Do you remember Columbia House? It was largely operated as a “club”. Customers signed up for a promotional offer and were then obligated to purchase additional items at full price.
As I remember, you receive a bunch of CD’s for about a penny and then you were sent CD’s each month automatically to purchase at full price. It was easy to sign up but hard to cancel.
Their peak revenue in 1996 was approximately $1.4 billion; last year net revenue was about $17 million.
MP3s began disrupting the market for CDs in the late 1990s. Apple’s introduction of the iPod in 2001 and iTunes Store made it easy and less expensive to buy music.
The market for CDs in the U.S. peaked in 2000 at about $13 billion but declined to $1.85 billion in 2014. Amazon.com and Netflix eroded Columbia’s House DVD sales.
Columbia House filed for bankruptcy on August 10, 2015 and joins other CD retailers that have closed down or sought bankruptcy, e.g. Tower Records, Sam Goody, Musicland, Circuit City and Virgin Megastore US.
Columbia has been seen as a company that is unwilling to change and either didn’t see the writing on the wall or did not read it.
It has been awhile since we received those penny offers and we won’t see them any longer.