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FAQ: CD CLUBS

Version: 1.6
Last Modified: 3/28/94


I'm going to start posting this FAQ every few weeks or so, I figure it
will reduce the traffic on "rec.music.cd" by 5% or so. Also. I decided not
to post it more widely than this, because if we *all* take advantage of the
deals, they won't be offered any more. You all on "rec.music.cd" have given
me so much useful information that I am posting this to return the favor.

Please help me keep up-to-date on the information, okay? I'll be happy to
credit you for any information that goes in. I don't believe I can provide
any information that isn't already listed here, or at least inferrable from
what is already listed here, so please don't ask me any questions. I will
be reading your postings to "rec.music.cd" and update this note accordingly.

Thanks,

Carl Ponder

ps - Special thanks to Malcolm Humes, James Fowell, Glenn Lea, Troy Biles,
Bob Neldorf, Jerry Dallal, Victor Ortega, Benn Tannenbaum, Bob Retelle,
Bruno Fernandes, and all the dedicated readers of "rec.music.cd" who
have provided me with so much invaluable information.


Questions Answer Sections
--------- ------ --------

Can I rejoin the club if I quit? yes. 1.[2]
Are the CD club disks as good as the store ones? open. 6, 7
Can I order from backissues of the catalogs? yes. 5
Can I use numbers from catalogs to order from ads? yes. 5
Should I use the half-price coupons? no. 1.[2]
Which club is better? depends. 1.[1]
What is the best deal to order under? depends. 1.2, 3
What is the phone number for BMG/Columbia House? see below. 4
Can I order Boxed sets through the introductory offer? BMG only. 1.[7]
Why does BMG charge Sales Tax? see below. 9
How do I stop getting these cards every month? see below. 10
What if they send me a CD that I don't want? return it. 10
What do I do with a defective disc? return it. 10
Do they have Beatles or Pink Floyd? not really. 5
Where did all this junk mail suddenly come from? surprise! 8



1. Getting the most CD's for your $$$
-------------------------------------

If you follow these rules you will pay on the average of $3 per CD. You
will only beat this price in the "bad" cutout bin. The listings are
strictly domestic CD's, and mostly high-volume stuff like the latest
U2 etc., or stuff that they couldn't sell, like "Best of Slim Whitman":

[1] As a rule, BMG is cheaper than Columbia House. Columbia House
has a *much* richer inventory. What I do is order everything I
can through BMG, and order the rest through Columbia House.

[2] The Golden Rule: Join, buy the minimum you have to, then quit.
Do *not* use their so-called "special member deals", like
buy-one-at-half-price. You just bought ten-for-next-to-nothing,
half price is *not* a good deal in comparison. If you want more
CD's, then you rejoin!

The stated policy of both Columbia House and BMG is that they
reserve the right to refuse any application. I have been a member
of both clubs maybe 7 times. Evidently the policy is that as
long as you pay your bills before you quit, they will be begging
you to rejoin almost immediately. This is probably due to the fact
that the $3 average that you payed per CD has already covered all
the costs plus some small profit.

[3] The best deals come out around Christmas time. BMG advertises offers
for 10-for-1, 10-for-1/2, or even 10-for-a-penny, as opposed to
their usual 8-for-1 offer. Columbia House offers 10-for-1 or
10-for-1/2. I believe that BMG has higher shipping costs, so
this offer (and *only* this offer) is cheaper than most BMG
offers you will see.

These offers will cost you an average of $3 or so, for all the CD's,
taxes, shipping and handling, even the stamps you have to use. The
"normal" Columbia House offer of 15-for-the-price-of-six will cost
you more like $5 or $6 per CD. You'd be better off to wait until a
special offer comes around (see section 3). The deals where you sign
up your friends are *not* as good as these, if you do the arithmetic.
However, if you can't wait for a good offer to show up, you might try
using the "buddy system" where you alternate sign each other up.

[4] The prices of the CD's are not all the same. Take the expensive ones
as the "free" selections, pay for the cheapest ones. You'll save
a couple bucks this way.

[5] Once you've joined BMG, you will receive an offer "buy one get two
free". Use *this* offer to fulfill your membership. You average down
your price considerably by getting the two extra CD's. You may have
to stay in the club almost a year before this offer shows up. Also,
different people receive different offers at the same time. If you
*and* your housemates are in the club, read your card to make sure
you have the right offer.

[6] Apparently you can sign up your roommates, girlfriend, etc. even if
you live at the same address. It's handy to split memberships if
you already have *almost* everything you want.

