Shrinking Supply Crimps
Bright Hopes for Growth

By DANIEL NASAW
Staff Reporter of The Wall Street Journal.

The Wall Street Journal Online

Yesterday's news is selling out fast.

Beginning in the 1970s, after many libraries across the country microfilmed their old newspaper collections and began dumping the originals, a handful of small companies emerged to take advantage of the opportunity. The old newspapers were cheap, and specific dates could be marketed as so-called birthday newspapers -- souvenirs of birthdays, weddings or other special events. And so they were -- and still are.

But most libraries have completed the transition from newsprint to microfilm, and most newspapers long ago discarded their old papers in favor of computerized libraries. As a result, the marketers are running out of raw materials.

Sold Out

That was evident this month when an order came into the Historic Newspaper Archives, in Rahway, N.J., for a 25-year-old copy of the New York Times. A man wanted a paper from the date of his parents' wedding for an anniversary gift. In search of the issue, the company's manager, an athletic Londoner named Philip Druce, climbed a 20-foot ladder to a shelf in the archive's cavernous warehouse. The facility houses over one million, mostly 20th-century, U.S. newspapers, but it had no New York Times with the requested date.

Would a Baltimore Sun or an Indianapolis Star Tribune do? Mr. Druce asked. No, it wouldn't. The customer, a New Yorker, wanted a hometown paper. Ultimately, Mr. Druce was able to find a New York Daily News at the top of another, higher ladder -- a stroke of luck because Mr. Druce's stock of New York City tabloids is shrinking fast.

The company, which merged with the British concern Historic Newspapers Ltd. last year, now has more than 40 employees in the U.S. and Scotland and expects to bring in revenue of $2.8 million this year. Its best-selling products are $40 original newspapers, which are shipped to customers in a vinyl portfolio with a certificate of authenticity. Currently, the years that sell the best are 1943, 1953 and 1963 -- for 60th, 50th and 40th birthdays and anniversaries. Mr. Druce says that he is running dangerously low on papers printed in 1945 through 1955.

He receives several copies of five major daily newspapers every day. But those won't begin to sell for decades. As supplies of older original papers dwindle, Historic Newspaper Archives recently started selling reproductions of sold-out issues of the New York Times -- its most popular title. The company also offers a gold-embossed "classic birthday yearbook" containing a reprint of the issue from the requested date along with front pages of several significant dates from the same year. Simple reproductions are priced the same as original papers, and the yearbooks sell for $100. Currently, Mr. Druce fills about 20% of orders with reproductions.

Question of Interest

But Mr. Druce says it's too soon to tell if customers will lose interest when reproductions replace the genuine articles. Also, there are printing costs and royalties for reproductions, so profit margins will be thinner. But if demand is strong and margins adequate, Mr. Druce says he will reproduce additional newspapers.

Timothy Hughes Rare & Early Newspapers, in South Williamsport, Pa., is using a different strategy. The business focuses on collectible newspapers, which carry reports of historic events and tend to be older and more expensive. Operating without subscriptions to current newspapers, "it's much easier for me to fill an order for a 200-year-old paper than a two-year-old," says Timothy Hughes, the company's 50-year-old founder.

Mr. Hughes founded the company in 1976 because he thought that newspapers were more interesting and less expensive than the coins he had been collecting. By early 2002, the company had topped $680,000 in sales. Believing that he lacked the marketing experience to boost revenue further, he sold 85% of the business for $2.4 million to a group of Lancaster, Pa., investors in December. He plans to stay on as a consultant for the company.

But there are only about 1,000 newspaper collectors in the country, according to one dealer, so the Hughes company also needs to build a bigger customer base if it hopes to grow. "People haven't been able to communicate to the public that this is collectible," says Guy Heilenman, the company's new president.

There are about a half-dozen other, smaller companies in the business, which all face the same dilemma of shrinking supply, and some are crumbling like a paper left too long on a windowsill.

Steve Alsberg, who started Historical Newspapers & Journals in Skokie, Ill., with his wife, Linda, in 1974 says business is shrinking. Bob Mooers says the inventory at his company, Gateway Books of Hebron, Md., is down to a fifth of its peak in the early 1980s. "That business is well on its way out," he says of the birthday-newspaper industry, but he believes that the number of collectors will grow.

Steve Goldman gains revenue from the inventory of his company, Stephen A. Goldman Historical Newspapers, in Parkton, Md., by licensing images of old newspapers to television shows and by co-publishing books filled with images of newspapers' front pages on themes like baseball, the Civil War and crime. He declines to give revenue figures, but says business is growing and that increasing interest in collectible newspapers bodes well for the future. "People are starting to recognize how important they are," he says.