Media Fortune Fame & Folly

Will newsletters kill newspapers?

Amid the carnage of job losses at newspapers and digital news providers, email newsletters are beginning to look like a surprisingly important part of the future. Look at the rise of Substack, in the US.

Since 2017, it has provided commentators, journalists and web pundits with an easy-to-use platform that distributes their work and collects subscriptions from readers. There are newsletters on every subject imaginable. Many are high-quality journalism, some are truly brilliant. Not all the newsletters charge readers but, if they do, Substack takes a straight 10% of revenue; for free newsletters, there is no charge to the writer.

Substack has raised $17m in funding and has not yet produced a profit. Of course. But it does have more than 500,000 paying subscribers – doubled in the last few months. Its top 10 authors are said, collectively, to make more than $15m a year – which has also doubled in a few months. There are thousands of newsletters on the platform (the majority of which are free) and millions of active readers. It’s a haven for writers who don’t want to be edited, and a profitable place for established commentators to monetize their success.

The rapid growth has been turbocharged by a number of celebrated writers who now publish on Substack including: Andrew Sullivan (ex New York magazine), Glenn Greenwald (The Intercept), Casey Newton (The Verge), Matthew Yglesias (Vox), and Matt Taibbi (Rolling Stone). Each of them have tens of thousands of subscribers paying $5 or $10 per month. By way of contrast, Luke O’Neil – a less celebrated freelance journalist – earns more than $100k annually for his less-than-comfortable “Hell World” newsletter about the rigours of his American life. He has found his audience.

That’s the significance of Substack.

Every print-centric news brand knows too well that its commentators, contributors, and columnists are the magnets for readership. But are they choosing to ignore the changing relationship between readers and media outlets? Many readers follow a publication but they may actually care more about an individual reporter, writer, or podcaster.

But traditional news brands also fear that the economics of their bundled content might be destroyed by letting digital readers buy just the distinctive, exclusive content they want – and not the general news that they can find (more or less) everywhere else.

The potential is illustrated by “Letters from an American” written by a 50-something Boston history professor Heather Cox Richardson who covers political events every morning in a 1,000-word newsletter. She’s got 500,000 subscribers paying $5 a month for what is the most successful newsletter on Substack. The New York Times says: “Dr. Richardson’s focus on straightforward explanations to a mass audience comes as much of the American media is going in the opposite direction, driven by the incentives of subscription economics that push newspapers, magazines, and cable channels alike toward super-serving subscribers, making you feel as if you’re on the right team, part of the right faction, at least a member of the right community.”

Substack carries no ads so journalists don’t have to worry about click-rates or SEO. They can write what they like. But the so-simple platform also offers financial freedom: “We allow writers and creators to run their own personal media empire.” While Substack takes its 10% commission and credit card payment company Stripe takes another 3%, writers get the rest. Substack also offers grants of up to $100k to help writers get started. It even helps to fund the legal costs if newsletters are sued, say, for libel.

Not all the Substack newsletters appeal to large audiences. Some must have very small numbers of paying subscribers. But, at a time when there are rumours of Donald Trump and all kinds of celebrities defecting from Twitter to Substack, it does feel as if – like podcasts before them – newsletters are becoming mainstream.

It also seems like an echo of the blogging explosion in the early days of the internet. But that was when everything was free. Substack is showing there’s real money to be made from newsletters – and from journalism. Right across the print, broadcast, digital media spectrum, you can see changing appetites: consumers are increasingly averse to advertising (smartphones reinforce that) but willing to pay for the content they really want. The trends are powered by the polarisation which has peaked interest in “echo chamber” politics. There is also the reality that the email inbox is becoming a more attractive medium than the news feed.

Substack gives newsletter authors a ready-made business model, especially in the US where newsletters new and old, paid-for and free, are an established part of the media industry. But it seems different in the UK where email newsletters are most often just a promotional medium for newspapers and magazines.

But the UK, like the US, is a market with growing numbers of unemployed journalists. Established daily newspaper commentators might also look wistfully at the freedom – and profits – enjoyed by counterparts across the Atlantic. For legacy publishers, it all comes back to the little subject of unbunding.

The New York Times’ 1m+ paying subscribers for its daily crossword puzzle and food content are the reminder of the upside potential of giving readers the choice. But most daily news brands stubbornly stick with their bundles. As a result, the UK, daily newspapers allowed The Athletic to muscle in on their highly-prized premier league football-soccer coverage with a subscription newsletter many of them could have bested.

Those same national newspapers might also not worry too much when a columnist or commentator decides to set up with Substack, or with Twitter which (having bought the Revue newsletter platform) is itself planning the launch of a Substack-like service. But the biggest news comes from Facebook which this week announced plans for a yet-to-be-named publishing platform that will be integrated with Facebook Pages later this year. In addition to text, the Facebook platform will allow the publishing of live video. It hinted at eventually allowing advertising. LinkedIn also plans what is described as “a creator program” working closely with the company’s in-house journalists. Its heating up.

If Substack hasn’t yet got the attention of newspaper and magazine publishers, Facebook will. Traditional media must recognise the significance of the soaring success of newsletters – and their potential for funding journalism in the longterm. The whole trend is also in tune with the wider world of media and entertainment.

Broadcasters are moving inexorably towards a world where every radio or TV programme will be an individual podcast or videocast accessible across a range of media beyond the original mode of transmission. Almost everything will become transferrable. It really should prompt print-centric publishers to start giving reader-viewers the opportunity to ‘pick and mix’ their content – before the power of the inbox starts to shred their profits. Newsletters could further erode the power and profitability of newspapers. Or be part of their future.