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It's a Steal! How Columbia House Made Money Giving Away Music

If you grew up in the pre-MP3 era, chances are you had at least one go-round as a member of Columbia House’s mail-order music club. Who could turn down the allure of eight compact discs (or 11 record albums or cassette tapes) for just a penny? It would be stupid not to join up! A few months of automatic shipments later, you probably ended up like a lot of members did: as a no-income 14-year-old who owed Columbia House $47 for unwanted Sir Mix-a-Lot CDs. Let’s take a look at a few lingering questions about the music club.

How did the Columbia House business model work?

The underlying model for Columbia House was a pretty simple setup known as negative option billing. Basically, once you sign up for a membership in a club or service, you start getting monthly shipments unless you expressly tell the club you don’t want them. Of course, you also get the bill.

Negative option billing has actually been illegal in Ontario since 2005, but it’s still legal in the United States. There are a few caveats, though. The Federal Trade Commission requires that any club or service offering a negative option plan must clearly and conspicuously indicate minimum purchase obligations, cancellation procedures, the frequency with which members must reject shipments, and how to eventually cancel a membership when they enroll new members.

The FTC really drops the hammer on any company that doesn’t comply with these regulations. In 2009 it reached a $1 million settlement with the online company Commerce Planet, which had been offering a “free” online auction kit while also signing customers up for a recurring $59.95 “online supplier” program.

How did Columbia House make any money while giving away so much music?

Columbia House and competitor BMG brought in tons of gross revenue — as late as 2000, the two companies were grossing $1.5 billion a year. But even with negative option billing bringing in cash from club members who forgot to return their rejection forms, Columbia House operated on a seemingly tight margin.

Columbia House and BMG had some fairly clever ways to save cash, though. Until 2006, the record companies had never actually secured written licenses to distribute the records they sent to club members. Instead, the clubs saved the hassle (and the expense) by paying most publishers 75% of the standard royalties set by copyright law. The clubs argued that since the publishers were cashing their discounted checks, they were submitting to “implied” licenses.

Music publishers didn’t love this arrangement, but for decades it was pretty tough to fight back against the mail-order clubs. As some of the biggest pre-Internet retailers, the clubs held enormous power over the music market. According to a 2006 Billboard article, if a publisher complained, the clubs would simply stop carrying their records.

On top of that, the clubs generally weren’t buying their records from labels and then selling them. Instead, the clubs would acquire the master tapes of records and press their own copies on the cheap. Moreover, remember those “bonus” or “free” records you got for signing up for the clubs? The clubs generally didn’t pay any royalties at all on those, which further slashed their costs.

In the end, all these little factors saved a ton of money. In his 2004 book The Recording Industry, Geoffrey P. Hull took a look at the economics of the clubs. He estimated that the cost to the clubs of a “free” disc was only around $1.50, while a disc sold at full price cost the club anywhere from $3.20 to $5.50. Hull did the math and realized that even if only one of every three discs a club distributed sold at the $16 list price, the club would still end up making a margin of around $7.20 on each sold disc. Hull explains that retail stores were hard pressed to make a margin of even $6.50 per sold disc, so it’s easy to see how the clubs stayed afloat even with their massive marketing and advertising costs.

Did anyone really, really take advantage of those introductory offers?

Joseph Parvin of Lawrenceville, NJ, was undoubtedly the patron saint of anyone who ever wanted to stick it to a music club for receiving an unwanted record.

In March 2000, the 60-year-old Parvin admitted that he had used 16 post office boxes and his own home address to fleece Columbia House and BMG out of 26,554 discs during a five-year span in the '90s. He pleaded guilty to a single count of mail fraud.

Oddly, the New York Times story on Parvin’s plea included a story of another scammer who was nearly as prolific. Just five months earlier, David Russo pleaded guilty to stockpiling 22,000 CDs using a similar scheme. He then sold the booty at flea markets.

What about Columbia House’s old rival, BMG?