[7] Getting double-CD's and multiple-CD boxed sets is complicated.
Columbia House only allows *some* double-cd's to be ordered in
their introductory offers, and does not allow you to order them
if you join through the offers listed in their catalogs. You *can*
get the double-CD's in your follow-up orders. Sets with "N" CD's do
not always count as "N" for fulfilling your obligation. They are
inconsistent with this, you would be best off to call them and get
the name of the representative

BMG allows you to order double- and multiple- sets in the introductory
offer, buy-1-get-1-free, 60% off offers, etc. (James Fowell, Glenn Lea)
.
In the introductory offer, you just put the number of the N-CD set in
one of the entries, and leave (N-1) of the entries blank so it adds up
right.



2. Sample Price Calculations
----------------------------

Columbia House 10-for-1/2 ("Department KGN") offer: (Troy Biles)

# of CD Shipping 6.25 % Sub-
CDs Price & Handling IL Tax Total
==== ===== ========== ====== =====
1-6 FREE 9.14 .57 9.71
7 8.49 1.99 .66 20.85
8 FREE 1.99 .12 22.96
9 FREE 1.99 .12 25.07
10 FREE 1.99 .12 27.18

Number of CDs = 10
Total Cost = $27.18
Cost per CD = $2.72



BMG 8-for-1/2 offer, using buy-one-get-two-free to complete the deal:

Transaction Cost (including taxes and shipping)
----------- ----------------------------------
Initial 4 "free" CD's $ 7.40
Half-price obligation CD, $13.94
plus two extra "free"
ones.
Three final "free" ones $ 5.85
Stamps for all transactions, $ 4.35
including months of refusing
the "monthly special"


Total $31.54
Per CD ($total/10) $ 3.16



3. Available Deals (unconfirmed)
--------------------------------
Deals vary throughout the year. Some are only available for limited time,
or through exotic sources. The ads you see can even vary between different
printings of the same edition of the same magazine, like TV Guide or Rolling
Stone. If you read the fine print, some will forgo shipping charges. Here are
some of the ones that you will find reported:

Columbia House:
*10-for-1/2. (Call the number below, ask for department KGN).
8-for-1-cent, buy 6 more. (Standard offer in most magazines
and newspapers).
4-for-1. (Showed up on Prodigy).
4-for-free, for buying a Sony CD player.
?-for-free, for signing on with AT&T.

BMG:
10-for-one-cent. (This showed up in Rolling Stone around January 1994).
*8-for-1. (Standard offer in most magazines and newspapers).

* This is assumed valid until known otherwise, and is the best offer known
to be avialable.


4. Phone Numbers
----------------

Columbia House New Member Service: 1-800-982-4242 (to join)
Columbia House Customer Service: 1-800-457-0500 (to order catalogs)

BMG: 1-317-542-0414 (their 1-800-WAMADEUS number went away around 1992,
probably because of overload from "rec.music.cd"
subscribers...)


5. Inventory Listings
---------------------

Columbia House periodically sends out a "directory" which contains several
thousand titles. This is *not* their entire inventory. A good rule of thumb
is that they should stock all the CD's by the same group/artist under the
same label. You can call them at the Customer Service number listed above
to order catalogs or get individual catalog numbers, even if you are not
yet a member. Tell them you are about to join.

BMG does *not* supply any such a directory. A comprehensive directory is
maintained by Bob Neidorff which he periodically posts to "rec.music.cd",
"rec.music.info", and "rec.audio", and is available directly by FTP'ing
to PERCH.NOSC.MIL, and doing a "get [.cd]bmg.txt". He recently stated
that he didn't have time to continue maintaining it; any takers out there?
Brian Wilson asked Columbia House for permission to create an online
directory of their inventory, and the answer was an empthatic *no*. Evidently
this would jeopardize their copyright unless they went through formal
contracts etc. which, of course, they have no intention of doing.
[News flash: evidently BMG has started distributing a comprehensive catalog
of their *classical* holdings, due to member requests. Hopefully they will
produce one for their rock 'n roll holdings, stay tuned...]

Catalog numbers are generally good indefinitely from both Columbia House and
BMG. It pays to save old catalogs. CD's *do* drop out of inventory occasion-
ally, although it is more common for them to list something and then have the
contract fall through. If you do not have access to old catalogs when you
join, you can still save up ads from newspapers and magazines until you
find enough stuff that you like.

Evidently you can use numbers directly from the catalog when joining BMG
through posted ads. I just did this and got away with it. I always join
Columbia House through their *telephone* offers (see #3 & #4) so I just
tell them the titles and let them find the numbers.

