Parent of Columbia House files for bankruptcy protection while it tries to find a buyer
The mail order service was launched in 1955 by Columbia Records and still has 110,000 members, the company claims – though it has no more employees and now sells only DVDs
The offer was simply too good to pass up: get two or three records for a penny and all you have to do is buy a couple more sometime in the future. That was the deal millions of youngsters signed up for with the Columbia Record Club starting in 1955. Initially designed to be as an experiment to market music directly by mail by CBS/Columbia Records, the business expanded to offer other labels and became Columbia House.
The owners of the record label eventually was Sony, and it decided to sell off Columbia House to the NYC investment firm The Blackstone Group in 2002. Why Blackstone would have thought it a good investment in 2002 is a bit hard to understand. Nostalgia?
Yesterday, Columbia House said it had filed for chapter 11 bankruptcy protection, a company with $2 million in assets, no employees, but with still 110,000 members. That seems amazing, that so many would still be members, but remember, there are 2.1 million AOL dial-up customers still. Yes, you’ve got mail, and it is an Andy Williams album, yippee!
(Actually, the company no longer sells music, having exited that side of the business in 2010. Now it only sells DVDs of movies and television series in the US.)
Columbia House is today owned by Filmed Entertainment Inc. which said in its filing that digital was to blame.
“The business has been in decline for approximately two decades, driven by the advent of digital media and resulting declines in the recorded music business and the home-entertainment segment of the film business,” the company said. “Columbia House’s revenues peaked in 1996 at approximately $1.4 billion and declined in almost every year since then.”
Amazingly, the company said its operations will continue and members will continue to receive their CDs and DVDs, while to hopes to find a buyer for the company. (Maybe they could offer the company for $1, but require the new owner to buy three more companies in the future?)
The company today uses third party operators to do fulfillment.
Some businesses just don’t know when to call it quits, they just evolve. There is a lesson in there somewhere, but I’ll leave that to you.
Were you ever a member of Columbia House? My friend and I joined the club around 1971 in order to get the three record set Woodstock, the record being too expensive for us at the time. But since we only received the one LP set, we had to trade it back forth week and after week. Then, we were forced to buy a certain number of other records at prices that were way higher than retail. I don’t remember a single one of those records, or where I got the money, maybe my friend bought the records.
But the really bad part of the agreement was that Columbia House would tell you what the featured record was for that month, and if you didn’t respond it time they would mail it to you… and bill you. (That’s why the joke above about buying three more companies.)
Once you reached the required number of record (or tape) purchases, you could finally, and mercifully, cancel your membership.