This may come as a shock to your circa-1994 self, but Columbia House and BMG are part of the same company now. In 2002 Columbia House’s then-owners, Sony and AOL Time Warner, sold a majority stake of the company to the Blackstone Group. (Sony and AOL maintained a 15 percent share between them.)

In 2005, Blackstone again flipped Columbia House to the German media giant Bertelsmann, the owner of BMG, for a reported $400 million. After a series of further transactions, Columbia House is now situated in the portfolio of Direct Brands, Inc., a direct marketer whose other holdings include the Book-of-the-Month Club.

Can I still order music from Columbia House?

You’re a few years too late. The merged version of Columbia House and BMG, the BMG Music Group, quit selling music on June 30, 2009. (Apparently digital music wasn’t just some silly fad.) Direct Brands still operates a business under the Columbia House name, but don’t expect the latest music to show up at your door. The revamped company sells DVDs and Blu-Ray discs.
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Did any of you end up owing way too much money to a music club? Do you remember your first eight CDs?

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15 Fascinating Facts About David Bowie
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BERTRAND GUAY/AFP/Getty Images

The music industry lost one of its most iconic artists when David Bowie passed away from liver cancer on January 10, 2016. Bowie’s death came as a surprise to music fans around the world, as he kept his diagnosis quiet. Which isn’t all that surprising when you consider the often-elusive nature of Bowie over the years. Here are 15 things you might not have known about David Bowie, on what would have been his 71st birthday.

1. HE CHANGED HIS NAME SO HE WOULDN'T BE CONFUSED WITH THE MONKEES’S DAVY JONES.

David Bowie was born in London on January 8, 1947 as David Robert Jones. But as he readied to embark on his musical career as a teen, there was a problem: Davy Jones, the lead singer of The Monkees, was already a known quantity in the music industry, and the aspiring artist was afraid they might be confused. So David Jones changed his name to David Bowie.

In 1967, 14-year-old Sandra Dodd sent Bowie what would be his first fan letter from America, in which she asked him about his name. Bowie quipped: “In answer to your questions, my real name is David Jones and I don’t have to tell you why I changed it. ‘Nobody’s going to make a monkey out of you’ said my manager.”

2. NO, HIS EYES ARE NOT TWO DIFFERENT COLORS.

While people often claim that Bowie had heterochromia, a genetic condition that results in having two different colored eyes, that is incorrect. Both of his eyes are blue; the ocular oddity that you do notice is what is known as aniscoria, or a permanently dilated pupil—which happened when Bowie was 15 years old and got into a fight with his friend, George Underwood, over a girl. "I was so aggrieved I walked over to him, basically, turned him around and went 'whack' without even thinking," Underwood explained. (His fingernail sliced into Bowie’s eye.)

Fortunately, there were no hard feelings; the two later collaborated on an album as The King Bees and Underwood went on to design the album covers for some of Bowie’s most famous records, including The Rise and Fall of Ziggy Stardust and the Spiders from Mars.

3. THAT WASN’T THE ONLY TIME BOWIE'S EYE TOOK A BEATING.

In 2004, while performing in Oslo, Norway, a “fan” threw a lollipop onto the stage, which somehow managed to strike Bowie in the eye—and get stuck. A member of his crew was able to remove it, and Bowie went on with the concert. Rebel rebel indeed.

4. HE WAS BOYHOOD FRIENDS WITH PETER FRAMPTON.

Despite Bowie being more than three years older than Peter Frampton, the two struck up a friendship as youngsters. Both attended Bromley Technical High School, where Frampton’s dad was Bowie’s art teacher. The two shared a unique bond over music, and remained close friends until Bowie’s death. "He really introduced me, along with George Underwood, to Buddy Holly and Eddie Cochran, people I wasn't aware of at that age," Frampton once said of his childhood friend. The two would collaborate a number of times over the years.

5. BOWIE AND ELTON JOHN WERE PALS AS TEENS, TOO.

Back in their teens—when Bowie was still known as David Jones and Elton John went by Reginald Kenneth Dwight—the two future rock icons became quick friends and would frequently get together to talk about music. But shortly after Bowie’s death, John admitted that they had a falling out and hadn’t talked much in about 40 years.

