if the gravamen of what these "elves" do is prostitution.

      If you are asking, can these elves  engage in prostitution but tape it and avoid arrest on grounds  they  and their partners are “actors” making non-obscene, “legal” personal not for sale pornography, the answer is clearly “no.” The labels they and this company attach to their conduct are no more controlling than the old “ I’m just paying for her time.”

       Most people do not realize that there is no rule of state or federal law that insulates pornography from the reach of prostitution statutes, or any rule that all forms of pornography are protected by the First Amendment. The regs under the federal child protection act which require adult film companies to keep age records do not mean that their conduct is always “legal.” The statement on the web site that 18 USC 71 regs make personal pornography not for sale “legal” does not address whether the underling act is legal. And prostitution disguised as pornography is just as unlawful as is prostitution.

       Aside from the landmark Cal Freeman case, there is very little reported case law as to why pornography is not prostitution,  and no case law that I am aware of that deals with auteur pornography – where the male actor is the producer, director, and talent in the film and most certainly is paying for his sexual gratification as well as to make some money selling the film, or the female actor is doing this for  a living - as opposed to the California and N.H. cases where the charge was against the non-performing maker of the “film.” Even in this situation, there is a 1977 prosecution ruling in New York:

       “Essentially, the defendant contends that the production of
motion pictures is constitutionally protected and that the receipt of money by actors and actresses for the express purpose of participating in such films and engaging
in filmed sexual conduct, cannot constitute prostitution within the meaning of section 230.00.

  This court disagrees. The Legislature, by enacting section 230.00, intended to prohibit certain sexual conduct of a commercial nature, thereby making illegal that which might otherwise be legally permissible save that a fee was offered or
paid in return for the sexual conduct.

       Neither the statute itself nor any decisions interpreting it, exclude explicit sexual conduct by a paid performer from the definition of prostitution. That the
fee paid for the sexual activity was provided by a nonparticipant
or that the defendant's object was to photograph the activity
creates no legal distinction.”

 
       I tend to agree with this case rather than the reasoning of the California and NH cases. But again no reported case  has addressed auteur porn or “personal porn” that I know of.  

       If the officer thinks this is prostitution, he will arrest the elf and her partner  and they are going to plead rather than spend thousands of dollars going thru a jury trial and, if convicted, hoping an appellate court will agree they  have First Amendment protection. So, for all practical purposes, this club is of no use, unless you want to be the “test” case. LOL

     So, while I can’t speak for the “real lawyers,” I would humbly offer my lay opinion that this would not provide any meaningful protection for a provider who switches her business model to join this club and claims she is just making personal pornography for a fee

Not an attorney.

The Studio in Phoenix recent bust trying to be a porn studio. 15 naive young gals and owner now face 10-40 years in prison and lifelong felons for thinking this would be legal

are located in California...  where local law generally allows the production of porn.  The rest of the US does not & wishing does not make it so.  
Thinking that some bogus claim to be a porn studio or a religious ritual has not held up in court...  and it's a lot smarter to know current rulings than to go off on some half baked attempt to convert something illegal to something that is not

"Lay-man" question here...
What if the provider/she advertises as photographer.  And the client/guy makes the appointment for a photo-shoot. But the real deal is the unspoken action that ensues. Or you reverse the roles of who is photog & who is model..

Legal loophole or wishful thinking?