A growing number of reporters are leaving newsrooms to create their own newsletters, a trend sped up by the media crisis unleashed by the pandemic.

But they were not alone. Many independent writers were starting already their self-publishing ventures, thanks to a new ecosystem of tools and platforms that allow to create, distribute and monetise content with subscription models. The champion of this newsletter economy is Substack, a tool that got its name in less than three years from launch, thanks to word of mouth among media professionals. 

Expert writers and journalists bet on the idea that their original reporting and analysis can attract enough subscribers to make decent revenues.

Others realize that they cannot ask readers to subscribe to theirs and other dozens of independent newsletters: to develop more sustainable alternatives, writers began bundling together their newsletters or developed collective newsletters. They are creating new types of newsroom and reinventing the magazine experience with a mix of vertical newsletters and podcasts. A look into what is happening and why it matters. 

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  • The coronavirus crisis is challenging the news industry, and especially those publishers that went too late in introducing digital subscriptions and depend too much on advertising revenues. To survive, many newsrooms are making rounds of furloughs and layoffs. The cuts are hitting hard on both magazines and newspapers, both the paper-first and the digital-first outlets: Vice, Quartz, The Economist, Conde Nast are a few of the big names that announced to axe jobs and internships. 
  • For many of their staff reporters and freelance contributors, setting up their own newsletters and podcasts is an attempt to develop a viable alternative, or at least a side hustle, to get through this crisis and still do what they love: reporting. So, the months of March to April 2020 have seen a surge of editorial newsletters and podcasts outside of the legacy publisher titles.
  • But even before that, a growing number of staff reporters started newsletters as side projects to communicate more directly with readers, test out new ideas, share thoughts and get early feedback, or cover topics they could not fit into the publications they were working for. Sometimes, when the reports left their job, they literally took their personal audience with them and moved their newsletters and their readers to the new job.  
  • This new class of newsletter authors found a fertile ground where newsletters and podcasts are striking a chord with readers: not only with the traditional small niche of “news junkies”. People looking for a more personal – and more controlled – experience than on social feeds are happy to open the door of their mailboxes: they subscribe to newsletters covering all topics.
    • The attitude to pay for newsletter subscriptions is growing, too. People are paying for valuable editorial content. In the background, new tools and platforms offer to creators the chance not only to manage content and audiences, but to monetise with a fully managed subscription management solution – enterprise-like but at a fraction of enterprise costs.
  • The champion of this newsletter platform ecosystem – part of the new paradigm called “passion economy” – is Substack, a platform where people can create and run newsletters (and podcasts), both free and paid. Substack itself works as a pure enabler: it gives writers full control over their subscriber lists, freedom to decide what fee to apply, how often to write and what. For its service, the platform charges always the same fee: 10% on the reader’s subscription revenues. For free newsletters, the platform is free (and advertising a no go).  
  • Substack is also proud to mention that several of their hosted authors are generating significant returns, over 100,000 USD per year. According to the words of Substack founder Hamish McKenzie, there “are early signs that we are witnessing the emergence of a new media economy”, populated by a new “rapidly growing middle class, of writers and podcasters netting incomes that range from pocket money to high five figures (…) and over 100,000 paying subscribers to Substack publications”.
    • Some of the most successful authors are Emily Atkin that left the New Republic to launch in September 2019 Heated, a deeply reported, four-times-a-week newsletter on the climate crisis. As of June 2020, Heated was among Substack’s top paid publications, with 28,000 subscribers, of which 3,000 on a paid subscription. Other top names are the China expert Bill Bishop and the liberal political writer Judd Legum

Substack is not overselling itself (well, not too much): the ambition to emerge from the creator middle class  creating a small media empire based on newsletters is legitimate. It has already happened.

  • Think at The Skimm: founded in 2012 as a newsletter startup by former NBC producers and targeted at female millennials, it became a powerhouse with over 130 employees (now, affected by the Coronavirus recession, has laid off around the 10% of its workforce), 8 million subscribers, and a portfolio of events, sponsorships, podcasts and a news app.
  • In a different topical domain, consider the one-man-band newsletter Stratechery, by Ben Thomson, that analyzes the strategy and business side of technology and media to deliver a combination of free weekly articles and subscriber-only daily updates. With 100,000 subscribers paying 120 USD per year, Ben Thomson is close to be one of the most paid tech columnists worldwide. 

