Newsletter in history
Newsletter is a type of grey literature, i.e., materials produced and distributed outside the traditional academic or commercial publishing institutes. It is usually a short report containing news or topics of interests to its recipients.
Common newsletters around Middle Ages were trader’s newsletters to inform trade and market information. In the 16th and 17th centuries, there were newsletters in England featuring updates from colonies. Benjamin Franklin also published newsletters since 1734. He covered weather predictions, recipes, trivia, and advices which he sold 10,000 copies a year. Companies also started picking up this trend, a famous example is the Michelin Guide which was launched by Michelin since 1900. With more advanced printing technologies, newsletters directly influenced the evolution and development of the newspaper sector.
In the 1930s and 1940s, amidst a crisis of confidence in the newspaper industry and enabled by the affordable new technology, modern newsletters started to spread. Cockburn from UK and Seldes from US created quite impactful newsletters in the pursuit of more liberal expressions. Tired of The Times’ conservative streak, Claud Cockburn resigned and started writing the first newsletter on a mimeograph machine in 1933. His subscribers included Charlie Chaplin and King Edward VII. In 1940, as the newspaper sector consolidated towards monopoly and impacted by business interests, George Seldes quit from Chicago Tribune and started his newsletter In Fact which was labelled as ‘an antidote for falsehood in the daily press’. His subscribers included Eleanor Roosevelt and many senators at the time.
Newsletter in the 21st century
Membership and subscription business model have been around for a long time. However, in the last 5 years, email newsletter subscription business model witnessed a significant boom. More newsletters start-ups were formed on daily basis. There are also many newsletters’ platforms being established and evaluated with million-dollar value potential.
For example, this year in Feb, Twitter recently announced acquisition of Revue which is a platform that helps anyone to create and get paid for newsletters subscriptions. Back in Jan, HubSpot acquired The Hustle which creates newsletters and organises events for its members, for an estimated $27 million. In 2020, Business Insider acquired Morning Brew, a college founded newsletters, for $75 million. In 2019, Substack, a newsletter platform founded in 2017 and incubated by Y Combinator, has secured $15.3 million Series A funding led by Andreessen Horowitz.
Newsletters seem to have started a second life and it has emerged as one of the main trends in the digital content creation and distribution economy along with trends like Podcast, Vlog and Livestream. The millennial generation will not be like their parents who spend time sifting through physical newspaper with tons of paragraphs or opening a few news websites like BBC and CNN to click around numerous headlines. Millennials will prefer to start their day with quick, convenient, and quality update and content about the world with no more than 3–5 minutes. Well curated newsletters delivered directly to the email inbox with social network links of the authors for intimate interaction will likely become a new media and lifestyle.
Driving Factors
I think below are the five main driving factors to explain the boom of email newsletter subscription businesses.
Firstly, the trend of reading gradually shifted to favour short-form over long-form, non-fiction over fiction. In the past 5 years, the % of adults reading novels in the US fell from 45% to 42%. As on-demand video content such as Netflix takes up more time, this decline in reading fictions rather than watching fictions is probably not surprising. Meanwhile, revenue from nonfiction titles soared by about 30% which might reflect readers’ changing tastes and habits towards fact-based information and needs for learning.
Secondly, traditional emails have resumed its position to be the most direct, intimate, and effective marketing and engagement channel. Social networks have saturated and filled with noise, bots, over-crowdedness and limiting formats of content consumption (e.g., short message on Twitter, overuse of hashtags, lack of filter with explosive information).
There are 3.9 billion active email users globally and email address has become more important than phone number in user identification. People use work or personal email addresses to register for tax, to access banking and finance applications, to book doctor appointments, to apply for a job and so forth. Emails provide more control and direct feedback channel to both newsletter creators and subscriber recipients. There are also more analytics available in the last 10 years on email interactions such as open rate and subscription retention.
Thirdly, there is an increasing need for niche topics (e.g., cryptocurrency, gaming, multi-culture) and customised content demand from the millennial generation. There is also a different preference such as the use of informal language, use of emoji and gif, and use of embedded multi-media resources. Traditional news and magazines publishers such as BBC, CNN, Wall Street Journal, Economist, FT, and National Geographic will not meet the vastly various interests and content demand in timely manner. To make it worst, the trust from the mass media has been declined with known biases and even ‘fake news’ misleading reporting. Therefore, the market, especially young readers, is hungry for trust-worthy and creative content producers and fresh ideas and thoughts.
The other factor which supports the supply side is the low cost and low level of entry barrier. Virtually anyone can start using a free newsletter service such as Mailchimp and Sendinblue to start populating content and sending to subscribers’ email inboxes.
Finally, the pandemic might have accelerated the newsletter subscription businesses greatly. Many high-profile journalists would work from home and launch their own brand via newsletters rather than depending on the fate of their news employers (e.g., Alex Kantrowitz left Buzzfeed, Casey Newton left The Verge). For topics on technology and business, they can work independently without technical support or resources. For non-journalists, as they spend more time at home, they will also find time to practice writing and producing quality content for readers which might have been their long overdue side project.
I have researched a few notable Newsletters (see below table). Most content is focused on business, finance, and technology. The target readers are also concentrated on young generation professionals who are motivated to learn about things quickly every day.
Ending remarks
I started my own series of weekly newsletters 4 weeks ago. Having 6 of my friends as subscribers, I was motivated every week to read more, research more and produce more content for the newsletter. I have not yet thought long and hard about who the newsletter is for, why would the target readers like the content and how it might monetise to compensate the cost of my time. Therefore, I wanted to research on the newsletter subscription business model.
It is interesting to see how some newsletter turned from side-projects into successful enterprises. This is surely a hyper competitive area to win sizeable and stable subscribers. Despite the low operating costs, I think the financial upside does not look promising. According to MonetizePros, the median CPM (cost per thousand impressions) of an ad in an email is $3.45. This means, even if I manage to have 100k stable subscribers, working on producing quality weekly newsletter will only generate about $1380 revenue a month.
However, if the 100k subscribers are willing to pay $5 monthly subscription fee, it is another story. For sure, the time and efforts to obtain 100k free subscribers and 100k paying subscribers are entirely different. With the volatility in the number of subscribers, the valuation of newsletter projects varies greatly. Many newsletters I researched have been evaluated quite high with the confidence from the VC investors.
Personally, I do not think I will be willing to pay for newsletter subscriptions because I can find quality free content online with a little more time and effort. For the free newsletters I subscribed, I do not mind the content to include marketing materials for their sponsors. Also, if the newsletter content gained my trust, I think I would quite like to check out the advertised products or services. In this scenario, I think it is a more effective marketing channel than Google or Facebook.
To cover costs for quality content, successful newsletters will need to scale, thus, the market will consolidate quickly in a fight for worth spaces in your inbox. There will be developments into few new and big names. They will surely be significant players in the era of new media, going beyond newsletters, extending into a variety of content medium to cater for different needs (Podcast, Livestream, Events, Books, etc.) for their millennial reader groups they have built trusted relationship with. I am glad to have experimented with my newsletters with various platforms and technologies and I am in search of my trusted source of news and viewpoints on topics I care about. What will be the preference for generation Z? Let us watch the space.
