After a rush of excitement around the potential for paid email newsletters to transform the media industry, there are indicators that the bubble may be popping.
“Text on the internet is arguably the most competitive medium in all of human history,” said Ben Thompson, who writes Stratechery, an influential media and tech publication. “If you’re going to ask people to pay for a newsletter, it has to be something they’re not getting anywhere else.”
Email newsletters have been a part of the publishing tool kit for decades, powering media startups like Politico, Semafor, The Ringer, Axios, Punchbowl News and Puck. Amid the noise of social media, journalists use newsletters to forge direct connections with readers, persuade them to pay for news and deliver them advertising.
In recent years, the humble email became a star in its own right. During the pandemic, media companies sought to cash in on a surge of excitement around the format from both readers and writers. But the fast-changing priorities of tech giants and the unforgiving economics of digital media have led to a reckoning at the inbox, as executives take a harder look at deals they struck with writers.
“Everybody had time to both create and consume,” said Jacob Cohen Donnelly, publisher of the Morning Brew business news outlet and author of the newsletter A Media Operator. “As the world has started to open, people don’t have as much time.”
The co-founders of Substack, a newsletter startup — (from left) Hamish McKenzie, Chris Best and Jairaj Sethi — in their San Francisco office on March 16, 2022. (Lauren Segal)
The Atlantic has been one of the most prominent recent adopters of email newsletters. Last year, Nicholas Thompson, the CEO, rolled out a program that allowed writers of certain newsletters to rack up major bonuses if they converted readers to Atlantic subscribers. At the upper end, some writers could earn total annual compensation approaching $400,000 if they converted 14,500 readers, according to people who spoke anonymously on the confidential deals.
Newsletter writers were also paid a base salary, some exceeding $100,000, and some hit less aggressive targets for lower compensation. The program attracted writers such as Charlie Warzel, Molly Jong-Fast and Nicole Chung.
But many of the targets proved too ambitious, and The Atlantic is reassessing the way it structures those deals, Thompson said in an interview. The company has offered to extend the contracts of its newsletter writers to assess how the emails affect the likelihood that readers maintain their subscriptions. Still, he said that the newsletter program had most likely made a small contribution to The Atlantic’s bottom line and that the company planned to continue the program. “It’s not as hot and as frothy as it was 16 months ago, but I also don’t think this is the end of newsletters,” Thompson said. “There are going to be lots and lots of successful newsletters.”
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The author and podcast host Malcolm Gladwell, a featured writer in Meta’s newsletter product, Bulletin, which will be eliminated, at his office in Hudson
There have been setbacks for email newsletters elsewhere. Meta said this month that it was shutting down its newsletter service, Bulletin, which included writers such as Malcolm Gladwell and Mitch Albom. The New York Times has seen some prominent newsletter writers, including Kara Swisher and Jay Caspian Kang, depart for other opportunities.
And Substack has curtailed upfront payments it was making to lure writers to the platform, after scrapping plans to raise money and laying off some of its staff members, people familiar with the startup’s operations said. The Information, a publication that covers technology and finance, earlier reported on Substack’s decision to cut advances.
One of the most-read politics publications on Substack, The Dispatch, moved off the platform this month. In an interview, Jonah Goldberg, the editor-in-chief and co-founder, said the publication “outgrew” Substack. “Substack really wants to be a platform that is sort of forward-facing and is about Substack,” he said, adding, “We wanted to be our own independent media company.”
In an interview, a Substack co-founder, Hamish McKenzie, said it was inaccurate to associate Substack with other media and tech companies that had cut back on newsletter products.
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He said the company was more similar to tech platforms like Twitch and OnlyFans, which connect creators to financial supporters through a wide variety of formats including podcasts, not just email. “The secret sauce of Substack is enabling that sense of ownership and independence for the creator or the writer, and it’s expressed through the direct relationship they have with their audience,” McKenzie said. “Email is a useful means to achieving that end, but it’s not the end.”
Substack, like the other privately owned newsletter startups, doesn’t publicly disclose its finances or profit projections, but people familiar with the matter said in May that its revenue was about $9 million in 2021.
Newer entrants are also swerving away from email after experimenting with the format. Zestworld, a digital comics platform, initially modelled itself on Substack, emailing graphic stories from creators signed to exclusive deals. But when user growth plateaued one quarter after the service had begun, Zestworld realised that email wasn’t a natural environment for entertainment content and switched to publishing on its website. Growth has since rebounded, said Chris Giliberti, Zestworld’s CEO.
“It’s really hard to control the user experience in email,” Giliberti said. “You can’t do a lot of rich, interactive stuff.”
This is not to say newsletters are going away any time soon.
The New York Times is continuing to add to its newsletter offerings for subscribers, including one written by restaurant critic Pete Wells that just began as well as another by opinion columnist Ross Douthat, a spokesperson for the company said.
Many writers continue to benefit from the burst of enthusiasm around newsletters. Emily Nunn, a food writer who has worked for The New Yorker and The Chicago Tribune, writes a twice-weekly newsletter focused on salad that generated more than $20,000 in March 2021, the month after she began charging subscribers.
Sign-ups have increased steadily since then, and Nunn said her newsletter, The Department of Salad, provided much more income than any of her previous journalism jobs.
“The salary that you get going in at newspapers rarely takes a leap,” said Nunn, who got an advance from Substack. “You can win a Pulitzer Prize, and they don’t say: ‘Here’s a nice chunk of change. Thanks for being you.’ ”
A co-founder of Axios, Jim VandeHei, said his company’s newsletter engagement was higher than ever, especially among influential readers.
“But I’m sure the market for crappy newsletters few people are reading has collapsed,” VandeHei said. “It’s not peak newsletters – it’s the end of weak newsletters.”