How did 1990s "CD clubs" like BMG or Columbia House make money?

If you were into music in the 90s, you likely remember BMG Music Service and Columbia House that would advertise "8 CDs for the price of 1" or other similar offers. And the thing, it an actual offer. With BMG, you would get four CDs for signing up, and after you bought one (for around $16, give or take), you would get three more for free. And you'd get more if you referred a friend, and so me and all of my friends did it. It was a great way for teenager to build a music collection (especially during a time when you couldn't buy just that one song you liked from iTunes, so you had to take a gamble and get the whole album.)

But looking back, how did this business model work? How were they making any money selling CDs at what amounted to $2 a disc (8 for the price of 1 at $16)? Did enough people actually regularly buy from them (their prices were on par with retail prices at the time, or maybe slightly higher), or was there something else? I know that the discs they shipped were marked with "Made for BMG" on them, which makes me wonder if there was some discount with the manufacturers, but I would love to know more about this if anyone has insider information.

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[deleted]

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I think most people either forgot or were unsuccessful at stopping shipments after the first one. The money was in the future shipments of music and I think a lot of people ended up getting orders they didn't really want but didn't go through all the work of cancelling.

ResampledTwizzlers

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Exactly what happened. Hell I always get deals on x box subscriptions then I dont cancel and get hit with a full priced month.

Back then you had to call to cancel it so I'm sure people who didn't really care just let it keep charging them and many people who meant to cancel it forgot.

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StaminPrimer

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Interestingly there is a show that goes into this. The Goldbergs S3 E18 is called “12 Tapes for a Penny.” The way I recall them explaining it is you got to pay that $1 for the cassette tapes, but in reality after so long of a time having them you would get charged. Or go to collections.

However, it was easily scammed by consumers, which is once again discussed within the shows. You could write down fake information on the label (such as a false name) and have the tapes sent. This way the company could not come back later using legitimate information to take recipients to court.

It is very much the same way torrenting works at this point. You use a torrent program to download the information you want. Most of the torrents have some sort of tracking software embed that allows the actual company to track you back to your ISP, and that will lead to a call or email about the issue. If you don’t respond, then they don’t pursue you any further.

Malverde32

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This is an example of weaponized music. They only wanted to brain wash kids. With gangster rap music and other morally dropping stuff. CIA funded, otherwise how did they make a penny lol?