Long before there was Napster and Spotify, there was Columbia House. For anyone under 35, they may have never heard of Columbia House, but for those of us who grew up with the lure of 11 tapes for a penny or 13 CDs for $1, its demise felt like a final goodbye to a bygone era.
Columbia House was started by CBS in 1955 as a mail order album delivery service. CBS sold Columbia House to Sony, and in 1989, Time Warner bought a 50% stake in Columbia House as a part of a settlement between Sony Corp. and Warner Bros.
It proved to be a profitable move. By 1996 and as CDs were hotter than ever, Columbia House earned $1.4 billion in revenue, according to The Hollywood Reporter. At its peak, Columbia had an estimated 8 million customers, and when combined with its biggest competitor BMG, accounted for one-third of all CDs sold in the United States.
Columbia Failed to ‘Keep Up’ With Technology
Columbia House began to lose money after it failed to keep up with technology, Forbes reported. They just weren’t fast enough, said a source. Competitors like Amazon were far better at software development. At first, Columbia House was hammered by e-commerce, then by iTunes and streaming.
The fact that it failed to keep up with technology and consumer demands is what led to the company’s obsolescence.
According to Forbes, Columbia House has changed hands on several occasions over the past 15 years. The last time it sold CDs was in 2010, before morphing from a CD club to a DVD mail order business.
Its current owner, Filmed Entertainment is claiming $62 million in liabilities with $2 million in assets in hopes of selling off its assets while under Chapter 11 protection.
Among its creditors are Universal, Warner Bros., and Lionsgate, according to The Hollywood Reporter.
Need a York bankruptcy attorney?
Are you interested in filing a Chapter 11, or another chapter under the Bankruptcy Code? To learn more about your debt-relief options, contact Dethlefs, Pykosh & Murphy Law for a free case evaluation!