From Kitchen Publishers to Multimillion-Dollar Firms : Newsletter Industry a Big Business Now

The newsletter business has matured beyond the era of kitchen table start-ups and now involves multimillion-dollar companies using sophisticated marketing techniques to cope with increasing competition, a leading publisher said Monday.

“The newsletter industry is no longer a novelty,” said publisher Thomas L. Phillips, contending that it has developed “real legitimacy” as a significant part of the information industry.

Phillips, speaking at a convention of the Newsletter Assn., said that in addition to a proliferation of small entrepreneurial companies, “you have some full-sized firms that are doing a very respectable business.”

He said his own company, Phillips Publishing of Potomac, Md., has annual revenue of more than $20 million.

Phillips was among about 450 newsletter publishers, editors and staff members who gathered to plot new promotional strategies, view the latest in computerized publishing systems and relish editorial achievements.

It’s no accident that they are meeting in the nation’s capital, where the enormous volume of information churned out every day by the federal government has become the lifeblood for a wide array of newsletters, ranging from Hazardous Waste News to Star Wars Intelligence Report.

Gaining Acceptance

Once denied press accreditation on Capitol Hill and full membership in the National Press Club, newsletter journalists now are regulars at congressional hearings and prowl the hallways of federal agencies. And it isn’t unusual for newsletters to beat the rest of the news media in reporting major developments.

“I think the newsletter industry is very healthy,” said Van R. H. Sternbergh, a newsletter consultant from Greenwich, Conn.

“We have become a nation of information junkies. Knowledge is power--and if you know more than your competition does, or if you know it sooner, that’s an advantage,” Sternbergh said.

“Newsletters are timely and they are focused. They know what their target is and they can keep their sights trained on it. Taken at the sum, the Washington-based newsletter industry probably has more impact on this country than the Washington Post and the New York Times put together,” he said.

Fred Goss, executive director of the association, said he estimates the U.S. newsletter industry’s gross revenue at $500 million to $750 million a year. More precise figures are unavailable, he said, because nearly all newsletter publishers are privately held companies that do not release detailed financial figures.

Goss said even keeping track of the number of newsletters is difficult, since hundreds of new publications surface every year. He said it is estimated that about 4,000 commercial newsletters are being published in the United States, and about 1,000 more elsewhere around the world.

Industry Consolidating

In recent years, he noted, the industry has been marked by a substantial amount of consolidation with the emergence of sizable companies--such as Phillips, Capitol Publications, Atcom, Business Publishers and United Communications--each publishing as many as several dozen newsletters.

“While the newsletter business was largely developed by the lonely entrepreneur and the kitchen table launch, and it still does happen, I’d say that’s tougher than it used to be because there’s more competition, and the competition is better established financially,” Goss said in an interview.

Another major trend, he said, is computerization, with smaller publishers scrapping outmoded addressing machines and larger publishers handling their circulation in-house, rather than resorting to outside service bureaus.

Also, desktop publishing systems are “quickly changing the way newsletters are produced and they look,” Goss said.

“The graphics of newsletters are being tremendously upgraded because the capacity is now there, in house, to produce newsletters using several different typefaces, charts, bars, graphs--all the things that newsletters never had before, in large part because there was no convenient, economical way to do it,” he said.

Paul Warren of Washington-based Television Digest said his company and others were striving harder--through warnings and lawsuits--to deal with the “devastating impact” of illegal photocopying of newsletters.

Photocopier Is Threat

“One of the largest threats to the newsletter business is the photocopier,” Warren said. “Newsletter publishers lose millions a year because of this problem.”

He noted that the association was encouraging manufacturers working to develop special papers that cannot be effectively photocopied.

Leslie C. Norins of American Health Consultants, whose Atlanta-based company publishes 30 health-related newsletters, said enhanced editorial quality was needed to deal with keener competition.

Despite increasing consolidation in the newsletter industry, Norins said: “I still think there’s room for the kitchen table publisher with bright ideas to serve market needs.”