Collecting the collectors - Krause Publications publishes collector-oriented periodicals - Company Profile

Nation's Business, Oct, 1992 by Michael Barrier

In October 1952, Chester L. Krause, a 28-year-old carpenter in rural Wisconsin, put together the first issue of a publication called Numismatic News. The local weekly newspaper printed it for him, he recalls, "and the printing was horrible." The one-page, tabloid-size paper consisted mostly of exhortations to advertise and subscribe, and it went to only 600 people who were, like Krause himself, coin collectors.

A copy of that first issue holds a place of honor in a display case in the 68,000-square-foot building in Iola, Wis., that houses what has become Krause Publications, a company that has 332 full-time employees and expects sales this year to exceed $50 million.

Chet Krause has built his one-page paper into a classic niche-market success story, becoming the publisher of dozens of collector-oriented magazines, newspapers, and catalogs. (Among those publications: Numismatic News, now a weekly newspaper.) In the vast and amorphous field of publications for collectors, Krause has staked out strong and often dominant positions in almost every hobby with a significant following.

He publishes more than two dozen periodicals. "We put out something like 550 issues a year," he says. "There are 250 working days in a year, so we're doing over two issues a day. We're doing about 250 pages of type a day."

Krause Publications has put several million dollars into computerizing its operations, but the staff is remarkably lean, even so, considering its output. For each issue, typically, a periodical's very small editorial crew produces hundreds of column inches of type, which wrap around dozens of advertisements for "collectibles." We figure it by the word," says Don Thompson, who with his wife, Maggie, does most of the writing and editing for the weekly Comics Buyer's Guide, "and we do around 3 million a year."

Like Comics Buyer's Guide, a 25,000-circulation tabloid read faithfully by comic-book collectors, most Krause publications to collectors of things besides coins.

"We stayed in coins exclusively for the first 15 years," Krause recalls, "and then branched out into automobiles." In the 1980s, Krause Publications expanded into other collecting specialties, starting or buying periodicals devoted to comic books, records, toys, guns, and cards. As Krause says, "The starting a periodical, whatever the subject happens to be, are not foreign to us."

Its mechanical proficiency aside, Krause Publications has grown to its present size in large part because it has been so nimble in latching onto trends in the volatile market for collector publications. Chet Krause is quick to say that the nimbleness hasn't always originated with him.

He started his first sports-collecting periodical 11 years ago--thanks, he says, to two staff members who just darkened my doorway until they finally convinced me that we should do this." He tested the market with a one-shot publication, successfully, and bought one of the two periodicals then in existence. Now, Krause estimates, his company has 80 percent of the market for sports-collecting periodicals.

Patterns in collecting, and thus the health of Krause's periodicals, can change drastically within a few years. Today, "baseball cards are about 45 percent of our overall business," he says, but a few years ago they counted for very little. Coins and cars--the foundation of the business--now account for only 15 percent of its revenues, with comics, toys, guns, and so on accounting for the rest.

Because of the popularity of baseball cards, Krause Publications surged in the '80s--',we went like hell for a few years," Krause says--but growth slowed in 1991. Yet he expects revenues this year will be up $3 million or so from 1991.

It is quite a business, especially considering that when he started Numismatic News, Krause didn't think of it as a business at all, but as "the extension of a hobby"

Krause, who will turn 69 in December, grew up as the youngest of six children on a farm about five miles from Iola. He joined the Army in 1943 and spent the rest of World War II in Europe, as a mechanic in an anti-aircraft battalion's motor pool. After he returned to Wisconsin, he worked mainly as a carpenter, but "I did electrical work and plumbing, and built chimneys, and God only knows what else."

Krause collected coins as a hobby, but, he recalls, "you had to travel as far as Milwaukee to find any other real collectors." The roads weren't good then, and long-distance calls were expensive, so, of necessity, Krause did most of his buying and selling and trading of coins by mail.

He worked on the first issue of Numismatic News on his parents' dining-room table in Iola. He patched together a mailing list--some of the names came from ads in a competing publication--and then relied on his readers to send him more names. "I solicited ads as ardently as I did subscriptions," he recalls.

Numismatic News was not an overnight success--Krause says that he lost $1,342 in the first 13 months--but he hired his first worker early in 1953. (He and an insurance agent shared an employee who picked up the mail and answered the phone.) It was not until the summer of 1956 that Krause "finally made the determination that I either had to lay down the hammer or get rid of the publication." He chose publishing.