The Kitchen-Table Entrepreneurs

It was clearly a scoop: the Food and Drug Administration was about to outlaw saccharin. What was remarkable was that the disclosure came almost two months before the FDA acted and that it was made in Food Industry Newsletter, a four-page, biweekly newsletter that is written, folded, addressed and mailed by Phyllis and Julian Handler from their Manhattan apartment.

The Handlers are among a growing legion of kitchen-table entrepreneurs who are turning the newsletter business, the last cottage industry of publishing, into a respectable and highly lucrative branch of journalism. Hardly any activity nowadays is without benefit of a newsletter, from Abortion Trends to Zoo's Letter. Aficionados of cartoons and soap operas have their typewritten grapevines, as do owners of Pet Rocks, fans of Evelyn Waugh and students of the Kondatrieff wave theory of economics. Circulations range from a few dozen to 430,000, for the 54-year-old Kiplinger Washington Letter; subscriptions cost anywhere from nothing to $3,600 a year, for French Journalist Danielle Hunebelle's International Letter, a monthly economic report.

No one is sure how many newsletters there are in the U.S. (estimates run as high as 6,000). Nor is there much agreement on what a newsletter is. "We try not to ask that question," says Howard P. Hudson, whose Newsletter on Newsletters is the industry's bible and whose Newsletter Yearbook Directory ($25 for the 1977 edition, published this month) lists 1,500 of the breed.

Last week in New York, the 138 delegates to the first annual convention of the newly formed Newsletter Association of America did agree, however, that their business is flourishing, readers are willing to pay ever higher subscription prices and nearly everyone is getting into the act. Out-of-work political operatives, for example, are finding second careers in the field: former Democratic Strategist Alan Baron claims 2,400 readers (most pay $39) for the Baron Report he launched last summer, and ex-Nixon Aide Kevin Phillips says he has nearly 1,000 subscribers to his $94-a-year American Political Report. Among the latest victims of newsletter fever are magazine and book publishers: U.S. News and World Report and Newsweek have launched newsletters in the past year, Harcourt Brace Jovanovich last year paid $1.4 million for a Boston group of seven letters, and CBS and Field Enterprises are pondering new entries.

Psychic Return. One of the siren songs of newsletter publishing is the shoestring startup cost--typically $10,000, v. 50 to 100 times that much to start a magazine. "All you need is a typewriter, a mimeograph machine and an idea," says Ken Galloway, who founded Capitol Publications in Washington, D.C., eleven years ago with $750 in his pocket; today the firm publishes 19 letters, has a staff of 45 and grosses $2.5 million. Once established, overhead is low and profits are high. For the editors, there are less tangible rewards, like virtually complete freedom of expression. "The psychic return is greater than the financial return," says John Herling, who has been turning out his Washington-based Labor Letter for 26 years. Says Galloway: "It's a real ego trip."

Newsletters obviously scratch some powerful itches among the reading public. "It's the segmentation of American society," explains Howard Hudson. "People know what they want to know about, and they want to know a lot about it. But they don't want to know about anything else." To Ray E. Hiebert, dean of the University of Maryland journalism school, newsletters assuage the alienating effects of more anonymous media. Says he: "Mass communication is out, personal communication is in, and that's what newsletters are."

In more ways than one. Though chain ownership is almost as old as the medium itself--the two Philadelphia journalists who launched the first modern newsletter in 1918 began a second that same year (their firm, Whaley-Eaton Inc., now publishes four)--the majority of newsletters are put out by lone entrepreneurs. For them, small will always be beautiful.

Consider the Handlers, who started Food Industry Newsletter in 1973 on their dining table. "It was rough," recalls Julian, who had just left a job with a trade magazine in the food business. "We had to clear the table every time we had dinner." Since then, circulation has grown from a handful to not quite 2,000. At $60 a year each, that has made the Handlers as wealthy as many of their executive-suite readers. With that prosperity, they have moved their business from the dinner table to more spacious quarters: the bedroom.

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