If you came of age in the pre-streaming era of the '90s, you remember having to buy your CDs from stores. Or, maybe you took advantage of the Columbia House music club and its eight-CDs-for-a-penny deal, a discount that was too good to be true. How could they sell products for next to nothing and still make a profit?
With a business model that’s downright Kafka-esque, music clubs managed to make money hand over fist by maintaining a low overhead, a high markup, and an ever-changing set of confusing rules. The following slice of music industry history lets you in on how music clubs made money, what customers were paying for, and how exactly they were being screwed.
Music Clubs Purposefully Marketed To Rural Areas
Look what I found being used as a bookmark... an envelope from the BMG Music club... I checked. The website no longer exists. DANG! WHERE WILL I GET MUSIC FROM NOW?!?!?! pic.twitter.com/Hx4xwxUZlg— Brian Bennett (@brian_o_bennett) March 15, 2018
Most of Columbia House's marketing was directed towards Middle America and rural areas rather than metropolitan centers with dense concentrations of record stores. A former Columbia House employee explained:
I remember there was an understanding back then that a lot of the people receiving these catalogs were so… These were people in the middle of nowhere. That was part of the idea of it: you had to order music through the mail, because you had no access even to a record store.
Columbia House Employees Knew They Were Grifting Consumers
The predatory practices of music clubs weren't lost on employees who made their bones charging unsuspecting customers for albums they didn't want. A source who worked for Columbia House told Forbes, "You could criticize us for not bringing more attention to the fine print, but it was all there."
Another former employee called their business practices "brilliant" and "perverse."
Music Clubs Banked On Reselling Collections
Every time a new format came along (cassettes, CDs, etc.), companies like Columbia House used the occasion as an excuse to sell customers something they already owned. Even though music clubs claimed to introduce subscribers to new music, they made their real money reselling entire collections to music lovers who wanted to update their libraries to a new format. For instance, if you had every Black Sabbath album on vinyl and cassette, why not have it on CD, too?
In Chris Wilcha's first-hand account of working at Columbia House, The Target Shoots First, he notes, "Consumers used Columbia House as a fast way to replace their vinyl with CDs. They bought everything they already owned for double, even triple the price."
Columbia House Introduced A Generation Of Young People To Mail Fraud
In 2015, Jack Hamilton wrote an article for Slate detailing his first foray into crime after joining the Columbia House record club when he was 13 years old. His article details how he ordered albums, never paid for them, and never canceled his account - thus falling into the music club trap.
He, like a lot of young people who ordered albums through music clubs, was technically on the hook for fraud, but Columbia House and BMG had bigger fish to fry - and they weren't going to take a teenager to trial.
My father got on the phone with the club and talked them down from some of the more outrageous penalties, basically telling them that, while I’d certainly messed up, 13-year-olds can’t actually sign contracts, and that it was shady business on their end that they had nothing in place to preclude this from happening. (He’s a lawyer.) I paid what I’d originally "agreed" to owe, and they terminated my membership.