Former Columbia House insiders explain the shady math behind “8 CDs for a penny”
avclub.com
avclub.com
The amount of fake applications I, personally, came across was astounding. I can remember, on my first day, coming across a batch of applications that were so obviously all from the same person -- different CD selections (six-digit numbers, if memory serves) and different names but the same mailing address and same handwriting. I went up to ask my supervisor what I should do about them and was told to enter them in regardless. Basically, it did not matter one bit if the apps were fake or fraudulent. My job was to enter them into the computer. It was explicitly NOT my job to decide whether they were legitimate or not. I wondered then how they managed to make any money.
Even before I worked there, though, it was common knowledge amongst my friends in high school that you could put whatever information you wanted to on the applications and the CDs would still come in the mail.
Fraud detection became an important kpi, and sophisticated tools were used to minimize it. The company was shopped and acquired several times, due diligence for the business model would not allow outright fraud like this to survive. I appreciate the cynicism though.
Another example of manual processing done on the warehouse side was manually entering in pricing from the print catalogs, to honor pricing mistakes. Such mistakes cost the company millions of dollars, but I eliminated them by automating print segment pricing (via 4D, AppleScript and Em Software plugins).
An important element of the business which might not be appreciated is that members were segmented, so each cycle several versions of the "monthly" catalog were created, with pricing tailored to the segment ("in commit", "out of commit", etc).
Note: this article does not explain the math at all, it is mostly about paying rent in Manhattan.
Despite what the article implies, it was easy to figure out if you can use a calculator and was an awesome deal. Add up the cost for all discs total, then divide by the number of them and voila, you'd end up paying something like $4.XX per CD with shipping. Which was amazing when stores were selling albums for $16 +/- $2. Then you'd cancel as soon as you tired of the mailings. I never knew why they did it but I didn't care.
In fact I built my ~500 CD selection that way. Probably 1/2 to 2/3 came from the clubs. Many of the rest bought used. Topical story because I just pulled them out of storage and are ripping them a final time to .flac and then will send them off somewhere.
Any tips on a service for that? I had found an interesting startup last year that would take your collection in bulk, rip, and put you in a marketplace to trade with others. But, unfortunately I've already lost the name and can't find it again.
edit: did the dvd club also around Y2k, was great also for a round or two before getting the axe. That was about the time a friend got me a DirecTV descrambler card so didn't sweat it.
My guess: you were an unusual customer. I suspect the more typical case was somebody who never canceled and was not very disciplined about rejecting the selection of the month. So maybe they broke even or lost money on you. But they'd do well on the typical consumer, so it was fine by them.
>> “You’re not supposed to be enjoying yourself this much,” even though we were incredibly productive. <<
Is it possible to have fun, go home at 6pm, and still be productive any more?
>> Especially looking at my younger friends in their late 20s, I feel bad for them, because they’re grinding. They’re working their asses off. They’re working so much harder than we did, and they’re barely having time for their own projects. One thing about the fat, Clintonian, CD money years, is that in New York, you could still skim off some of the industry money and be an artist. <<
Is this just an attack of the Good Old Days syndrome or is it evidence of a trend that will eventually cause the ossification of our cities?
PS: UK: Book of the month style 'clubs' had books in 'club edition' bindings to differentiate them. They did that default option is you bought that month's book deal as well. My parents did it for a bit, then stopped it.
The whole business was premised on this concept called negative option.
Which just sounds so creepy and draconian and weird, but the idea that if
you don’t say no, we’re going to send you shit. It’s going to fill your
mailbox, and we’re going to keep sending it unless you panic and beat
us back. That was how the money was getting generated.
"There is an alternative to [Spotify], in getting outside of it, but only if we have net neutrality. If they really fuck with net neutrality, then I don’t know what independent musicians are going to do. Right now, you can go up on Bandcamp and you can put out your record, and they take their 15 percent cut, and you can make a fair amount of money selling a couple hundred CDs. You can do okay. But if that kind of freedom is taken away, then it’s going to be a really strange game."
This is some bizarre logic that has filtered down into the general population - that if ISPs are allowed to prioritize traffic, it inevitably leads to people not being allowed to sell zip files of their band's music.
It's a ridiculous conclusion to draw.
1. Laws written to allow different "lanes" of traffic, with protections that prohibit censorship and don't raise the bar of entry for websites.
2. Providers mostly have free reign to slow/stop any data that crosses their network and charge anyone however they want.
Given Facebook's internet.org and similar "zero-rating" schemes, I'm not sure you can dismiss argument 2 so easily.
Smaller streaming services such as Bandcamp, with their selfish capitalistic intent on charging for their services directly, cannot compete with the pervasiveness and free-ness of Spotify services. People cannot fathom why they would pay to buy music when Spotify is so generously providing it for free (faster loading, free, and doesn't use up their data allotments!) included in their ISP plan.
Far down in the future Spotify realizes they don't have to improve their services anymore. They realize "hey altruistic act we did is actually a great indirect way to pay to make our competitor's services worse, instead of investing in making our services better."
By paying to prioritize their traffic at the network level, Spotify realized they can leverage their existing size, money, and power to simply hold down the competition at the ISP level rather than rise up above them in the product level.
