But perhaps his most ingenious promotion was the Gold Box — a "buried treasure" in the company's advertising that offered free records to subscribers who found them, filled them in, and mailed them back. It rewarded obsessive behavior, identifying record-club subscribers as geeky fanatics willing to spend hours combing through the company's advertising if they thought they might get a free record out of the deal. In a famous (to advertising junkies) speech he gave at MIT a full 25 years before the Internet was conceived, Wunderman described the sales relationship of the future as "interactive."
In a pre-Web world, his interactive Columbia House concepts led millions to mail in their pennies. There was nothing like the elation of getting that first shipment of records for essentially nothing — but that ecstasy was quickly offset by the anxiety of finding out that you owed $34.74 for those Sir Mix-A-Lot and Crash Test Dummies discs you never asked for. Now you were on the hook: either you could fulfill your obligation, or start ducking collection agencies.
Unless, of course, you could find a way to cheat the system. For a large contingent of the record-club membership, scheming a way to get more free records — usually through fake accounts and multiple addresses — was the ultimate caper. Everyone had a friend of a friend who had supposedly done it: signing up using a false name, or having the records sent to a conspirator's address. After all, in the pre-supercomputer age, it wasn't hard to stay one step ahead of Columbia House's detectives.
The patron saint of the records-club schemers would probably be Joseph Parvin. In 2000, the 60-year-old was prosecuted for having received, between 1993 and 1998, nearly 27,000 CDs, using over 2000 fake accounts and 16 P.O. boxes. All told, he bilked Columbia House (and rival BMG) out of $425,000 of product, selling them at flea markets. For anyone who was paying attention when his arrest made headlines at the time, it was kind of like finding out that Paul Bunyan is real — someone actually was able to cheat the system the way everyone dreams of.
END OF AN ERA
In many ways, though, the real victim of the clubs wasn't the consumer, but the recording artist. As record clubs' popularity mushroomed, the introductory incentive deals became more and more important to the success of the whole system. Since these incentive records were considered "giveaways" by both the clubs and the labels, artists were not paid royalties on them. Additionally, artists' royalties on even normal record-club purchases were typically far below the industry standard. The artists' financial losses became more noticeable in the CD era: for one, record clubs began to account for huge percentages of overall sales of certain blockbuster albums. On top of that, the cost of manufacturing a compact disc dropped to a fraction of what it had previously been to create vinyl.
It's important to understand that record clubs not only sold and distributed their records, they pressed them as well. What this meant to an artist during the 1990s CD boom was that while they were losing royalties hand over fist, the clubs were netting a fortune from low costs, high sales, and minuscule royalties.