“David and I were not the best of friends towards the end,” John said. “We started out being really good friends. We used to hang out together with Marc Bolan, going to gay clubs, but I think we just drifted apart. He once called me ‘rock ’n’ roll’s token queen’ in an interview with Rolling Stone, which I thought was a bit snooty. He wasn’t my cup of tea. No; I wasn’t his cup of tea.”

6. AS A TEEN, HE FOUNDED THE SOCIETY FOR THE PREVENTION OF CRUELTY TO LONG-HAIRED MEN.

In 1964, when he was just 17 years old, Bowie formed The Society for the Prevention of Cruelty to Long-Haired Men, an organization aimed at protesting the treatment that he and other men with long hair received on the streets of London. He took the matter seriously, as you can see from the BBC interview above.

That BBC spot led to an interview with the London Evening News, where Bowie explained that the organization was “really for the protection of pop musicians and those who wear their hair long. Anyone who has the courage to wear their hair down to his shoulders has to go through hell. It’s time we were united and stood up for our curls.”

7. HIS FIRST HIT, “SPACE ODDITY,” WAS PERFECTLY TIMED.

On July 11, 1969, Bowie released the single “Space Oddity.” The timing could not have been more perfect. Nine days after its release, the BBC ran the song over its coverage of Apollo 11’s lunar landing. It would end up being his first big hit in the UK.

8. HIS BROTHER WAS A MAJOR INSPIRATION FOR HIS MUSIC.

In 1985, Bowie’s half-brother Terry Burns, who battled mental health issues throughout his life, escaped from the hospital where he had been admitted and killed himself. In Nicholas Pegg's The Complete David Bowie, the writer reveals that Burns had quite an impact on Bowie’s writing. He was reportedly the inspiration for a number of his songs, including “Aladdin Sane,” “All the Madmen,” and “Jump They Say.”

9. BEING ZIGGY STARDUST LED HIM TO QUESTION HIS SANITY.

3rd July 1973: David Bowie performs his final concert as Ziggy Stardust at the Hammersmith Odeon, London. The concert later became known as the Retirement Gig
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Though Bowie had many alter egos over the years, Ziggy Stardust was the most famous of them. From 1972 to 1973 he toured in character as the glam rock persona until he abruptly announced that he would be retiring Ziggy during a concert in 1973. “Not only is this the last show of the tour, but it's the last show that we'll ever do,” Bowie said of Ziggy Stardust and the Spiders from Mars.

He later admitted that Ziggy “wouldn't leave me alone for years. That was when it all started to go sour ... My whole personality was affected. It became very dangerous. I really did have doubts about my sanity."

10. FOR A TIME, HE FEARED A WIZARD MIGHT STEAL HIS URINE.

Four years after his Ziggy Stardust period, Bowie became the Thin White Duke. It was during this period that he struggled with both drug and emotional problems. In David Buckley’s book, Strange Fascination: David Bowie—The Definitive Story, the author wrote that by 1975, Bowie was "living a cocooned existence [in Los Angeles], disconnected from the real world.” He was apparently subsisting on a diet of peppers and milk, and exhibited some truly strange behaviors—like keeping his urine in his refrigerator so that "no other wizard could use it to enchant him.”

11. HE WAS A BIT OF A FUTURIST.

Not only was Bowie ahead of his time when it came to his art, but he also seemed to foretell the rise of the internet. In 1999, while discussing a newfangled invention known as the world wide web with Jeremy Paxman of the BBC, the host suggests that the internet’s potential has been “hugely exaggerated.” Bowie was quick to make it clear that he didn’t agree. “I really embrace the idea that there’s a new demystification process between the artist and the audience,” Bowie said “The interplay between the user and the provider will be so in sympatico it’s going to crush our ideas of what mediums are all about.”

