Columbia House’s recent bankruptcy filing triggered all kinds of stories, ranging from fond reminiscing about early experiences with record clubs, to surprised reactions that they even still exist as a corporate entity, and a whole slew of whining about how they were killed by streaming services.
Their filing says that Netflix, Amazon, Spotify and Apple crowded it out of the market, preventing Columbia House from getting licensing agreements when it tried to offer streaming services for videos and movies last year. Yes, the more established competitors had an advantage over the new kid on the block. The young, clueless Columbia House, which has been in business since 1955.
Columbia House pioneered the record club business model, getting millions of consumers on board with the then still new 12″ vinyl LP format, introduced in 1949. Their first year they had 125,175 members who had purchased 700,000 records (for $1.174 million net). By the next year, they had 687,652 members and had sold 7 million records ($14.888 million net), and by 1963, it commanded 10% of the recorded music retail market. By the mid-1960s, they had competition from other clubs, including EMI, Capitol and RCA. At that point, Columbia House was able to stay several steps ahead of the competition when the father of direct marketing, Les Wunderman took over the account. Along with direct marketing, Wunderman introduced innovations such as the database, the 1-800 number, the magazine subscription card, and the credit-card customer rewards program. For Columbia House he created the 12-albums for a penny postage-paid insert card, the Gold Box buried treasure Easter eggs that people could find in the advertising and redeem for free albums, in what he called “interactive” sales in a 1967 speech at M.I.T., decades before the Internet took off. It’s too bad they didn’t keep Wunderman on at least as a consultant to advise them. He’s still around, they should give him a call. Continue reading