Krause Publications, Inc.

700 East State Street
Iola, Wisconsin 54990-0001
U.S.A.
Telephone: (715) 445-2214
Fax: (715) 445-4087
Web site: http://www.krause.com

Private Company
Incorporated: 1964
Employees: 570
Sales: $87.8 million (1999)
NAIC: 51112 Periodical Publishers; 51113 Book Publishers

Krause Publications, Inc. an employee-owned enterprise, bills itself as “the world’s largest publisher of hobby periodicals and books.” The company publishes and circulates 53 magazines and newspapers for special-interest enthusiasts, covering a wide variety of hobbies and trades, including antiques, arts and crafts, classic cars, coins and paper currency, comic books, fishing, guns, hunting, knives, sports memorabilia, stamps, and toys. On such topics, Krause has printed over 650 books, adding over 100 titles per year. In addition, it publishes serials on the rural construction trade and manages hobby shows. In 1999, in a partnership arrangement with eBay, it also began publishing the official eBay magazine. Although the company is headquartered in lola, Wisconsin, the small rural town in which it was founded, its publications are printed at several different sites throughout the country. Krause maintains a very helpful web site that provides extensive information, including up-to-date news releases and job opportunities as well as information about its extensive publications.

1952-68: Unauspicious Origins Give Way to Necessary Diversification

Krause Publications certainly began humbly enough. Chester Lee (Chet) Krause, an lola, Wisconsin, carpenter with an interest in coins and firearms, founded the company in the fall of 1952 when, at 27, he began issuing a newsletter entitled Numismatic News. Born in 1923 on his family’s farm in nearby Helvetia, young Chet had become interested in collecting both stamps and coins while he was attending a one-room school-house on property adjacent to his family’s land. After a fire destroyed the farm in 1940, his parents moved the family to lola. Krause lost his stamp collection in the fire but was able to save his coins.

During World War II, Krause served in the Army, returning home in 1946 to begin working as a carpenter, a trade he would continue to practice until 1957, when he gave it up to devote all his time to his new business. Before making the decision to go exclusively into publishing, Krause worked very hard to gain respectability for his first serial, Numismatic News. Initially, the publication consisted of a single page of newsprint printed by the local weekly newspaper. It was in part inspired by Shotgun News, a tabloid publication to which Krause then subscribed.

The first issue of Numismatic News bore an October 13, 1952 imprint date. For the next 18 months of his new publishing venture, Krause operated out of his house on lola Street, where, with help from his mother, Cora, he put the work together on the kitchen table. At first it was a losing venture, leaving Krause down $1,342 in out-of-pocket expenses over the first year, but from that single page and mailing list of 600 readers he gradu-ally turned the work into a competitive publication with a respectable number of both subscribers and advertisers.

In the early spring of 1953, Krause rented office space and hired his first employee, a clerk he shared with an insurance agent. Numismatic News, which would remain Krause’s sole publication for seven more years, grew to 24 pages in 1954, and began turning a profit. Three years later, just before stopping work as a carpenter, Chet Krause constructed a new office building to house his growing operation.

Over the next few years, Krause developed Numismatic News into a very durable serial. He was doing well enough by 1961 that he was able to purchase another serial, Coin Press, from a publisher in New Jersey. Krause renamed it Coins, and in 1962 it first appeared under the new owner’s imprimatur.

In the next year, Krause hired Clifford Mishler as associate editor of Numismatic News. The young man hailed from Vandalia, Michigan, which, like lola, was also a small rural town, and like Krause, Mishler was an avid coin collector. He helped Krause expand the publication, which by 1964 had grown to an average issue length of 116 pages. However, just when prospects for greater expansion seemed very good, the company hit a temporary setback. In 1965, inexplicably, interest in coin collecting took a fairly drastic downturn, and the company’s sales began to drop.

Although it survived and again began a forward surge by 1968, Chet Krause and his associates realized that diversification was needed. Until then, the entire focus of the company had been on coins minted in America. That was soon to change.

1968-89: Branching Out, Sustaining Strong and Steady Growth

In 1968, the first move towards diversification came when Krause and his staff decided to add book publication and world coins to the company’s initial focus on U.S. coins. The result was the 1972 publication of the first edition of the Standard Catalog of World Coins, a cornerstone in Krause’s book division. By then the company had already begun diversifying. In the fall of 1971, it had begun issuing a monthly tabloid called Old Cars and was considering other hobbies and interests suited to coverage in serials and books.

