Meta, which owns Facebook, is killing its newsletter product, Bulletin. Substack, a tumultuous newsletter startup, has cut promotions to writer. Atlantic is restructuring newsletter deals with writers.
After the excitement over the potential of paid email newsletters to transform the media industry, there are signs that the bubble may burst.
“Text on the Internet is arguably the most competitive medium in human history,” said author Ben Thompson. ruse, influential media and technical publications. “If you ask people to pay for your newsletter, it has to be something you can’t get anywhere else.”
Email newsletters have been part of the publishing toolkit for decades, powering media startups such as Politico, Semafor, The Ringer, Axios, Punchbowl News, and Puck. In the hustle and bustle of social media, journalists use newsletters to create a direct connection with their readers and convince them to pay for their news and serve their ads.
In recent years, the humble email has become a star in its own right. During the pandemic, media companies sought to capitalize on the growing excitement about the format from both readers and writers. But with the rapidly changing priorities of IT giants and the unforgiving economics of digital media, executives are taking a tougher look at their writer contracts, and the math is taking place in their inboxes.
Jacob Cohen Donnelly, publisher of the Morning Brew Business News Outlet and author of the newsletter, said: media operator“People don’t have that much time now that the world has started to open up.”
The Atlantic is one of the most prominent recent adopters of email newsletters. Last year, CEO Nicholas Thompson rolled out a program that allowed certain newsletter writers to earn big bonuses for converting readers to Atlantic subscribers. Converting 14,500 readers, at the upper end, could bring some writer’s total annual compensation closer to $400,000, according to people who spoke anonymously to discuss details of the top-secret deal.
Newsletter writers are also paid a base salary, some over $100,000, while others achieve less aggressive goals for lower pay.
The program has attracted writers such as Charlie Worzel, Molly Johnfast and Nicole Chan.
But many of its goals have proven too ambitious, and Atlantic is reassessing how those deals are structured, Thompson said in an interview. The company has offered to extend the contracts of its newsletter writers to evaluate how email affects the likelihood of readers staying subscribed. It likely made a small contribution to The Atlantic’s revenue, and the company said it plans to continue the program.
“It’s not as hot and bubbly as it was 16 months ago, but I don’t think this is the end of the newsletter,” Thompson said. “There will be many successful newsletters.”
Elsewhere, there has been a setback of email newsletters. Meta announced earlier this month that it was shutting down its newsletter service Bulletin, which includes writers such as Malcolm Gladwell and Mitch Albom. The New York Times has seen prominent newsletter writers such as Kara Swisher and Jay Caspian Kang depart on other occasions.
Substack also cut the upfront payments it was making to lure writers to the platform after scrapping funding plans and laying off some staff, said people familiar with the startup’s operations. The Information, a publication covering technology and finance, formerly report Regarding the decision to reduce the substack upfront payment.
One of Substack’s most read political publications, The Dispatch, left the platform this month. In an interview, editor-in-chief and co-founder Jonah Goldberg said the publication had “overtaken” Substack.
“Substack really wants to be a platform that is kind of forward and about Substack,” he said, adding, “We wanted to be our own independent media company.”
Substack co-founder Hamish McKenzie said in an interview that it would be inaccurate to link Substack with other media and technology companies that have cut back on newsletters. He said the company is similar to technology platforms such as Twitch and He OnlyFans, connecting creators and financial backers not only through email but through various formats, including podcasts.
“Substack’s secret sauce allows author or writer ownership and independence, expressed through a direct relationship with the audience,” said McKenzie. “E-mail is a convenient means of achieving that goal, but that is not what it is about.”
Substack, like other privately-owned newsletter startups, doesn’t publicly disclose its financials or earnings projections, but people familiar with the matter said in May that 2021 revenue is around $9 million. said it is.
Newcomers are also moving away from email after trying this format. Zestworld, a digital comics platform, initially modeled on Substack, emailing graphics from creators with exclusive contracts to his stories. But when user growth plateaued a quarter after launch, Zestworld realized that email wasn’t the natural environment for entertainment content and switched to publishing on its website. Growth has since picked up, said Chris Giliberti, CEO of Zestworld.
“It’s very difficult to control the user experience with email,” says Giliberti. “You can’t do a lot of rich, interactive things.”
This is not to say that newsletters will go away anytime soon. Some companies have found success with this format. Puck, a newsletter-powered media company approaching 20,000 paying subscribers, said Puck is a potential investment with the goal of raising about $15 million at a valuation of at least $75 million. I recently had a meeting with my family.
Pac co-founder John Kelly said subscription newsletters are part of the new model of publishing, comparing it to magazines in their heyday.
“If you look back at the history of the magazine industry, it’s a multi-billion dollar total market size business focused on affinity-based creative products where people subscribe because they absolutely love them. I did,” he said.
Pac’s paying memberships are growing by an average of 20% month over month, Kelly said, but declined to comment on fundraising conversations or the company’s revenue and profit targets.
According to Mailgun, the email delivery service used by Substack and Ghost, the online publishing industry’s sending volume has more than quadrupled in the past two years. The New York Times continues to add subscribers to a newsletter just started by restaurant critic Pete Wells and a newsletter authored by opinion columnist Ross Douzat, a company spokesperson said. said.
Many writers continue to benefit from the explosive craze around newsletters. Her food writer, Emily Nunn, who worked for The New Yorker and The Chicago Tribune, writes a twice-weekly newsletter focused on salads, and in March 2021, she will make more than $20,000. Sold. Since then, her signups have increased steadily, Nunn said of her newsletter. salad departmentprovided much more income than her previous journalism jobs.
“It’s rare for newspapers to get a big pay rise,” said Nunn, who received an upfront payment from Substack. “You can win a Pulitzer Prize, but they don’t say, ‘This is a great change.’ Thank you for being honest.'”
Axios co-founder Jim VandeHei says engagement with his company’s newsletter has never been higher, especially among influential readers.
“But I’m pretty sure the market for crappy newsletters that most people don’t read is collapsing,” Vandehey said. “This is not the peak of newsletters. It’s the end of vulnerable newsletters.”