First Side Hustle: Reselling CDs

Soon, I’ll be documenting every way that I’ve ever made money outside of paid employment. You can think of this as a full history of the stealthy and wealthy story. For the first one, you’ll have to hop in the DeLorean with me.

My first side hustle: Reselling CDs

Remember those Columbia House and BMG offers that you would see in the newspaper each week back in the day?  You know, the ones that offered you 11 CDs for the price of one? If you are between the age of 35 and 55, chances are that you have either considered signing up, actually signed up, or know someone who has. Well, I signed up.

My Dad, brother and I split the cost of a membership and each picked out a few CDs. A couple weeks later, Hootie and the Blowfish, Matchbox 20 and friends arrived at my doorstep and I was a happy 14-year-old. But the story doesn’t end there.

Notes for our readers under 25 years old:

A “CD” was basically a streaming music file, only on a round piece of plastic that required a special device to play music from it. This process typically lasted about three weeks before listeners like me accidentally scratched the CD, transforming it into a soundless piece of plastic. 

A “newspaper” was a blog that came out once a day, then turned into wrapping paper after 24 hours.

Anyway…after going through the Columbia House/BMG process 2-3 times and purchasing about 30 CDs “for the price of 3” (probably more like the price of 15), I started to think. This company had a ton of CDs in their catalog and it was constantly changing as new music was released. They probably had warehouses full of thousands of crappy CDs that nobody wanted anymore. After all, this was a time when groups like Marky Mark and the Funky Bunch actually came out with more than one studio album. Where did those CDs go?

Sourcing the product

I called BMG, asked a bunch of questions, got transferred around, and confused a few people. Eventually, I got a call back from the right people. The right people were the ones responsible for getting rid of the crappy round disks after nobody bought 11 of them for the price of 1. Eventually, my brother and I worked our way into a deal where we would purchase their closeout inventory in bulk for the price of 15 cents per CD. In the previous sentence, “bulk” didn’t mean a few hundred. It meant a few pallets of CDs. A truckload arrived at our door three or four weeks later. We had our parents park the cars in the driveway and our garage was transformed into a warehouse for the remainder of the year.

A bunch of really crappy CDs

We tore into the boxes, hoping for the hottest new releases that we could instantly flip for some quick cash. Instead, we found a few dozen CDs from a rapper named Nasty Nardo, 180 copies of Joe Nichols’ first studio album, and a few cases of the aforementioned Marky Mark’s classic “You Gotta Believe.” All in, there were about 100 different albums in quantities between 100 and 500 each. Not exactly what we were hoping for.

Making lemonade out of really crappy CDs

Sometimes, you have to simply take inventory of what you have, gauge the market demand, craft a strategy and hustle. We came up with a few different methods of distributing the CDs.

  1. Selling and trading them in at local record stores. There was a chain of electronics and music stores in our area at the time (which shall remain unnamed) that would exchange CDs that were in their database for $1-$7 each, or add an extra 35% to that if you wanted store credit. After about three visits, we figured out which CDs they would accept, then carefully randomized our “collection” to appear normal. They accepted about 75 CDs per visit. We visited about 40 times before we were banned from every store location in our city and later found out that they actually had our pictures behind the counter. The record store was through.
  2. Repeated step 1 with Pawn Shops. This didn’t last nearly as long. Pawn shop employees are shockingly savvy purchasers of used goods.
  3. We sold the individual albums that had a market for them on eBay. This was pretty much the only viable peer-to-peer eCommerce platform at the time. The big winner here was an album called “Sleeping with the Enemy” by a rapper named Paris, which sold about 60 copies for $5-10 each. As a side note, I still have one copy of this album. I still like it.
  4. Once the individual albums no longer had a market, I packaged them in boxes of 200-400 and sold them on eBay as “bulk lots” for enterprising buyers who wanted to resell them and get banned from their own local record stores. This typically netted about $1 per CD, but cleared out the rest of the inventory.

All in, this process took about six months and netted just over $20,000 in profit. Probably not something that I would tackle today (even if CDs still had value), but as a kid who wasn’t even in high school yet, it wasn’t a bad gig. Thus, a hustler was born and I set off on my merry way, having discovered eCommerce and the power of buying other people’s junk and making money on it. This theme woulds reappear several times over the next decade or two of my life.

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