The physical expansion of Krause and the growth of its staff through both the 1970s and 1980s pretty much kept pace with its ever-increasing product line. Once committed to the idea that diversification was necessary to provide a solid buffer against the volatile interest swings of collectors and hobbyists, the company doggedly branched into new interest territories, even some that it suspected, like most fads, would have a limited life. During the same period, in addition to venturing into new fields with serials initiated in-house, Krause grew through the acquisition of existing publications.

In 1975, Krause Publications moved into its State Street plant, a 20,000 square foot facility accommodating the company’s 60 employees. Over the next two decades, the plant had to be enlarged five times in order to house the much expanded operation and a workforce that by 1992 had grown to over 300. By the end of 1990s, Krause began further physical expansion scheduled for completion in September 2000.

In 1980, when it first expanded its plant, Krause began publishing a serial on baseball cards, first issued as Baseball Cards but later entitled Sports Cards Magazine and Price Guide. In the next year, the company purchased an existing serial named Sports Collectors Digest. This move into baseball cards and other sports memorabilia proved very timely, spurring sales rapidly upwards through the next dozen years. Still more diversification followed. In 1982, the company bought a publication devoted to comic books and in the next year an additional one on phonograph records.

Further expansion of Krause’s operation came in tandem with its burgeoning hobby and trade periodicals and workforce. In 1987, with another plant enlargement, the company began publishing its first serial on firearms, followed by one on toys in 1988. Adding yet more space in 1989, Krause also began issuing works on the outdoors and rural construction.

In the 1980s, in an amicable arrangement, ownership and control of the company shifted from Chet Krause to his employees. A major move came in the fall of 1988, when the company established its Employee Stock Ownership Plan (ESOP). Under its terms, each employee who had worked at Krause for more than one year was credited with some stock, which, when retiring, the employee could sell back to the company. Over the next several years, the ESOP acquired all the stock.

1990s: New Fields, Including E-Commerce

In the 1990s, leadership of Krause Publications passed into the hands, first of president Clifford Mishler and then Roger Case, who succeeded Mishler as president in January 2000. Case had joined the company in 1988 as director of numismatic publications and within six years was named the firm’s executive vice-president.

Company Perspectives:

We are committed to providing our customers with quality products and services that support their interests and meet their needs on a timely basis. We are committed to ensuring Krause Publications’ long-term viability by providing a rewarding work environmentfor its employees and accumulating capital to reinvest in the business.

In 1992, the company estimated that about 45 percent of its overall business came from the nation’s interest in collecting baseball cards, while coins and cars, the first focus areas of Krause product line accounted for about 15 percent of its sales. Further diversification was still in the works, however. The company started publishing serials on general collectibles in 1993. It added one on knives in 1994, stamps in 1996, and crafts in 1997. In 1996 and early 1997, through some important acquisitions, it also added substantially to its book line, bringing its total of books still in print to 600. First it acquired DBI Books, an Illinois publishing company that added about 50 new titles to Krause’s book division line. Most of these dealt with firearms, knives, and outdoor activities. Next, it bought Books Americana from an Alabama publisher, adding about 30 books on a variety of collectibles. Then, in January 1997 Krause doubled its book division product line when it acquired the non-automotive titles of the Pennsylvania-based Chilton Book Co. Finally, in 1999, the company purchased Landmark Specialty Publications, a Norfolk, Virginia-based publisher of books and antique and collectible serials, including the Antique Trader Weekly. Among other things, the deal boosted Krause’s work-force by about 40 percent. It also involved the acquisition of some online services. Not that the Internet was new to the company. In 1998, Krause had gone online with an auction web site (http://www.collectit.net) designed to attract customers with an interest in all sorts of collectibles. However, it later discontinued that service.

It was also in 1998 that Krause made another important acquisition when it purchased the International Collectible Ex-position from McRand International. The Exposition had two annual shows, one in Rosemont, Illinois, and the other at alternate-year locations on the East and West Coasts. Over its history, Krause has sponsored and run many events related to its publications. Some of these, eventually community-sponsored events, it initiated; with others it held an affiliation. Three of these were local affairs: the lola Old Car Show and Swap Meet, which had been held annually on grounds in back of the company’s complex; the lola Rod and Kustom Weekend; and the lola Vintage Military and Gun Show. Other affiliated shows occurred across the country, including the Blade Show and International Cutlery Fair in Atlanta; Blade Show West in Costa Mesa, California; Chicago International Coin Fair; Chicago Paper Money Exposition; Kit Young Hawaii Trade Conference and Card Show; MidAmerica Coin Expo; Tuff Stuff Summer Classic; and SportsFest in Chicago. The International Collectible Exposition was a major addition to this program.

