
Former Columbia House insiders explain the shady math behind “8 CDs for a penny” - colinprince
http://www.avclub.com/article/four-columbia-house-insiders-explain-shady-math-be-219964
======
jlgaddis
My first job out of high school was entering those Columbia House applications
into a computer database.

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.

~~~
bryanrasmussen
surely filtering out the false applications should have been the task of
programmers / DB admins once the data was all in the DB.

~~~
jlgaddis
One would hope so but the evidence (CDs showing up in the mail) didn't tend to
support that assumption. In addition, this was nearly 20 years ago so the
technology wasn't as great as it is today. If memory serves, our interface was
a DOS-based application with our PCs networked using Netware, if that says
anything.

~~~
mixmastamyk
That technology was fine, the policy and culture is what mattered. Likely
people were making sales targets and bonuses and looked the other way at
"fraud" that aligned with that goal.

~~~
hakutsuru
While this may have been so at some time, while I was at the company
(1998-2010), it is categorically false.

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).

------
mixmastamyk
Yes, good memories. I was a member of Columbia and BMG clubs many times over
the years, often with multiple memberships at a time for a decade or so
in/after high school.

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.

~~~
wpietri
> Then you'd cancel as soon as you tired of the mailings. I never knew why
> they did it but I didn't care.

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.

------
keithpeter
A couple of quotes from the OA

>> _“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.

------
wsc981

      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.
    

Interesting article, but a bit too long. I think in The Netherlands (and
perhaps Belgium) there was this 'book club' that shared the same 'negative
option' business model.

~~~
malz
In the US it is Book of the Month Club (surprisingly still in business).

[https://en.wikipedia.org/wiki/Book_of_the_Month_Club](https://en.wikipedia.org/wiki/Book_of_the_Month_Club)

~~~
cafard
Indeed, I joined Book of the Month Club to get the introductory offer of the
two volume OED cheaply, and ended up leaving after paying $50 for stuff that I
just didn't want. I still have the OED, but I couldn't tell you what the other
books were. I do, however, remain the pain of writing the $50 check, which was
a good deal of money for me then.

------
brandonmenc
From the article:

 _" 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.

~~~
wpietri
> It's a ridiculous conclusion to draw.

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](https://en.wikipedia.org/wiki/Answering_machine)

[2] [https://en.wikipedia.org/wiki/Hush-A-
Phone_Corp._v._United_S...](https://en.wikipedia.org/wiki/Hush-A-
Phone_Corp._v._United_States)

[3]
[https://en.wikipedia.org/wiki/Carterfone#Landmark_regulatory...](https://en.wikipedia.org/wiki/Carterfone#Landmark_regulatory_decision)

~~~
brandonmenc
I'm pushing 40 and my mom was a lifelong GTE employee, and while I only
vaguely remember pre-divestiture, I've heard all the stories - from both sides
of the DMARC.

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.

~~~
wpietri
There isn't a monopoly _yet_. And "that's just not going to happen" is at best
an argument from ignorance (I don't how X could happen, ergo X is impossible),
and at worst a statement of faith.

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.

~~~
brandonmenc
My "that's not going to happen" is an argument that it's imo nearly impossible
that people will accept a highly restricted web. That's where I see the
discontinuity - consumers will demand a relatively open web, monopoly or not.

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.

~~~
wpietri
Ok, fine, you don't see how it's possible. That's not an argument that it
isn't possible, unless you also want to claim that you have a much stronger
ability to predict the future than humans normally demonstrate.

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...](https://www.dslreports.com/shownews/Cogent-CEO-
Interconnection-Congestion-Has-Magically-Disappeared-135287)

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.

~~~
brandonmenc
> Ok, fine, you don't see how it's possible. That's not an argument that it
> isn't possible

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.

------
DrScump
Did the article ever get to _why_ Columbia House failed? I gave up due to the
obnoxious ad load ( _eleven_ external sites according to Ghostery), and that
obnoxious Timescapes moving ad (which reloaded from the beginning with _every
text scroll_ , which means every 1-3 paragraphs) slowed it down to the point
of being unreadable.

~~~
mixmastamyk
It failed for the same reason that the music industry failed. People stopped
buying CDs, so loss-leading divisions were eliminated.

~~~
mystikal
The music industry failed?

~~~
mixmastamyk
More or less, when revenues drop 50% ... things change, have a point?

~~~
mystikal
Shrinkage is not failure. I know plenty of pro music biz people.

~~~
mixmastamyk
I meant "as we know it". There are large parts that did not survive, such as
this one, and music videos for example.

~~~
mystikal
I see what you mean, but I think maybe "disruption" or "upheaval" is a better
way to characterize the changes than "failure". Also, music videos are still
made and widely watched on YouTube - again disruption rather than failure.

~~~
mixmastamyk
Yep, it was just a sub-optimal word choice, a bit too strong.

~~~
mystikal
No worries, I just like to argue :)

