LOS ANGELES — There are 70 to 80 percent less paying customers of adult products in today’s market than there were in the salad days of porn, executive and entrepreneur Mike Kulich says.
And he should know, having cut his teeth on the old brick and mortar days that saw the transition of VHS to DVDs when most buyers would order large amounts of one title in both formats just to be sure. But the bugaboo of Internet saturation has permanently changed the landscape and has hurt, and in some cases even destroyed a number of fledgling and long-established companies.
But it’s not all doom and gloom. Kulich and his suite of adult businesses that includes Monarchy Distribution, Skweez Media and recently launched Stunner PR have debuted in the middle of all of the turmoil and have shown growth and even success. So how does he do it, and what’s the formula for keeping an adult business thriving in the new environment?
“With the way the business changes I have tried to steer my companies to adapt with changes. Everything else is mostly the same. You've got the same companies, you've still got the teens, you've still got the MILFs, and you still have the familiar faces selling the products. The only real change I have seen that has affected the business is the consumer mentality. The tube sites have convinced consumers that free porn is a God-given right and there is so much free content out there that if all the uploads stopped today, you could still watch a new porn movie everyday for the rest of your life,” Kulich says.
And that’s not news to struggling adult companies. But what makes Kulich stand out is his determination to succeed despite the roadblocks, and more importantly the desire to create businesses with a new twist.
He points to Monarchy Distribution, the keystone of his fledgling empire launched four years ago. The business model came about when Kulich saw the real changes the tube sites were having on the DVD market. He recounts that sales had dropped so drastically to the point where if a production company was going to shoot a new title, it had to make sure their budget was in range that they knew they would be able to recoup their investment on their out the door sales. But Monarchy took a different path and in addition to distribution, serves as a broker for talent and independent and smaller producers. “I saw that through social media a lot of people had started to shoot their own content because the amount of work had decreased dramatically. I set up a shop and contacted people shooting their own content that were selling on sites like Clips4Sale and their own pay sites. What we do is take that content and professionally package it into a retail-ready product. Then we distribute it to our network of wholesalers, retailers and broadcast channels and take a percentage,” Kulich says.
What Monarchy became was essentially a brick and mortar version of Clips4Sale. The business model worked because the company didn’t have to front money for production. Kulich says, “We get the content on consignment and our only cost is post production (authoring, replication, etc.) and our typical overhead.”
But unlike a number of other business types, Kulich didn’t rest on the Monarchy model but instead sought out new business in order to diversify — what he calls the essential key to staying alive.
In 2012 a friend who had a strong background in software engineering approached Kulich. The chance meeting turned into another opportunity —SkweezMe.com – a Netflix-like VOD platform with iTunes pricing for adult. The duo realized that billions of dollars are left on the floor every year as a result of content piracy.
“The model was based on the premise that if we offer a platform that has the quality at a price that everyone could afford and we could get less than 1 percent of the people accessing their content on tube sites to use our service, we could bring a whole lot of money back to the studios and have a thriving new business,” Kulich says.
After a year of development and securing some partners (one who had helped innovate Google Video), the streaming platform was born. But serendipity alone didn’t make SkweezMe happen. The team differentiated the model by doing away with recurring billing which is normally the lifeblood of an online streaming site. Kulich explained, “We’ve instituted a token system which allows a user to stream unlimited content for just 99 cents a day. Our users purchase packages of tokens ranging from three for $2.97 all the way up to 90 for $86. Each token unlocks a 24-hour pass where the user can watch whatever he wants, for however long he wants during that 24-hour period. We made our price low enough to where anyone can afford it — and judging from our success so far, we are convinced that our system is the wave of the future.”
The risk paid off. Kulich says he’s seeing new users coming in everyday buying the three-day pass and also coming back to buy bigger packages.
Another weapon in Kulich’s arsenal of success is self-marketing, what he calls his real strength, and what sets his companies apart from the rest. Every project is heavily promoted and targeted for mainstream attention. Monarchy titles have been featured on big name media outlets like the Huffington Post, Forbes, Daily Dot, Daily Mail and New York Magazine. “We have done a lot of stunts (including charity donations) and produced movies that kept up with current events [the latest to Clipper’s owner Donald Sterling to sit in on a porn film] which gives us a great mainstream edge and that kind of became the trademark of Monarchy,” he says.
The marketing savvy earned Monarchy the 2014 XBIZ Award for Best Marketing Campaign and helped get it noticed among its peers. Kulich says that after the win a number of other studios approached him about helping them with their marketing.
Never to let an opportunity to pass by, Kulich once again applied his penchant for parlaying his business and decided to create Stunner PR last February along with former Victoria’s Secret and ad agency executive Jess Brigham.
Brigham administers the social media networking for Stunner PR and SkweezMe.com. Since it’s launch, the firm has already secured major clients like interracial producer, the Dogfart Network that ushered in the Sterling stunt. “We were able to get placement in the Huffington Post and a number of large mainstream sports sites like Barstool Sports, FOX Sports, and a few pop-culture sites like BroBible and Guyism,” Kulich says.
And it’s not only films. Stunner also works with male enhancement novelty company, Beamonstar Products, and AdultVerifiedVideoChat.com, a new e-commerce platform that enables talent to sell Skype shows and other services to their fans without the hassles of dealing with a merchant account like PayPal.
Staying true to his mantra of spreading his reach, Kulich is also representing veteran adult performer, singer, and gamer Alana Evans, and newcomer Rachele Richey acting not only as a talent broker, but a branding force.
It may seem obvious, but most adult pros stick to only what they know, and in today’s market that could spell disaster. “You have to be creative and look at every interaction and handshake as an opportunity to make money. I never leave any doors closed,” Kulich says.
Indeed. Kulich revealed that he is now working with a Silicon Valley venture capitalist and once the influx of money comes in, he’ll be rolling out a “huge variety of original programming” on SkweezMe along the lines of Netflix’s “Orange is the New Black” program.
