Columbia House, the mail-order music retailer that turned an “Eight CDs for a penny” offer into an annual profit of $1.4 billion at its peak, has filed for bankruptcy. Filmed Entertainment Inc., the parent company for Columbia House, filed for Chapter 11 bankruptcy protection in New York Monday, citing the ever-changing digital and online landscape that continue to erode at the physical medium’s sales, the Wall Street Journal reports.
“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. In 1996, Columbia House’s profits peaked at $1.4 billion; by comparison, the company only managed $17 million in revenue in 2014.
Columbia House, whose thin cardboard ads for their unique one-penny offers populated nearly every issue of magazines like Rolling Stone in the mid-Nineties, got out of the music business in 2010 as MP3s, streaming and illegal downloads made their CD endeavor unprofitable. For the past five years, Columbia House has instead been dealing in DVDs, but even that market has experienced some rough times as Netflix, streaming and piracy cut into that medium’s sales.
Although Columbia House still boasts 110,000 members, the company listed total assets of $2 million while owing $63 million to over 250 creditors. Columbia House’s fall has mirrored the CD and DVD markets themselves: In 2000, the music industry sold roughly $13 billion worth CDs. That total was down to $1.85 billion in 2014. Similarly, DVD sales have plummeted by 50 percent between 2006 and 2014.
Coincidentally, Columbia House’s bankruptcy filing comes the same week that the Billboard 200 witnessed its worst-selling Number One album in the chart’s history.