Columbia House, a relic of the era when physical records and movies were king, has filed for bankruptcy after nearly two decades of declining revenue. The mail-order music and video retailer once boasted an annual profit of $1.4 billion at its peak in 1996 but in 2014 only tallied $17 million in revenue. According to the bankruptcy filings obtained by the Wall Street Journal, Filmed Entertainment Inc., the parent company for Columbia House cited the constantly evolving digital and online landscape and eroding physical CD sales.
The decline of physical CDs, which the music industry sold approximately $13 billion worth in 2000, declined to only $1.85 in 2014 and the rise of streaming as a more consumer-friendly option in the era of the cloud contributed to the company's 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," the company's director Glenn Landberg wrote in the bankruptcy filing.
Columbia House grew as a platform that stated with records and evolved with the technology into 8tracks, cassettes and eventually CDs. At its height, the service became known for its cardboard ads that allowed users to order CDs for a single penny. Eventually the company had to get out of the CD business with rise of piracy, MP3s and streaming. In 2010 they made the move to DVDs but that has been equally as unsuccessful with Netflix, piracy and streaming also cutting into profits.
Columbia House will have to settle its $63 million in debts with over 250 creditors, despite having only $2 million in total assets. The company still boasts 110,000 members, possibly people who don't even remember they are still signed up or those who way too nostalgic, but it is surprising it took this long for Columbia House to go under.
