Selling eight CDs for a penny may not seem like a sustainable business model. But that gimmicky prospectus kept Columbia House record club going for more than four decades, until the mass disc seller finally filed for Chapter 11 bankruptcy Monday in New York City.
At its peak in 1996, Columbia House was raking in $1.4 billion (according to Rolling Stone) by preying on the collectivist tendencies of young music fans with an infirm grasp on economics. The A.V. Club had insiders explain the fuzzy biz model here.
Last year, Columbia House managed only $17 million in sales, which still seems like a lot, all things considered, until you realize it's $63 million in debt to more than 250 creditors.
Company director Glenn Landberg blamed streaming for the demise of Columbia House (which was rebranded as Filmed Entertainment and primarily began selling DVDs in 2010). Landberg had this to say in the filing:
"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."
Columbia House is survived by 110,000 (!) current members and millions upon millions of the formerly scammed who, among their ranks, include 40 percent of Hit Parader's former readership, my older brother Jeff, and French Stewart's character from 3rd Rock from the Sun.