Columbia House Files For Bankruptcy

Columbia House: RIP

The days of eight albumr or CDs for a penny are over.  At least when it comes to physical product.

COLUMBIA HOUSE's parent company, FILMED ENTERTAINMENT, INC., filed for Chapter 11 bankruptcy protection yesterday in a MANHATTAN court after more than two decades of declining revenues, according to NPR.COM.

COLUMBIA HOUSE moved exclusively to DVDs in 2010 after its annual revenues peaked in 1996 at $1.4 billion, but by last year, revenues had dwindled to just $17 million.

COLUMBIA HOUSE "started in 1955 as a way for the record label COLUMBIA to sell vinyl records via mail order," according to the A.V. CLUB, which adds that it "continually adapted to and changed with the times, as new formats such as 8-tracks, cassettes, and CDs emerged and influenced how consumers listened to music."

COLUMBIA HOUSE was renowned for its deals, offering a dozen CDs, tapes or vinyl albums for just a penny, though many an unsuspecting consumer was trapped into paying for unwanted product long after that initial subscription ran out. 

How did COLUMBIA HOUSE make money?

"The phrase you want is 'negative option,' " explained NPR MUSIC contributing editor PIOTR ORLOV, who worked at COLUMBIA HOUSE as Director Of A&R and marketing between 1996 and 1999, referencing the idea of hooking people with a good deal and then roping them into a longer-term contract, which forced you to buy a number of titles at regular prices up to $20.

COLUMBIA HOUSE signed multimillion-dollar contracts with companies such as SONY, WARNER MUSIC and others that allowed it to produce its own CDs.

ORLOV insists COLUMBIA HOUSE was valuable in its time.

"If you didn't have a record store, this was the closest you got to having a good music selection. It gave the ability to buy CDs and send them to your house even if you lived in [the middle of nowhere]."

Kind of like SPOTIFY today.

The FEI statement said the decline was "driven by the advent of digital media and resulting declines in the recorded music business and the home-entertainment segment of the film business."

Or, as ORLOV sadly put it,  "No one cares about owning CDs anymore."

« see more Net News