Newsgroups: misc.entrepreneurs
Distribution: usa

Here's an overview. Read the whole thing if you're going to read any of it
because there is important stuff at the end.

Reading this post costs $3 for the first minute, and $2 for each
additional minute. :^)



A 1-900 number is a unique type of telephone number that individuals can
call to get information or information services. Occasionally a 1-900
number can be used to fulfill a product shipment; for example you call 
my 1-900 number, get billed an appropriate amount, and I ship you a product.
However, the long distance carriers frown on fulfillment operations, so
it's best to offer information through the form of recorded messages or
via a live person who answers calls.

The cost of the call is billed to the person who calls. It appears on their
phone bill at the end of the month. The cost can be based on the length of
the call or it can be a flat rate. At the beginning of the call you must
have an 18 second preamble where you permit the caller to hangup without
incurring any charges. You the Information Provider (IP) pay for these
callers who hangup during or immediately after the preamble. The charge is
about 15 cents for each preamble hangup.

The person who operates the 1-900 service only receives a percentage of 
the amount that appears on the consumer's bill, because the long distance
carrier charges to carry the call and to bill for it. In addition, what is
known as a service bureau charges you money for being able to receive the
1-900 line and transfer it to your service.

You can't just get a 1-900 number and have it terminated to a simple 
answering machine in your basement because the type of line over which
the incoming calls are carried is more technically complex than your
existing lines. But service bureaus will take care of this issue for you,
also charging you a fee.

Deals with service bureaus vary widely. Many service bureaus are now
rejecting porn, which is a good thing for the little guy wanting to
make money. Congress is supposed to pass legislation which will restrict
or eliminate these types of calls. This should result in an improvement
in the way that the general public perceives the 1-900 industry.

The cheapest way to get started is to sublease a 1-900 number from a
service bureau. The biggest downside to this other than earning less
per minute is that the check from the long distance carrier comes 
to the service bureau and made out as payable to the service 
bureau. It is up to the bureau to forward the money along to you. Nobody
enjoys giving up money in a fast and convenient fashion, and horror
stories abound about service bureaus who find all kinds of reasons
not to pay you the full amount promptly.

For more money, you can lease the 1-900 line directly from AT&T or
MCI and the check will come directly to you. The service bureau
will still handle technical aspects of your call, but the long
distance carrier's check comes directly to you, and usually more
quickly. But the cost of getting started this way can run to
thousands of dollars.

What are the downsides? First, until recently 95% of all the service
bureaus were out of Nevada so that they could do porn without any
hassles. But bureaus are now popping up in states with more uppity 
laws -- even Maryland. Second, you've got to get people to call 
your 1-900 number to earn any money. This means you need to place
advertising which more than pays for itself. Call any advertising
agency in the phone book and ask if they ever do advertising
work where: 

  they guarantee their advertising will create a net positive
  cash flow for you after you pay their services plus the cost of 
  running the ad. It will never happen.

The point is that 1-900 numbers are just another tool of the 
direct marketing industry, and if your knowledge and experience
with direct marketing is zilch, you can be sure that will also be
the amount of your profits. I've seen estimates that say only
1 in 10,000 direct marketing startups will not go bankrupt in
a short period of time, Do you like those odds?

Fortunately, it doesn't have to cost a lot of money to get your
feet wet in direct marketing. The first step is to read some of
the classic books which have been listed in this group. NOTE:
The first step is _not_ to go out and spend money on some "hot"
direct marketing program or "cheap" 1-900 setup.

If you think you can devote several hundred hours of work to
this type of study, you can then try to get your feet wet. And
you will probably lose some money because while the information
you learn from books can be very good, the only way anyone in
direct marketing can honestly know an idea's viability is to 
test it out inexpensively.

Direct Marketing attracts thousands of people who will only lose
money because they don't do the preliminary work. And there are
many people who will tell you information or try to sell you
advertising or services which waste your money.

Obviously this is not an exhaustive discussion of the topic.

I welcome other comments and corrections to this post.

Robert