Your friend is a submissive masochist and he has a need for you to dominate him and to hurt him. If you were together IRL, he would probably want to have this same maso-sub behavior. It is certainly not an unusual desire.

It seems that you are heavily invested in this man. He has particular kinks and yet your fantasies are, well, not at all kinky (you just wanna let the Kama Sutra unfold before you).

My opinion: I think that your friend’s ability to admit to his kinks is good; it feels as if he is laying bare what he wants of you. I believe that you might need to get a complete 180 overhaul and decide if you can, or cannot, satisfy your friends wants and desires and, possibly, needs. If you cannot - and, from what you’ve written, I do not believe that you can take charge and dominate and play the sadist. This, alone, might be reason enough to begin distancing yourself from this friend.

And next I will point out something obvious: As you have Skype interaction I would think that the most intimate thing to would be to masturbate together. Now, maybe you have and, maybe, your friend spoke of his need to be dominated and to feel pain.

I only see two choices: accept your friend as he his and indulge him his fantasies - even if you meet IRL - or... decide, for yourself, if you would be uncomfortable belittling and punishing him both over Skype and/or IRL. If you are not sexually compatible then you are not compatible as a couple. You should present this information to your friend whilst respecting his kinks... just not to the point of responding as he would like.

Make sense?