Why Journalists May Have a Big Problem With Making Money Through Newsletters

Gary Andrews
Nov 1, 2020 · 6 min read
Typewriter with the words Write Something on the paper
Photo by Markus Winkler on Unsplash

Newsletters were, on the face of it, an unlikely candidate to be 2020’s hot new medium. They’ve been around pretty much since the internet was invented and are possibly one of the least sexy formats available, partly because if you make the design too fancy, you’ll probably break a few inboxes.

And yet, here we are. Journalists and thought leaders are setting up their own subscription services, firing off regular emails with long hot takes. Publishers are doubling down on email subscription over social media. The humble inbox is having its moment in the sun as marketers realise there’s more to Gmail than some cheap display advertising and firing spray and prays into your inbox.

But if newsletters are no longer the past, they’re also not quite the future either (Adam Tinworth has a good piece around this).

Newsletters are certainly not saviours of journalism and a lot of new companies or even solo writers who are building a business around newsletter comms will probably fail. At the same time, there’s a very good reason why publishers should continue to prioritise the humble inbox.

The plus side: taking back control

Let’s unpick this a bit more. Firstly, the positives — and there are a lot of reasons why newsletters are here to stay and form an important part of the publisher ecosystem.

The main advantage here is that newsletters give the sender control over their first party data, even if the production is done on a third party platform. After years of trying to rely on the likes of Facebook who were at best indifferent and, at worst, actively harmful to publishers, news brands are discovering they had a potentially profitable and easy-to-active source of clicks at their fingertips.

It’s much like the teen high school movie where the heroine realises the popular school jock isn’t all he’s cracked up to be, and the shy introverted nerd who’s spent the whole film being ignored is actually a much better fit.

Newsletters allow publishers — and individuals — the opportunity to build a direct 1-to-1 relationship with their users. They own their customer data and have control over distribution and how the newsletter is seen (algorithmic inboxes aside).

And that direct relationship allows for a very classic tactic: convince your loyalists to pay more for a premium product, while enticing a more casual buyer in with a lower tier cheaper or free offering, the ladder of which can be made profitable by adverts and sponsored content.

As long as you can manage subscriber churn and have a compelling enough proposition to keep people opening and clicking then it’s relatively straightforward to do well and drive a lot of value from your audience for relatively little cost on both sides (ok, it’s not quite that simple. But more simple than trying to work out how much of your programmatic inventory is being clicked on by a human). Newsletters have the potential to be a stand-out star on the P&L sheet.

It’s also incredibly easy for individuals with profile — star journalists, freelancers, thought leaders, LinkedIn hustle-porn bros — to leverage their followings and networks to create a relatively stable income source. Even as an individual, if you’ve got 50 subscribers all paying $10 a month, it’s at least $500 you can plot into your monthly budget. In a world of freelancing that can sometimes make the difference between a good month and having to eat beans for a week. Be big enough to get a small amount of sponsorship and you’ve got a potentially strong and steady income stream.

Everybody else is doing it so why can’t we?

But the same elements that make it so appealing to individuals are also the very reasons it will be tough for the majority of solo entrants. Marketing professor Mark Ritson’s “Virtual Yoga With Gary” sums this up well. His wife’s yoga teacher went fully remote during lockdown but hadn’t accounted for the fact that he was now competing with a large number of other virtual yoga teachers, as opposed to doing 1–2–1 sessions at home.

There’s a super low barrier to entry. Anybody can start up their newsletter for a small monthly fee, and knock up a half decent template with the help of a free Canva account. It’s much easier than podcasting or YouTubing, both of which require more time, equipment and a specialist skillset.

This means that you’re not the only game in town. It’s the Brick Lane of brand building. There’s a lot of curry houses and the customer can be very discerning where they want to spend their money (if they’re smart, they’ll take a tube to Tooting Broadway instead for a cheaper, superior curry).

Theoretically this shouldn’t be a problem. There’s enough people and newsletters to go round, surely?

Well, yes and no.

Ultimately even a $5 a month payment is still a $5 a month payment. Add in the likes of a Netflix and Spotify subscription, plus an online subscription to your news publication of choice. Suddenly that $5 becomes easy to cut.

Your superstar freelance journalist is suddenly no longer competing for byline space with other writers. They’re having to convince their readers that they offer better value than signing up to The Economist, while also combating subscriber churn and acquiring new readers. All on a fraction of the budget, resources and time of their bigger competitors for attention, both in and out of category.

There’s also the need to hold the subscriber attention as well. Newsletters aren’t competing for space in your inbox. They’re competing for your time and attention versus almost anything else you can think of filling your day with.

There’s plenty of good free newsletters from individuals and news publications. These freebies also compete for a reader’s attention. It only takes a few weeks for the solo subscription newsletter to drop out of reading habit — maybe due to a couple of iffy weeks, or a couple of free newsletters that cover the same area better — and that’s $10 of income gone.

Big publications can weather the ups and downs of subscriber churn a little easier given their large subscriber numbers, but the solo newsletter auteur is likely to be running on tighter margins.

So, to recap, our newly empowered freelancer has to define a clear brand positioning that’s more compelling than the established competition, keep front of mind for new subscribers, provide better content than lower or zero priced entrants into the market and keep a clear eye on profit, loss and time spent creating the newsletter. Given that time is, quite literally, money to many freelancers, an ineffective or low impact newsletter could actually be costing them cash overall.

That’s a steep learning curve for any young marketer, let alone a journalist or thought leader who perhaps isn’t quite as commercially-minded as the competition.

Where individual-led newsletters may be heading

Of course this is a little simplistic, just as it’s dangerous to made broad, sweeping assumptions about any kind of marketing. There are newsletters that provide more value than just subscription and revenue.

Tech consultant Martin Bryant’s daily Big Revolution newsletter is just as much about showcasing his knowledge and abilities to land bigger, profitable consulting work as it is to drive revenue through the newsletter. Then there’s analyst Benedict Evans, who offers a premium and free version of his no-frills newsletter, but also can use it to promote an exclusive $500-a-head limited space event, in the same way that Time Out, say, can push live events (at least, it can when there’s no global pandemic).

But all of this requires a lot of effort and hard work. It will be no surprise to see many well-written popular newsletters crease publication because the creator has neither the time nor the money (or is not generating enough money to make it worthwhile) to keep publishing. It’s why I’d expect, as ever, to see consolidation in the hands of publishers and bigger names. It’s what happens with every free-to-entry comms platform.

This isn’t to say that newsletter creators should shut down immediately. There’s enough space for well-written, entertaining independent newsletters that are financially viable for their authors, while many people will simply create out of love and enjoyment.

And newsletters will not go away as a key part of publishing. They’ll evolve, as any medium does, but they offer a lot of value to those who do it right. They won’t save journalism, but they can help. As ever, it’ll be toughest for the smaller players. But wasn’t that ever the case. Very few shiny new objects remain truly egalitarian for a substantial period of time.

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