"Father of the forced free trial" reveals what he's learned in 25 years of newsletter publishing. (NEPA Conference Presentation).

Pace Publications publisher Sid Goldstein's 25 years as a newsletter publisher coincide with NEPA's own first 25 years. Accordingly, the Washington, D.C. publisher of six newsletters spoke at the recent conference on "What I've learned in 25 years of newsletter publishing." Excerpts of that presentation follow.

"Before I say anything about my experiences in newsletter publishing, I want to say something about the role that the U.S. Postal Service has played in the success of our industry. At our December conference, Lee Smith made the observation: 'We're still here.' I wonder how many of us could make that statement if it were not for the U.S. Postal Service.

"To my friends from Toronto, I'm sorry: I can't speak for Canada Post. But here in the States, there was not one single disruption of postal service from the time I got started in newsletter publishing in 1977 for nearly the next 25 years. (I am not counting the snowstorm that shut down everything on January 8 and 9, 1996.) There was not a single disruption until the United States Senate and the Brentwood Postal Facility here in D.C. were attacked by anthrax in the middle of last October.

"There were three days' worth of incoming mail that we did not receive until December, after it was sent out of town to be irradiated and came back looking like parchment. But my point is, despite this disruption, the postal system still works. It gets our products out, it gets our marketing messages out, it brings our revenues in. It is a constant in our changing world."

Technological evolution

And goodness knows what changes there have been! I'm going to give you some words that have come into the language during the 25 years I have been in newsletter publishing. These are in reverse chronological order, words that did not exist when I started:

* webmaster

* web site

* e-mail

* cell phone

* fax

* personal computer

"What did we have back in 1977? For production, there were basically two newsletter styles: typeset and typewritten. If you wanted a formal look, you used professional typesetting equipment. If you wanted an informal style, you used a Selectric typewriter.

"Now we have desktop publishing so we can emulate typesetting or typewriting.

"For marketing we had the postal system which we continue to use. But now we also have the internet. I guess you could say that with the internet we can emulate marketing.

"For gathering news, we then had a reporter with a telephone. Now we have a reporter with a telephone and internet access. (And the reporter with internet access can emulate reporting.)

"The more I think about it, 25 years ago things were as good as they needed to be. So I cannot honestly say the best years are yet to come. But I'm still having a good time. That comes from someone who started out as an editor and publisher, doing my own reporting, then spent a couple of decades overseeing others ... and now for the past two years (in addition to my other duties) I have been once again reporting and editing one of my own newsletters."

What Myra Lieberman thinks of newsletters--and Sidney

"I know how we all consider ourselves important and consider our publications to be important. But over the years I have had a few jolts back to reality.

"When I started my first newsletter, I remember how excited I was to become a publisher. I thought the whole world would share in the excitement. I envisioned it being sold on newsstands. I issued a press release announcing the beginning of my newsletter's publication.

"Then I went to a high school reunion and Myra Lieberman from the 12th grade asked me what I was doing. I explained that I worked for NBC News in New York, but that on the side I published a newsletter.

"She said, 'Sidney, I really thought you were going to turn into something.'

"Eventually I quit my regular day job and went into newsletter publishing full time. One day I ran into a colleague from SDX, the Society of Professional Journalists, who had known me when I was at NBC News. I told him that I was now doing newsletters instead.

"There was silence. I could see pity in his eyes."

Goldstein's Theory of Market Penetration

"Over the past 25 years I do believe I have gained a perspective on particular issue that affects newsletter publishers, particularly those in defined niche markets.

"First, Goldstein's Theory of Market Penetration. This theory makes use of three rules of thumb I've learned from attending so many of these conferences.

"1. If there is room for one newsletter in a given market, there is room for two or three.

"2. A newsletter saturates its market at somewhere between five and ten percent of its mailable universe.

"3. There is usually a 20-percent reader overlap between directly competing newsletters.

"(Let me explain that overlap. A publisher who does a lot of acquisitions told me that when they acquire a newsletter that they have been going head-to-head with, they invariably find that 20 percent of the actives were already on their own list.)

"So here are the 'givens': a market can support three newsletters on the same subject. Each of the publications saturates the market at no more than ten percent of the universe. There is a 20 percent overlap between competing newsletters.

"This is a matrix problem in mathematics. You have three circles that (to a certain extent) overlap (sort of like the Olympic rings). One of the circles, representing one of the newsletters, captures (perhaps) ten percent of the market. The second newsletter captures another eight percent. Then the third newsletter gets maybe another six or seven percent. All together, the three newsletters command a total of about 25 percent of the mailable universe.

"This tells me that (conversely) 75 percent of all the people in the world will not subscribe to a newsletter.

"How do you get them? I don't know. Maybe you don't. But what I did figure out is how to accelerate a newsletter's market penetration."

The forced free trial

"... At this association's December conference in 1983, there was an amazing presentation by Barrie Martland that opened my eyes to the conversion process. He spoke about bringing in new customers for a low-price trial, then all the different ways he tries to step them up to higher price levels. I was inspired to apply this to my situation, but wondered how I could possibly bring in enough trials to work for a government-oriented newsletter with a limited universe.

"That's when it occurred to me to select the trial subscribers myself, at zero price. Then put them into a pattern for conversion to a regular subscription. I called this technique the forced free trial * The prospects got eight free issues, twice a month over a four-month period.

"Along with the conversion efforts, the cost was 25 times the cost of sending them a single direct mail package. But the results were also typically 25 times as good, or better, enabling me in many cases to saturate a market seqment with a single four-month campaign.

"This has been one of the staples of my marketing efforts for various weekly, semi-monthly and monthly publications ever since. In this way I have dealt with the obstacles to market penetration in the past and I offer the forced free trial to you as an ongoing solution for the future."

1900 L St., NW #312, Washington, DC 20036, 202-835-1770, fax [phone].

* While some would dispute Sid Goldstein's claim to have invented the forced free trial, almost all newsletter publishers do credit him with popularizing it through detailed conference presentations over the years.