Once they have their service they don't need to do any favors for other music competitors, such as Bandcamp, unless those services "partner to provide a premium experience." In this fuzzy future, they need not block it, just make that traffic part of the basic pipeline that gets regularly and frustratingly throttled.
Not really. My guess is you're young enough that you never had to deal with AT&T in their prime. Packet prioritization is the very beginning of what carriers would like to happen. But once they get it, each succeeding step gets easier.
The basic view of a dominant carrier is that they should get a piece of everything that passes through their network. Everything. And because they're enormous, they really only want to deal with other enormous entities. It's most convenient for them to skim 30% of everything if they deal with just a few other players who are also monopoly or oligopoly players.
Try to imagine what the Internet would be like if Ticketmaster were in charge. Or if you'd like to read the history, When Wizards Stay Up Late, an origin story of the Internet, gives some of the flavor of how much AT&T squeezed everything.
Or you could look at the history of the answering machine. It was originally invented by AT&T, but they suppressed the invention out of fear that it would cut down on call revenue. [1] They fought tooth and nail against letting other companies sell them; it wasn't until 1956 you were even allowed to strap something to your phone [2], and they prevented people making electrical connections to the telephone network until 1968 [3].
[1] https://en.wikipedia.org/wiki/Answering_machine
[2] https://en.wikipedia.org/wiki/Hush-A-Phone_Corp._v._United_S...
[3] https://en.wikipedia.org/wiki/Carterfone#Landmark_regulatory...
Even if they want to, I don't believe it's possible for ISPs to exact Ma Bell level control over their services, for a number of reasons - the main ones being that the landscape is not a monopoly, and that while consumers might not care about their mobile carrier throttling Spotify or Netflix, they won't stand for being served with a completely locked-down web across the board. That's just not going to happen.
I know I represent a minority position inside tech - of not supporting Net Neutrality - but I would support it if there were an actual monopoly, or if ISPs were rendering sites and services completely inaccessible, which they are not. Until then, it's just a slippery slope imo.
If you're going to argue against a slippery slope, you have to say where the discontinuity is and why. Personally, I don't see one. Their used to be a vibrant ISP market. Now most Americans have at most two choices; many have just one. Comcast, the largest, is notoriously terrible along any axis you care to name: pricing, quality of service, reliability, customer service. There is no reason to think they won't get worse if they're allowed to.
I don't think they'll leap to a locked-down web. They don't have to. If they get pricing control, they can just keep squeezing small players and suppressing competition. It doesn't even have to be on purpose; it's just the easy way for them to make money. Even without that control we're seeing a lot of consolidation into large players. With it, we'd see a lot more.
Your argument here is something I see often.
The conversation starts with talking about all of this possible content restriction, then it shifts into a discussion about consolidating ISPs and stagnating quality - but I fail to see how Net Neutrality will provide more consumer choice re: quality of service.
I think those are two different conversations.
As a disclaimer, I prefer an internet like the one Net Neutrality proposes, but at the same time I believe there are a lot of good reasons to prioritize traffic differently - and that the leap to content restriction is a big one. Because, why aren't they doing it now? Maybe I'm being naive.
But one way it could happen: It doesn't start with people accepting a highly restricted web. Instead, people just get gradually comfortable with things dying off or merging (which happens all the time) and don't notice that new things don't crop up to replace them except when owned by companies large enough to successfully negotiate with the gatekeepers.
For decades people have been happy with video being controlled by a small number of media conglomerates. For decades more they were happy with an oligopoly of 3 TV networks.
As to the "why aren't they doing it now", they were. They did their best to squeeze Netflix to pay for access to consumers at the same time consumers were paying for access to Netflix. This has now changed thanks to tougher rulings:
https://www.dslreports.com/shownews/Cogent-CEO-Interconnecti...
But they will certainly keep trying. It's a very easy path to revenue growth for them if they can get away with it. Plenty of money, and no need to do the hard work of finding new ways to deliver value. Plus the US right is partial to oligopoly and rentier capitalism.
Anything is possible. That's not an argument that everything likely.
> For decades people have been happy with video being controlled by a small number of media conglomerates. For decades more they were happy with an oligopoly of 3 TV networks.
And now, they are not happy with that.
The trend is that people want and demand choice, and rolling it back in any significant way will make consumers push back. The genie is out of the bottle, as they say.
Does the absence of Net Neutrality permit ISPs to charge on both ends of a Netflix stream? Yes. Does it inevitably result in me not being able to post a video of my band's new music? (the original argument) Highly doubtful.
Or t-mobile's free streaming plans - you pay for a couple hundred megs of data and your Spotify doesn't count towards that quota, so you can't download a bandcamp album because your plan doesn't allow for it. This isn't some crazy future we're imagining. This is the internet right now.
(Recognizing the weird/sleazy negative-option element, it was possible to use Columbia House to amass product at a discount while playing by the rules, as explain by others.)
The CD boom pushed the company toward $2 Billion annual revenue. Take these numbers as fuzzy. Revenue definitely dropped, but it was still sizable for music, though the music clubs became much less profitable...
When Bertelsmann acquired Columbia House to eliminate the competition for BMG, the music clubs were shut down. While I can sympathize with people calling Columbia House a failed business, its music business did not fail.