These two kids in my hall actually talked this over with a lawyer and found out what was up. Basically, this chick wants to make some money by whoring, and the dude is finding her clients. So he's pimpin her.
They found out that if each person involved in the act gets paid to do it, and it's filmed, then they're not engaging in prostitution, but are actually pornographic artists. So what he does is have both people pay him for "casting fees," then they have sex while he films it, then he gives the chick her cut of the money. The guy goes home empty handed - it's like an audition.
The problem is, in New York, you need a license to make money from pornos. His plan was to pimp this chick out and sell the videos online, but he needs a license to do that. For now, though, having both people pay for the casting fees then having an audition is perfectly legit. It's just if he wants to sell them online, he'll have to apply for a license.