Private Maps Out New Revenue Plans

Feb 1, 2011 8:00 AM PST
BARCELONA — Mainstream advertising, online casinos and a chain of swingers’ hotels are part of a new plan laid out by Private Media Group in an effort to compete with poached and pirated content.

In an interview with Gigaom, CEO Berth Milton said his company’s goal is to revamp Private’s strategy and generate revenue from new sources including advertising with Groupon-like vouchers whereby the company would give away most of its content for free. “There is no reason to continue to charge people,” said Milton

Although Private has taken legal action against some porn poaching sites that make money from unlicensed content, Milton explained that he doesn’t think it’s an effective strategy and in fact, free content is a new method or promotion whereby the company’s sites would reach millions of consumers and be ad-supported.

“We don’t mind P2P, that’s absolutely okay,” he said.

The old affiliate-driven pay-site approach is a “stupid business model” according to Milton. And tube sites only get small ad dollars from porn-friendly companies like dating sites. Instead, Private is about to sign on with a major Italian ad agency in order to attract luxury products and brand advertising.

But the problem adult has always faced is how to attract mainstream advertising to adult’s strong consumer base while sidestepping the stigma of porn?

Private’s idea works like the Groupon voucher program whereby the Italian agency — that’s paid by luxury brands in product instead of cash — would act as the filter offering Private the products for a discount. Private would then advertise the high-end products without any direct connection to the manufacturers and make money only on sales.

In this scenario Milton said, “We don’t need approval for any of the luxury brands.” He noted that the campaign will first kick off in Europe selling major fashion brands and gym equipment but he hopes to then quickly expand to the U.S. where he feels he will reach millions of consumers. “It will explode,” he said.

Private also wants to create new revenue streams including an online casino that’s expected to launch in mid-February and a chain of swingers hotels that will open its doors in Barcelona in mid-July.

Despite being sour on traditional pay site models, Private's hotel idea provides a twist. The company will allow guests to stay for free if they allow their sex acts to be streamed, thus giving Private another revenue source by charging users to watch the live sex.

The prototype hotel will be a test, but Milton feels it can grow to a chain of more than 100 franchises.

Although still struggling with legal issues regarding control of the company and its NASDAQ listing, Milton feels Private is on the right track. He said porn has wasted too much time hanging on to old business models.

“[Adult] companies are getting smaller, but the market is getting bigger. When I started, we could sell in a few select porn shops. Now we can sell to a billion consumers,” said Milton.

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