Columbia House

Did You Know?

• The club continued to issue product in formats no longer available on the commercial market, such as reel-to-reel tapes until 1984, 8-track tapes until 1988, and vinyl LPs until 1992.
• In 1996, club membership peaked at 16 million, and the Columbia House website was launched that same year.

History

In 1955, CBS/Columbia Records launched the Columbia Record Club as a test to sell music through the mail, targeting rural buyers and fending off outside mail-order competitors. New members got a free record for signing up. To keep physical stores happy, the club delayed offering new titles for six months after their in-store release (later cut to three months), and gave a 20% commission to retailers who helped recruit members. By year’s end, the club had 125,175 members who bought 700,000 records, bringing in $1.174 million net.

Growth was so fast that in 1956 operations moved from New York City to a distribution center in Terre Haute, Indiana, near a new Columbia pressing plant. Within a year, membership hit 687,652 and sales reached 7 million records ($14.888 million net). By 1963, the club held 10% of the recorded music retail market. RCA Victor and Capitol started their own clubs in the late 1950s, each initially selling only their own label’s records.

In 1958, after losing members who wanted more variety, Columbia began making and selling records for smaller labels like Verve, Mercury, Warner Bros., Kapp, Vanguard, United Artists, and Liberty. These deals guaranteed minimum sales but tied licensors to exclusive contracts, sparking price-fixing accusations in 1962 and seven years of mostly fruitless legal battles. The club expanded into stereo records and gear in 1959, reel-to-reel tapes in 1960, 8-track cartridges in 1966, and cassettes in 1969.

Business practices

Since its beginnings, following the sale to BMG, and continuing after the sale to Direct Brands, Columbia House attracted criticism for its business practices. During its first three decades, the company employed a marketing strategy that gave customers several albums for free, with most early campaigns requiring the customer to tape a penny to the enclosed postcard or order form, in exchange for a promise to purchase a set number of records or tapes at full club prices plus shipping.

Mailers contained dozens of small stamps with pictures of album covers; customers would tear off a stamp, moisten it, and affix it to the order card. These envelopes arrived as junk mail to countless homes regularly, with different recipients sometimes receiving different offers. Many teenagers intercepted this mail and were easily enticed by the idea of getting albums all at once, needing only to buy three or four albums within two or three years.

There were many underage customers who legally could not be bound to the agreement; Columbia House knew these contracts were unenforceable but apparently did not care, though this policy eventually changed. The company made it extremely easy to defraud them, with countless cases of customers joining, receiving free albums, and never ordering more at full price. Some joined multiple times under different names with no intention of paying, in extreme cases receiving recordings with a retail value of hundreds of thousands of dollars.

Columbia House practiced negative option billing, a form of commercial distribution in which services are automatically supplied until a specific cancellation order is issued, drawing many consumer complaints. The Federal Trade Commission published information to protect customers against this practice, specifically referencing a $0.49 per video offering.