12. HE WAS A PIONEER OF MUSIC STREAMING.

In September 1996, Bowie became the first major artist to release a single via internet download only with “Telling Lies.” It took about 11 minutes to download. (Times have changed.) That was just the beginning: In 1998, Bowie announced that he’d be launching his own internet service provider, known as BowieNet.

13. HE WAS A VORACIOUS READER.

May 1973: In a black and white horizontally striped jacket with wide lapels glam rock star David Bowie
Hulton Archive/Getty Images

While he was mostly known for his musical output, Bowie was a major bookworm who often read a book a day. In 2013, the curators at the Art Gallery of Ontario compiled a list of the artist’s 100 favorite books as part of an exhibition, “David Bowie Is.” It was an eclectic list, encompassing everything from Alfred Döblin’s Berlin Alexanderplatz to Gustave Flaubert's Madame Bovary to Michael Chabon’s Wonder Boys.

14. HIS SON RECENTLY CREATED A BOOK CLUB IN BOWIE’S HONOR.

In late December, Bowie’s son—filmmaker Duncan Jones—announced via Twitter that he would be paying tribute to his father’s love of reading with an online-based book club.

The club will kick off with Peter Ackroyd’s Hawksmoor, and the conversation will begin on February 1.

15. A LOCK OF HIS HAIR SOLD FOR $18,750.

In June 2016, just a few months after the singer’s passing, a lock of Bowie’s hair—which had been snipped in 1983 by a wig mistress at Madame Tussauds in London—went up for auction as part of Entertainment & Music Memorabilia Signature Auction held by Heritage Auctions and sold for a hair-raising $18,750.

“David Bowie changed music forever and fans are hungry for related precious objects that bring them closer to their favorite musician," Margaret Barrett, Heritage’s director of entertainment and music auctions, said at the time. "What brings you closer than a lock of hair?" (The bidding started at $2000 and early estimates thought it might only go as high as $4000.)

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20 Memorable Elvis Presley Quotes
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Hulton Archive/Getty Images

More than 40 years after his death, Elvis Presley remains a rock ‘n' roll icon and has yet to be ousted from his position as “The King.” Yet the Tupelo, Mississippi-born, Memphis, Tennessee-raised superstar never took his fame for granted, nor did he forget his roots. On what would have been his 83rd birthday, here are 20 memorable quotes about Elvis’s life and legacy.

ON AMBITION

“Ambition is a dream with a V8 engine.”

ON MAINTAINING YOUR VALUES

“It's not how much you have that makes people look up to you, it's who you are.”

“Values are like fingerprints. Nobody's are the same, but you leave 'em all over everything you do.”

ON THE MUSIC INDUSTRY

“I happened to come along in the music business when there was no trend.”

“I've never written a song in my life. It's all a big hoax.”

“I don't know anything about music. In my line you don't have to.”

ON THE ARMY

“After a hard day of basic training, you could eat a rattlesnake.”

“The army teaches boys to think like men.”

ON TRUTH

“Truth is like the sun. You can shut it out for a time, but it ain't goin' away.”

ON THOSE LEGENDARY DANCE MOVES

“Rock and roll music, if you like it, if you feel it, you can't help but move to it. That's what happens to me. I can't help it.”

“Some people tap their feet, some people snap their fingers, and some people sway back and forth. I just sorta do 'em all together, I guess.”

ON KEEPING POSITIVE

“When things go wrong, don't go with them.”

ON STARDOM

“If you let your head get too big, it'll break your neck.”

“I have no use for bodyguards, but I have very specific use for two highly trained certified public accountants.”

“The image is one thing and the human being is another. It's very hard to live up to an image, put it that way.”

“The Lord can give, and the Lord can take away. I might be herding sheep next year.”

ON LOVE

“Sad thing is, you can still love someone and be wrong for them.”

ON THE PITFALLS OF HOLLYWOOD

“I sure lost my musical direction in Hollywood. My songs were the same conveyer belt mass production, just like most of my movies were.”

ON GETTING OLDER

“Every time I think that I'm getting old, and gradually going to the grave, something else happens.”

ON LEAVING A LEGACY

“Do something worth remembering.”

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