Columbia House, the mail-order company that once offered customers popular records, tapes and CDs for next to nothing, has gone out of business.
Filmed Entertainment Inc., the parent company of Columbia House, filed for Chapter 11 bankruptcy protection Monday, and is seeking to sell off the remnants of what was once a billion-dollar business.
Columbia House merged with BMG Direct in 2005, and stopped dealing with music entirely in 2010, opting to focus all of its efforts on DVDs, according to PC World. Filmed Entertainment Inc. acquired the company two years later where it continued to stagnate.
Despite its popularity at one point, the company soon became loathed for terms concealed in its fine print: Members could get a stack of albums for 1 cent, but couldn't quit the service until they purchased several more at full price, which were, in fact, higher than most record stores and included inflated shipping and handling charges. To top it off, users had to refuse offers of new music by mail or they'd be charged for those albums as well.
One user on Twitter posted a parody of a Columbia House magazine ad from 1975:
At its peak in 1996, Columbia House raked in a yearly revenue of $1.4 billion, but sales declined every year since then, falling to just $17 million last year. In court papers obtained by the Wall Street Journal, Columbia House cited the continuing irrelevance of optical media as the reason for its downfall.
"This decline is directly attributable to a confluence of market factors that substantially altered the manner in which consumers purchase and listen to music, as well as the way consumers purchase and watch movies and television series at home," said FEI Dirctor Glenn Langberg.
Columbia House now values its assets at about $2 million, but carries about $63 million in debt, almost half of it coming from long-term pension liabilities. The company has no employees and all of its services are handled by a third party.
