RINKER ON COLLECTIBLES — Column #1686
Copyright © Harry Rinker, LLC 2019
Consolidation Is the Kiss of Death in the Antiques and Collectibles Trade - Always Has Been, Always WillBy now (mid-May 2019), the antiques and collectibles trade is familiar with F+W Media, Inc, and its eight affiliates and subsidiaries’ March 10, 2019 Chapter 11 bankruptcy filing with the Bankruptcy Court for the District of Delaware. Krause Publications is one of F+W Media’s subsidiaries.
Chapter 11 bankruptcy is a petition for relief from existing debts. In theory, the company continues to operate during the bankruptcy period. This allows time to search for a new buyer or investment / turnaround group who will restructure and ideally restore the company or portions of the company to profitability or break it apart.
What is known at this point in respect to Krause Publications? First, on June 15, 2018, F+W Media completed the donation of its Iola publishing office and grounds to the non-profit Iola Car Show. At the time of the donation, “Old Cars Weekly” promised to be a continuing sponsor of the car show. Second, Krause Publications laid off 41 employees in January 2018 as part of an out-of-court reorganization deal with F+W lenders to reduce its debt. Third, Krause Publications opened a new office in Stevens Point on Joerns Drive after the sale of its Iola facility. An article in the April 5, 2019, issue of the “Stevens Point Journal” was headlined “F+W Media may lay off 66 people, close Krause Publications’ Stevens Point Office.” F+W informed that Wisconsin Workforce Development on April 1, 2019, that the layoffs were likely if no buyer was found for it or its subsidiary Krause Publications. Fourth, although “The Antique Trader” continues to be published, Krause Publications has issued no new book titles. Finally, Krause Publication authors, columnists, and writers have been informed that they will not be paid any moneys due and are now just another name on the list of creditors involved in the bankruptcy action. Those with whom I spoke are writing off what is owed as a bad debt. They are more concerned with copyright issues and what will happen to materials currently in-house, in production, and stored in Krause’s warehouse.
The Mighty has fallen. Krause Publications’ demise leaves only Schiffer Publishing standing as a major publisher of antiques and collectibles reference book titles. Schiffer Publishing played it smart from the beginning. It stuck with what it does best—publishing books. It did not attempt to expand vertically. It did expand horizontally into other publishing specialties such as military books. Schiffer refused to participate in the antiques and collectibles industry consolidation euphoria of the 1990s and early 2000s that condemned so many established auction companies, publishers, shows, and trade periodicals to a slow but inevitable demise.
Before analyzing why Krause Publications failed, it is necessary to address the question: will Krause Publications, like the mythical phoenix, rise from its ashes and renew itself? It will not. I disagree with those optimists who think it will. The reasons are myriad.
First, Krause Publications periodicals have experienced a decline in their subscription bases for years. All efforts to stem the flow at the corporate level were futile. Krause is not alone. Similar publications outside the Krause Publications fold, such as “Linn’s Stamp News,” are experiencing similar declines in advertising revenue and subscriptions. If there is a hope, it is a slim one. It may be possible for a private individual intent on saving one of the specific publications relating to his/her personal collecting interest to step forward, acquire that one specific publication from the Krause Publications wreckage, and turn it around.
Second, “The Antique Trader,” long a shadow of its former self, has outlived its usefulness. The age of the generalist collector is over. 21st century collecting is more specialized than ever. Collectors, a diminishing market in their own right, are interested only in periodicals and reference books that apply to their specialized interests.
Third, the “Golden Age” of the printed reference book is in its twilight years. Thanks to numerous self-publishing software programs and print on demand technology, the days of press runs of a thousand or more copies of an antiques and collectibles reference book have passed. Increasing publishing costs have forced retail costs above $25.00 with over $45.00 being the more common price. Few can afford to maintain a comprehensive general reference library at these prices.
Fourth, the Krause Publications leadership no longer consists of individuals who live and understand the antiques and collectibles field. Instead, it is a group of corporate pencil pushers whose sole goal is to generate the required profit return required by the great corporate entity in the sky, in this instance F+W Media, Inc.
Lack of ability to effectively take advantage of e-Commerce and declining periodical subscriptions are the two principal reasons cited in most online and print media stories focusing on F+W Media’s Chapter 11 bankruptcy. Krause Publications’ difficulties often are cited as examples. But, these are not the primary reasons why Krause Publications failed.
Krause Publications failed because (1) consolidation within the antiques and collectibles field does not and never will work, (2) profitability in the antiques and collectibles field cannot support a layered bureaucracy, (3) corporate anything is an enigma within the antiques and collectibles field, (4) corporate gurus who have no knowledge of the antiques and collectibles field are useless and prone to making bad decisions, and (5) corporate types have no ability to judge whether advice they receive from professed “experts” in the trade is reliable or not, especially when these experts are not familiar with the American marketplace.
I have reached a point by default whereby I am one of the few writers in the antiques and collectibles trade with an institutional legacy that extends back over 50 years. Because I have studied trends within the trade dating into the 19th century, I was tempted to use a high number but am content with 50. Fifty years is early enough to make this simple statement—I remember the trade before the attempts at horizonal and vertical consolidation occurred.
In the months ahead, I am going to dig out those “Rinker on Collectibles” columns written during the late 1980s, 1990s, and early 2000s that focused on consolidation in the auction, publication, and show sectors of the antiques and collectibles field. There was a time when Landmark (does anyone remember who or what this company was?) was an optimistic instead of a curse word. Few understood the dangers. Those who did were voices crying in the wilderness.
Each consolidation added another layer of corporate overhead. Profits were not reinvested in the product but sent upstairs to make the corporate executives and stockholders rich. Those who believed that consolidating management in a single location, reducing the number of individuals needed in the field, and instituting other overhead reductions would increase profit margins were mistaken. The antiques and collectibles business works best when conducted eye-to-eye.
F+W’s acquisition of Krause Publications in 2002 was the last step in a consolidation process that resulted in the elimination or gradual disappearance of multiple strong regional publications and major antiques and collectibles shows such as Atlantique City. A history of Krause Publications and its failure to ensure the preservation of the industry it cherished most needs to be written. I would write it, but think it might be best to wait until a few more of the principal actors are dead.
Although the antiques and collectibles trade functions a business, its business model works best at the individual level. Its success relies on the dedication, devotion, and love of those who participate in it.
In the case of Krause Publications, a number of corporate gurus who tried to impose business practices that made no sense and their reliance on “experts” whose motivations were more self-focused than centered on the good of the industry led to one disastrous decision after another.
I take no pleasure in the writing of this column. The demise of Krause Publications is a tragedy that could have been avoided. Blaming what happened on economic trends and an aging collecting base ignores the real reasons Krause Publications failed.
As a believer that people and institutions can learn from their mistakes, it is my hope that those who salvage any of the Krause Publication pieces will carefully consider the past, learn from it, and avoid the mistakes that linked Krause Publication to a corporate entity that eventually destroyed it.
Harry L. Rinker welcomes questions from readers about collectibles, those mass-produced items from the twentieth and twenty-first centuries. Selected letters will be answered in this column. Harry cannot provide personal answers. Photos and other material submitted cannot be returned. Send your questions to: Rinker on Collectibles, 5955 Mill Point Court SE, Kentwood, MI 49512. You also can e-mail your questions to firstname.lastname@example.org. Only e-mails containing a full name and mailing address will be considered.