There are some significant artists, like The Beatles and Pink Floyd, that
just don't make themselves available to the CD clubs. Some of the weird
stuff does, like The Wall Live in Berlin, or the Beatles with Tony Sheridan,
the Star Club recordings, etc. I read that Geffen and some other labels no
longer supply the CD clubs, due to pressure form Tower and other outlets that
are mad about being undercut by clubs (I don't shop there anymore!). Peter
Gabriel's US was scheduled to come out in Columbia House but get pulled when
I tried to order it. You can still get some of the old Peter Gabriel.


6. The Quality Debate
---------------------

There is an ongoing debate as to whether the club CD's are as good a quality
as the ones you buy at the store. Both BMG and Columbia House (CBS) do sell
CD's on the commercial market, so presumably many of their CD's will be
commercial-grade. BMG prints much of their stuff under license. Here are two
possible reasons why club CD *might* end up being worse:

[1] To cut prices, they may be pressing CD's too fast, which
could conceivably raise the error-rate past the error-correcting
capability of the coding scheme. Records I bought from the old
RCA club sounded pretty bad for this reason.

[2] They may be "mastering down" the quality of the mix. They *do*
sometimes "master down" their artwork, omitting liner notes, using
a poor-quality image on the booklet, or shrinking foldout posters
down to the size of the normal booklet.

There is no hard evidence that either of these is the case. In a year or so
we will be able to take binary dumps and do a "diff" to see if the digital
stream is the same or not. In the meantime, there have been claims by people
that they could actually *hear* a difference, which substantiate #1 or #2.
Another person claimed that the track positions were actually *different*,
which substantiates #2.

If they are "mastering down", here are the only motives I can think of:

[a] They are clearing inventories of a CD that was later remastered;
they sell the "improved version" at the store, and the old one
at a discount through the club.

[b] If the CD is printed under license, they may have licensed a
binary of an earlier mastering and be unwilling to buy the
upgrade.

[c] If the CD is printed under license, the supplier may actually be
corrupting the binary so the licensed CD's will not be as good
as (and hence less competetition with) their own pressings.

I think if this is indeed going on, it is on few titles as most people
are claiming that they can't hear any difference. Once the "digital diff"
is easy to do, we can start posting warnings about poor-quality CD's and
start thinking about lawsuits etc.



7. Resale Value
---------------

BMG blocks out the bar code on every CD they sell and instead prints the words
"Manufactured for BMG Direct Marketing, Inc. under license", and they print the
CD's selection number on the back, the booklet, and the CD itself. This is
pretty conspicuous, I have found BMG disks in the used bins at pawnshops and
known that I could order them new from BMG at a lower price than they were
asking. Some used-CD stores refuse to accept BMG disks.



8. Ethical Issues
-----------------

Since I've received some criticism, I felt I should add this section. If
you follow the "standard" algorithm of becoming a preferred member of the
CD clubs, you will be buying CD's at an average price of $10-$17 with the
disadvantages of limited choices, long turnaround time, and their occasional
screwups. You would be better off ordering from Noteworthy Music
(ph. 1-800-648-7972) which has 10x the inventory, princes in the $9-$12 range,
a complete catalog, and a delivery time of a few days.

I believe that the cost of manufacturing a high-volume music CD is about
$2, *including* manufacturing and copyrights. CD's are expensive because
people are willing to may money for high quality. The free-market *might*
be able to normalize this situation over time, as long as we always go
with the cheapest source. On the other hand, stores like Tower have complained
about being undercut by CD clubs, and some labels like Geffen are limiting
what CD's they issue through the clubs. A notable example is "Us" by Peter
Gabriel, which was pulled off of their inventory list.

The "super" deals are posted as a way to attract new customers. Here's a
quote from BMG's vice president, Oren Testa:

"We make this offer simply because experience has shown that it is a sound,
economical way to acquire new friends for the BMG Music Service. Many of
our members continue with us for three, five, even ten years. We make a
fair profit while you keep on saving." (Victor Ortega)

I believe that the clubs still cover their costs under all these deals,
with the *possible* exception of BMG's 10-for-one-cent, where they may
*still* be making it all back with their inflated "shipping charges".
On the other hand, if the clubs all go out of business, I'll be back
buying my CD's for $10 from Noteworthy. In the meantime:

[1] Pay your bills.

[2] Don't invent fictitious subscribers.

[3] Read the fine print *always*, before you join, while you're in,
and as you quit.