The lines between independent authors and traditional newsrooms are blurring on those newsletter platforms: established media or soon-to-be-launched newspapers have been landing recently on Substack to run experimental newsletters, attract a new audience, or us the newsletter ecosystem as a test field for their editorial formula. 

  • Elevate the Conversation, curated by four Wall Street Journal editors is part of the publisher’s effort to reach a younger audience. With a focus on the environmental and social issues that influence the way we work, spend our money and live our lives, the newsletter is written like a conversation, where each editor engages the others in a kind of written dialog encapsulating tweets, graphics and visuals.
  • Domani is the pre-launch newsletter of a new Italian newspaper, named Domani (Tomorrow), whose start is planned for September 2020. The new editorial team and its contributors have been using the newsletter to introduce themselves and their works with daily features and columns: a tasting offer of what the newspaper will be. Substack, for Domani, is also a way to collect the first subscriptions and membership fees.

Not all that glitters is gold. And even when it is, you must work hard to find the gold vein. 

  • The promise of Substack and the other platforms of the “passion economy” – Patreon, Podia, Podbean… – is that it takes a small group of true fans for providing a decent funding. One of the standard-bearer of the passion economy, the former Andreessen Horowitz investor Li Jin, took the Kevin Kelly´s “1,000 fans” theory and stretched it down to 100 true fans as the threshold that the new ecosystem allows to be a viable business. 
  • The evidence shows that this micro-audience-business-model might work well for many creators and individual service providers – teachers, trainers, lifestyle counsellors, and many authors – but the business of journalism cannot work only for the hundreds or two thousands. 
  • Why? Let’s take investigative journalism, but also any kind of research-based journalism. It takes time, often requires more people to work on it, and that makes it expensive to produce. Not to mention some costs for legal protection. Not something you can do for 1,000 subscribers paying 50 USD a year. You need a critical mass of audience for that. 
  • The second big issue – for journalists but also for authors of any genre – is discoverability. Each newsletter, each podcast is a new title swimming in a sea where other hundreds thousand are swimming. There is not yet a proven discoverability model, both because of the fragmentation and because of some technical issues (such as the lack of transcriptions of many podcasts, a less standardized approach to tagging). That is why some of the most successful writers built their newsletters and podcasts to serve followers they had already on social media and on the publishing titles they were working on. They brough their fans onto the new platform. They did not find them there. 
  • A third issue is on the consumer side. I am a news junkie and an avid newsletter reader, and more recently have discovered and listened regularly to podcasts: I have subscribed to not less than 30 newsletters and 20 podcasts. Some come from established publishers, some from independent authors. Do you think I would be available to pay a separate subscription to each of them? Impossible, not even for budget reasons, but for cognitive reasons. To keep track of so many subscriptions is too much. Think at what some streaming platforms are already trying to prevent: the subscription fatigue by viewers overwhelmed by 10+ VOD alternatives. 
  • I can be the superfan of few offers – happy to subscribe and/or happy to support as a patron – but for many others, they must come to me for free or as a part of something I am already paying for. That is working, for instance, with the newspapers I have a paid subscription. There is a reason newspaper and magazines have not yet disappeared: a curated mix is a value both editorial and as convenience. 

The answer to those challenges is in the making. New bundles are born by entrepreneurial spirit and out-of-the-box thinking. They could contribute to reinvent the magazine experience and to create original, distinctive editorial offers.

If services like Substack were born as an “unbundling” of traditional newsrooms, now we see happening an interesting countermovement: writers are “re-bundling” their editorial offers by joining forces and federating to sell common subscriptions or start coauthored newsletters. They do so not mimicking the old newsrooms models, but starting from an in-depth knowledge of their audience, accumulated thanks to the very intimate, responsive relationship they have with readers. 

The result is not “miscellaneous” bundles, but very cohesive titles, that match precise segments: they might cover more topics, but they share a common voice, orientation, approach. If you subscribe to a bundle, you know what to expect. I see this as a reinvention of the newsmagazine experience, but with a refreshing perspective on how to serve readerships. Traditional publishers should look thoroughly into that to find inspiration.

