Audiocassettes a Success : Turning Newsletter Industry on Its Ear

When most corporate executives realize their company is headed for disaster, they worry. They fret about their futures; they suffer high anxiety.

But when then-Senior Vice President Vicki Krantz learned that Central Savings & Loan Assn. would inevitably be a casualty of the great thrift industry shakeout, she reacted differently. Although she knew the end of her job was in sight in 1985 when it became clear that Central would have to be acquired by a healthier institution, she kept calm.

“I had a wonderful experience,” Krantz said of the period before Central’s demise and acquisition by Coast Savings in 1986.

Increased Responsibility

As the situation at Central was worsening, making it harder to attract new executives, Krantz, 42, who had joined the company as vice president and personnel director in 1978, assumed increasing responsibility. By 1985, she was in charge of Central’s 50-plus branches and was chief executive officer of the bank’s luxury hotel development at Lake Arrowhead.

Those duties put her on the road a lot. While driving in her BMW 733, she often thought about the work she had left at the office, particularly the mountains of reading she had to complete to stay abreast of developments in human resources, perhaps her most important responsibility as Central’s business wound down. If only she could read in the car or have the information recorded so she could listen while driving.

One day it occurred to her that, when her job at Central ended, she could produce a newsletter on audiocassette summarizing the key issues facing human resource professionals. As a past president of the Personnel Management Assn. of San Diego, a former district representative to the American Society of Personnel Administration and a personnel executive at RCA and May Co. before coming to Central, she certainly had the proper credentials.

True, she didn’t know anything about audio publishing, but she felt she could learn, having majored in journalism at California State University, Northridge.

So, when Central’s struggle finally came to a close in 1986, Krantz took her $40,000 completion bonus for staying to the bitter end and set up Professional NewsScan in her home in Solana Beach. She gave herself two months to see if the concept would work.

It did. Now, with more than 2,000 subscribers paying $144 a year for a dozen 45-minute summaries on human resource issues--culled from the trade and general business press--Krantz has carved a small but unusual niche in the burgeoning field of audio publishing. The company was profitable after 18 months, and Krantz hopes to double its subscriber base this year. In addition to four regular news categories concentrating on legislation and legal developments, each tape covers 10 to 12 topics such as age discrimination and severance-pay plans.

The first thing Krantz did was write a business plan. Working with her husband, Fred--now a management consultant but formerly a vice president and general manager at General Dynamics Electronics Division and Topaz Electronics--she calculated the price she would have to charge to have a viable business.

Studio Located

Next, she turned to the Yellow Pages to find local recording studios, quizzing them on how to produce professional quality audio tape. She eventually struck a deal with Lightning Corp. in Kearny Mesa, where, she said, employees “were ready to roll up their sleeves to help out.”

Then she began to read. She reviewed 90 magazines, ranging from the Academy of Management Journal to Working Mother, and wrote a script summarizing human resource issues in the news that month. She said she spends more than $5,000 a year on subscriptions to periodicals.

In August, 1986, at a cost of more than $9,000, Krantz sent 5,000 sample tapes to members of the American Society for Personnel Administration. What followed was “the longest two weeks of my life, waiting to see what would come back,” Krantz recalled.

Although the returns, at nearly 2%, were not overwhelming, they fell into the range she had predicted in her business plan. “Then we knew we had a business,” she said.

What Krantz didn’t know was that the business she had entered could be on the brink of significant growth. According to Seth Gershel, director of sales for Simon & Schuster’s audio division and the organizer of the Audio Publishers Assn., audio publishing (which most people know as books on tape) has experienced double-digit growth for three years.

‘Big Business’

“It is big business,” said Mark Hinckley, editor of Magazine and Bookseller magazine, a trade publication that has tracked the industry for three years. “And the potential seems greater.”

According to Publisher’s Weekly, another trade magazine, commonly accepted research indicates that audio publishing is a $100-million industry evenly divided between retail sales and direct mail. Audio versions of best-selling fiction represent about 41% of the market. Business information represents about 11%.

“We think those numbers are low,” said Paul Houston, president of ManagersEdge Corp. in Denver, which markets audio tapes, including Krantz’s, to senior executives of small and medium-size companies.

Not That Ambitious

Houston believes that more than 500,000 people a year buy business-oriented audio tapes through the mail. The acknowledged market leader is Chicago’s Nightingale-Conant, with revenues of $40 million. “The total market is at least $60 million to $70 million,” Houston said. ManagersEdge has 11,000 subscribers, and Houston foresees a total potential customer base of 60,000.

Krantz, who reads for the cassettes herself, is not that ambitious. There are about 40,000 human resource professionals in the country, she noted. She says she would be content with 5,000 subscribers, and wants to have 4,000 within the next year.

Busy commuters who want to make maximum use of their time represent the best target audience for audio publishing products, according to Houston. “Our biggest competitor is probably car phones,” he said.

Krantz is prepared to compete with those. Nearly 90% of her listeners say they listen to the tapes while in their car. The national average commute time is 22 minutes, Krantz said, the approximate length of each side of her tapes.

“I listen to and from work,” said Dee Tielhet, personnel section manager at Hewlett Packard in San Diego. “I live about 20 minutes away from the office.”

Others Listen Too

Her department of 16 people is responsible for the human resource needs of 1,500 Hewlett Packard employees. When Tielhet finishes listening to a cassette, she passes it on to others in the department. ManagersEdge research indicates that, for every subscriber to such tapes, two more people listen.

Bea Betterton, personnel director of the YMCA of San Diego County, lives only 15 minutes from her workplace. But she listens to Professional NewsScan when she travels from branch to branch for meetings. N. Bruce Ferris, manager of personnel and employee relations at Maxwell Laboratories, listens on his way to and from Orange County.

Why do they listen?

“It is a unique, super service,” according to Ferris.

Sensitive Issues

Krantz’s tapes cover some of the most sensitive issues confronting corporate America today: managing health-care benefits, dealing with AIDS, new federal guidelines to ensure a drug-free workplace.

Fred Krantz said human resource issues are now “at the center of corporate life. For many corporations, compensation and benefits is 60% of the cost of doing business.”

Although both Krantz and her husband have managed hundreds of employees in their respective corporate careers, neither has the ambition to let Professional NewsScan get too large. Indeed, they work with no employees, relying entirely on subcontractors, and would like to keep it that way.

Besides the monthly cassette, Krantz would like to add quarterly special reports on single issues, such as the new Internal Revenue Service guidelines for employee benefit programs. And she would like do some original reporting.

“My job is to give new solutions,” she said. “Our subscribers know the problems as well as we do.”