[4] Track your costs. You will be able to buy more efficiently as
you understand where to put the money.

[5] Always return the monthly card. If you don't want the monthly
selection, check the box that says this.

The clubs also seem to make money by selling your address to various
junk mail lists. They call this a "benefit", giving you the opportunity
to order all sorts of neat stuff. If you send them a note asking to be
taken off of the junkmail lists, they should do so. I think there is
a way to do this more generally through the post office, I just don't
remember how.


9. BMG's Sales Tax
------------------

Another question: whay does BMG charge sales tax for out-of-state orders,
and do you have to pay it? Here's the answers so far:

If a company has a business presence in a state then they have to
collect that state's sales tax, even for purchases made from a unit
located outside that state. (Jerry Dallal)

When you buy something in a state that has a sales tax, you're supposed
to pay the state... no matter who or where you buy it from. In Michigan,
there's a form in the annual Income Tax booklet that you're supposed to
fill in, telling them all the stuff you bought from vendors in other
states and enclosing the proper 4% tax on all of it... (yeah, right).
Big mail order places like BMG collect the sales tax at the rate for
wherever you live and send it to the state treasury department to save
you the trouble of having to send it in voluntarily. (BobR)

I did some checking a few years back about this-- it seem charging tax on
GOODS received is a definite must, however, charging tax on SERVICES (i.e.
shipping and handling) is a bit vague. I usually refuse to pay that portion
of the sales tax (it's not that hard to figure out) and have never receive
any grief from BMG or Columbia. It just seems like one more way these
companies want to separate us from our money. (Benn Tannenbaum)


10. The Monthly Selection
-------------------------

You will generally *not* want the selection-of-the-month. Sometimes it is
offered at a slight discount, make sure that fills your obligation. I just
keep filling in "send nothing at this time" until I'm ready to "cash in the
cards", where I order everything I want all at once. This reduces your
shipping and handling fees with Columbia House. With BMG, I wait around for
the "buy-1-get-2-free" offer to fill my obligation. I also keep track of how
many stamps I've used so I can account accurately.

You may get a monthly selection that you didn't want -- you may have been
on vacation when the card was sent to you, or it got lost in the mail. DO
NOT OPEN IT. Mark it "return to sender" and send it back. If you *have*
opened it, contact the club and ask for a return shipping label. (Do the
same thing if you got a defective disc -- they *will* replace it for you,
at no charge). If you return too many discs, they will kick you out of
the club.

If you *don't* want to worry about the monthly selection, tell them that
you want to change to a plan where they don't automatically assume that
you want it. I believe that this was called a "positive option" or
something like that. You have to already be a member "in good standing",
i.e. you already bought your obligation CD's. I'd have quit the club at
this point, so I never persued this.




Appendix A -- Specifics on Columbia House Membership
----------------------------------------------------

Troy Biles wrote this note on the Columbia House "standard" offer, which
describes Columbia House services and all the details of their offers.



Columbia House CD Club
1400 North Fruitridge Avenue
Terre Haute, IN 47811


Customer Service 800/457-0500
Mon - Fri 6 AM to 9 PM
Saturday 7 AM to 3 PM
(Central Time Zone)


Shipping & Handling (subject to change)
=======================================
1.99 = 1st CD and all FREE CD Certificates
1.59 = 2nd CD
1.39 = Each Additional CD



Price of CDs
============
Regular Price CDs are usually $14.98, $15.98, or $16.98
Some CDs are Regular Priced $12.98 or $13.98
Sale Price CDs are usually $7.99 to $9.99
Some Sale Price CDs are as low as $3.99 to $5.99



Columbia Houses' Introductory Membership Offer (Dept. KGN)
==========================================================
6 FREE CDs when opening new membership.
Buy just 1 CD at one-half Regular Price within the next year.
Receive 3 FREE CD Certificates after paying for first CD.
Nothing more to buy. Membership can be canceled after that.
Shipping & Handling charge added to each shipment.
Sales Tax added to all orders.


# of Shipping 6.25 % IL
CD's CD Price & Handling Sales Tax Sub-Total
---- -------- ---------- --------- ---------
1-6 FREE 9.14 .57 9.71
7 8.49 1.99 .66 20.85
8 FREE 1.99 .12 22.96
9 FREE 1.99 .12 25.07
10 FREE 1.99 .12 27.18


Number of CDs = 10
Total Cost = $27.18
Cost per CD = $2.72


Note: The cost per CD will change as you buy more CDs. This
is just an example of the introductory membership's
value. Cost does not include postage for mailing back
reply cards. (Use the Toll-Free Phone number instead!)


