"It was a music club mold that works off the same basic tenets as the Columbia House Record Club," Butkowski said. "The big difference is we don't do contracts, which is what everybody hated about the music clubs. They tied you into a minimum number of purchases, or a lifetime contract of having to buy something every month. We don't work like that."
How DVDs For A Buck works is simple. Customers pay a monthly membership fee of $34.95, and new members get a bonus offer, just like the record clubs, in which they receive five movies for a dollar. After choosing which five movies they want, new members receive them in the mail with no shipping charge.
"Then each month they get two movie credits," Butkowski said, "so they can log into the system and choose whatever movies they want to order with those credits. So no money changes hands, other than the monthly fee. Most movies are one-credit movies, and customers can purchase movies, as well. They're competitively retail-priced, and they get 40 percent off after the first movie they buy. We charge regular shipping on movie sales."
Whatever Butkowski is doing seems to be working, because DVDs For A Buck is more profitable than it was under its previous owners. One of the changes she's made is to bring in movies from a number of new studios that the original owners didn't have. Customer longevity has increased over the previous ownership, too, according to Butkowski. She thinks her company's model may be key to its success.
"We're the only ones using the Columbia House model, where you pick the movies you want and you own them," she said. "My direct competition is the retailers and video-on-demand, but there are lots of people who want something physical in their hands if they're spending money."
Butkowski believes her company appeals to a specific type of consumer, who will continue to buy DVDs as long as the site maintains its advantages.
"If they're really into buying porn, it's really a good deal for them," she said. "For most customers, the $34.95 gives them two movies per month. These movies usually retail at $24.95, so they're getting $50 worth of movies with no shipping charge.
"The other upside to the club is that it's physical product. I think watching porn on the computer sucks. I have to screen a lot of movies on my laptop, and it makes me think, if you want to watch porn, do you really want to watch it on a computer? Besides, a lot of people out there still don't have the ability to watch it on a computer. They're still on dial-up and their computers don't have the capability. My family is back in Cleveland, and their DSL service drops out all the time. They've only got a choice of two DSL providers, and they're both terrible. I don't know how people back there get any work done, let alone watch porn on their computers."
Since taking over DVDs For A Buck, Butkowski has modernized the site to make it more customer-friendly, as well as more profitable.
"We have an algorithm built into our program that looks at the niche the customer likes, and looks at all the purchases that customer has made," she said. "Then it compares that to what we have in our database, which that customer hasn't yet ordered. That way we can customize our offers, and that makes it a little more dynamic."
Although she feels that the adult retail stores remain her main source of competition for DVD sales, Butkowski is certain that her site holds one undeniable advantage over them: privacy.
There are still many consumers, especially women, who are not comfortable buying product in a store, where there is so much visibility.
"We have a lot of customers that order transsexual movies, and those people are generally men," she said. "That's not exactly something they'd feel comfortable buying in a store, so this is a way somebody can get what they want discreetly. We mail it to them in a plain brown box, which is also discreet.
"We don't sell out our mailing list, and we also don't pass customer information to other sites."