Krause Publications managed very well in a tough enterprise. In the late 1990s, estimates indicated that new periodicals hit the national marketplace on an average of two a day, some of which quickly failed. More simply faded away. Even some distinguished, time-honored publications succumbed, such as Life, which issued its last number in June 2000. Moreover, Krause published magazines for special interest readers, hobbyists who tended to ride the crest of a national craze one year only to slide into a trough of disinterest the next. The company’s quick response to the fickleness of the market and the diversity of its product line helped it both survive and prosper. Its policy was to weather declining circulation in some areas by spreading costs across its whole product line. At various points in its development, it relied heavily on the excellent sales of publications appealing to readers enmeshed in a collectible mania, baseball cards, for example, which, as mentioned above, in 1992 accounted for almost half the company’s overall business. Because overhead costs were spread over the broad range of its publications, Krause continued to publish some serials even in the ebb tide of public interest, knowing that hobby interests tended to be cyclical and that interest might be rekindled. Tenacity had limits, of course, and over the years the company suspended the publication of some of its titles and consolidated others.

By the end of the 1990s, the company stepped yet further into the world of e-commerce, most importantly in a 1999 partnership arrangement with eBay, the Internet’s chief auction site. Under its terms, Krause undertook the publication of the official eBay magazine. In September, the company published and distributed the first issue, anticipating a circulation of 400,000 copies. Although bearing eBay’s imprint, the magazine was designed to appeal to anyone with an interest in the Internet, not just online auctions. Early in 2000, Krause also entered a partnership with Shop At Home, Inc. and collectibles.comsm, one of the leaders in e-commerce on both television broadcast channels and the Internet. According to the agreement, both companies would create an online “newsstand” selling books and serials for all sorts of hobbyists and collectors. Both of these partnering arrangements demonstrated that Krause Publications was increasingly responsive to the Internet’s tremendous potential and that it remained ready to accept the challenge of change, something that not all print media companies have demonstrated.

Principal Competitors

Meredith Corporation; Random House Inc.; The Reader’s Digest Association, Inc.; Reed Elsevier plc.

Key Dates:

1952:

Chester Krause begins publication of Numismatic News.

1961:

Company acquires Coin Press.

1963:

Clifford Mishler joins Krause as associate editor.

1972:

Krause publishes the first edition of the Standard Catalog of World Coins and publishes its first non-numismatic offering, Old Cars.

1988:

Roger Case joins Krause as director of numismatic publications; company establishes Employee Stock Ownership Plan (ESOP).

1991:

Mishler becomes Krause’s third president.

1995:

Company is named ESOP Company of the Year by ESOP Association.

1999:

Krause Purchases Landmark Specialty Publications and begins publishing the official eBay magazine in partnership with eBay.

2000:

Case succeeds Mishler as Krause’s president.

Further Reading

Barrier, Michael, “Collecting the Collectors,” Nation’s Business, October 1992, p. 53.

Eads, Stefani, and Robert McNatt, “From the Net to the Newsstand,” Business Week, May 3, 1999, p. 6.

Francis, Thomas, “Krause Publications Buys International Collectible Exposition,” Knight-Ridder/Tribune Business News, August 12, 1998.

Grabatstein, Lisa, “Let’s Make a Web Deal,” Mediaweek, May 17, 1999, p. 70.

Kerwin, Ann Marie, “Ink and Paper World Clicks with the Online Universe: Wenner, Krause Plan Magazine; Hearst Weighs Women’s Guide,” Advertising Age, July 5, 1999, p. 29.

Mclntyre, David, “lola, Wis., Proves Ideal Setting for Employee-Owned Publisher,” Knight-Ridder/Tribune Business News, March 30, 1999.

Mulholland, Megan, “lola, Wis.-Based Publishing Venture Will Step into Online Commerce,” Knight-Ridder/Tribune Business News, May 9, 1999.

—John W. Fiero