During the Lockdown time, in April 2020, two of Substack’s most popular newsletters — Divinations, on business strategy, and Superorganizers, on the world’s smartest people — joined forces. For $20/mo., you can now subscribe to the Everything newsletter. The two creators have similar readerships and their content complement each other. Since then, they’ve turned their partnership into a company, adding some employees and opening their newsletter to other contributors. Other writers are following this federative pattern, like the promoter of the non-profit news project Opt Out.

  • An organization that is more close to a traditional newsroom, but works as a collection of newsletters on Substack, is the “center-right” digital media company “The Dispatch”, founded by two big names of American conservative journalism and backed by Venture Capital. It serves as an umbrella brand for six different email newsletters, and three podcasts published on Substack’s platform and since its launch in 3Q 2019 it has added 60,000 non-paying subscribers plus 10,000 paying subscribers, that brought in the around 1,4M USD revenues in March 2020. https://thedispatch.com/about?sort=newsletter

One of the first and most prominent examples of the “newsonomics” of bundles lanched in 2016 with the mission to create the most vast offer of local sport coverage worldwide. The Athletic is 100% based on subscriptions that cost $10 a month or $60 a year. The San Francisco based upstart raised almost 140M USD from VCs to finance growth. In three years, it has reached the 500,000 subscriber mark, expanded from the USA to other 47 markets and covers hundreds of cities and sport teams. The Lockdown hit sport news, so The Athletic – although not relying on advertising – had to cut the 8% of its newsroom, but this seems a temporary thing. To push new subscription further, the company has announced in July 2020 an agreement with Bloomberg to bundle their digital subscriptions. Interesting: bundles keep bundling.

One more thing about bundles. Bundling sounds like a pure commercial idea: collecting things to convince also the most reluctant audience to pay for content, but it is not just that.

Remember what used to make magazines or newspapers your favourite or not: the ability of match the right content for you. Bundling used to be the art and practice of curation, and in digital a data-driven science. Now, when newsletters and podcasts are becoming the new darling among content formats, the ability to bundle and serve newsletters (and podcasts) as a cohesive portfolio can make or kill a media business. 

Look at Axios. Born with the ambition to be something between the in-depth analysis of The Economist and the concision of tweets, Axios found in topical newsletter its magic formula. It delivers news written in bullet points, that tell you what is the news, what the background, what the big picture you need to get and what’s next if you want to dig deeper. They base the business on advertising and their newsletters are for free. When launching its mobile app in 1H 2020, the Axios team built it on the experience of email newsletters: the sections reflect the vertical newsletters, and the news is the same – crispy, readable in one minute each, of impressive clarity. A newsletter aggregator for the ones that prefer to get them on the app, instead of through the mailbox. 

What’s next. Bundling can be the future of paid newsletters. A way to promote innovative subscription models and recreating newsrooms as federations of authors.

  • Newsletter bundles are a smart way to offer readers value for money. And a way to explore potential customer segments, exploring different combinations targeted at distinct groups. 
  • With the right customer focus and entrepreneurial spirit, they can help the subscription economy to convince also the most reluctant to pay for content. 
  • The opportunities are vast, also for publishers that seek their way into the subscription business models (now more urgent than ever) to cooperate with independent writers and podcasters to develop publisher/authors bundles on digital. 
  • Platforms like Substack could consider offering readers the chance to assemble their preferred bundles (pick and mix) and pay one subscription.  
  • New collective newsletters can launch to explore any topical areas and segments. For podcasters, at moment threaten by the appetite of platforms like Spotify to lock in them in exclusive agreements, this can be an option too.

The path ahead will be full of trials, errors and pivoting.

But, with the right bundle, you can expect a true win-win content game: a viable business model for producers and a valuable offer for consumers.

And for all those publishers that know they cannot live any longer relying on advertising as a business model and social and search as the key audience drivers, bundles can offer a flexible way to speed up the path to become subscription-first businesses. Platforms like Substack can help try new things and making bundle experiments. 

Bonus read: https://newrepublic.com/article/157798/email-future-journalism


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