The performers are quite protective of their territory. I saw a short film about a guy who dresses as superman in times square, taking tips for photos. He got quite upset about the idea of other people just turning up and trying their luck, said he and the other superheroes would basically drive them out.

He took the job very seriously, priding himself on remaining in character and having a full knowledge of the superman mythos, and being able to engage with kids/fans and make them happy beyond just the photo. He got quite offended at the idea of other people turning up in a rented superman suit and not bothering with any of that.

Interesting film, interesting guy. Wish I could remember the title.

EDIT: I found it. Looks like he's not in times square, rather somewhere in california: https://www.youtube.com/watch?v=Jxfbsd-8CIw

* If it really is that lucrative (I do believe the figures he mentions) then why isn't everyone doing it?

Time Square is probably the only place in an entire country where a person can do this.

It's actually quite a small place.

Isn't there some kind of regulation for that? Where I used to live there were only a fixed amount of street performers allowed, and licenses were given out on a daily basis very early in the morning (or so I have heard).

* If it really is that lucrative (I do believe the figures he mentions) then why isn't everyone doing it?

Yup! I suppose you wouldn't typically expect someone in a costume to be making that much.

* Who tips a guy in a costume $100 for a photo?

People on a business trip, also some people from the middle east.

There are a lot of people doing it. Look up the YouTube videos of the 'Racist Elmo' (Some paranoid man with mental issues), he also works costumes in Times Square among many others.