New Member Service (800/982-4242)
=================================
To join, pick six selections from any Columbia House advertisement
or magazine. Call New Member Service and say you would like to join
Columbia House CD Club under Department KGN. They will ask for:

Your Name and Address
Your Birthday
Do you have a VCR?
Do you have a Credit Card? (They don't ask for any Card #'s.)
What are your selection Numbers?
What is your main music interest?
Dance/Pop Modern Rock R&B/Soul Hard Rock
Soft Rock Heavy Metal Rap Easy Listening


Selection of the Month
======================
About every four weeks (up to 13 time a year) you'll receive the
Club's Music magazine, which describes the Selection of the Month for
your music interest ... plus many alternates. In addition, up to six
times a year, you'll receive sales and other music offers.
If you wish to receive the Selection of the Month, you don't have
to do a thing -- it will be shipped automatically. If you prefer an
alternate selection, or none at all, fill in the response card and mail
it by the date specified.

* Mail back the card by the specified date. You indicate on the
card that you want to:
* Rush ONLY my Selection of the Month.
* IN ADDITION TO my Selection of the Month, send other CDs.
* INSTEAD of my Selection of the Month, send other CDs.
* Send nothing at this time.
* Call the toll free number for Customer Service to do any of the
same options that you have on the mail-in response card.


Customer Service (800/457-0500)
===============================
* Cancel Selection of the Month.
* Order any CD. (This can be faster than sending in the card.)
* Check on the status of an order.
* Check on the availability of a CD or an Artist.
* Questions or Problems.
* Request that you be removed from Mailing Lists going to
outside companies. (This reduces the amount of junk mail you
would receive because you joined the CD Club.)
* Request to be placed on the Order-Only list. This option may
not be allowed until after you order your first CD and it may
depend on the operator who answers your call. If they tell
you no, then try again later in a week or two. By using this
Order-Only option, you do not have to do anything concerning
the Selection of the Month. You will still get a Selection of
the Month card, but it will have a note on it that you will
have to return the card to receive the Selection of the Month.
It will NOT automatically be sent to you.



Columbia House in Canada (Bruno Fernandes)
==========================================

Columbia in the USA will not cater to Canadian residents. Columbia House
operates at least in Ontario and Quebec with some small differences. In
Ontario it is illegal to give free discs to a sponsoring friend: Section
37(2) of the Consumer Protection Act prohibits the giving of incentives.

Very recently though Columbia has created a little work-around by giving
the joining member an extra free disc. Now the deal for a person joining
under sponsorship is: 8 for 1 penny. Then you can take another two at a
discount and they WILL count toward the agreement. Then the person need
only buy 5 more at regular price - most CD's are $18.98 regular (range
from 15.98). So...

8 for $ 0.01
1 for $ 6.95
1 for $ 4.96
------------
$11.92 CD-Total
$ 1.85 Special Shipping & Handling
------------
$13.77 Sub-Total
$ 0.95 8% Provincial Sales Tax (on CD-Total) (% per province)
$ 0.96 7% Goods & Services Tax (on Sub-Total) (same for all prov)
------------
$15.68 Total
============

Now for the 5 regular...

$94.90 5 Discs * 18.98 each (can buy some as low as $15.98)
$ 1.99 Shipping for 1st Disc
$ 1.79 Shipping for 2nd Disc
$ 3.57 Shipping for next 3 (3 * 1.19)
------------
$102.25 Sub-Total
$ 7.59 8% PST (on 5 Disc price of $94.90)
$ 7.16 7% GST (on Sub-Total)
------------
$117.00 Total
============

Initial 10 = $ 15.68
Regular 5 = $117.00
--------
Total = $132.68 / 15 Discs = $8.85 per Disc.
========

Most MALL record stores in the Toronto area sell CD's for $17-$22. In
Downtown Toronto, the BIG stores from the same chains will sell for
$13-$20 with an average of $15 or $16. Used shops will sell for $7-$11
but most common is $9-$10. This is all before TAX. The buyer must add
an additional 15% to all this (PST+GST). Note that there will sometimes
be clearance prices or a special deal. HMV offers Buy Ten get one Free
(the ten must be at least $15.99 and the FREE one can be up to $25).

The Columbia figure above is even better than buying used from the US at
$6 per disc USED. The exchange today was scary - it cost $1.39 CDN to buy
$1 US. I've bought some discs this week from someone in the US for $4.50
each plus shipping. All in all it came to $7 CDN per disc.



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