The Business of Newsletters

Ever sense The Morning Brew and The Hustle got acquired for a lot of money the amount of interest around newsletters…

Well… it hasn’t been like this since they were sent in the actual mail.

I’ve personally run an email list since 2008, and since then I’ve seen a lot. Further, in my personal brand business, email has always been the largest driver of sales, outpacing every single other medium by a long shot.

When I decided to go “all in” on The Wisdom Group, my portfolio company, I knew that I had a very important problem to solve.

Attention.

If I was going to help build 100’s of education businesses, there were going to be two major problems.

Marketing + Sales

and

Operations + Delivery + Team

The former, is easily solved with great systems and people.

Marketing + Sales? It’s “technically” easy to solve it, however, at both scale and security. Not so much.

Thus, I knew that I wanted to play the “owned” media model— in our case, owning newsletters, podcasts, niche sites, events, and communities that are able to easily give us attention (and pay us for owning it).

Straight up— while I’ve been using email marketing for a LONG time… I’m very new to the newsletter model.

At least, the one that has been run by Morning Brew or The Hustle. I remember when I first discovered it and I said… “that’s crazy”…

And as I discovered more… and spoke to more of the “successful” people who have crushed it.

The more I realized… I may of got “onto” something before the hype bubble occurred.

I saw a massive opportunity that most others may see, but are unable to execute on.

What is it?

As I see it, there are only 3 ways to make the newsletter (or any media) business work:

1. It’s just you, with a VA taking on the world and figuring it out. If you make $100,000, you're crushing it. If you make $250K, you're legendary, but in reality, it’s very difficult to turn a newsletter into a singular business that truly is amazing.

2. The newsletter fuels your core business, and the newsletter’s job isn’t to sell sponsorships or do anything more than be a funnel for you and your business.

3. You are able to have a series of segmented newsletters, in niches that are highly desired, and by having many newsletters, you are able to use both the network effect and economies of scale to create success.

I chose #2 and #3, but most people can’t choose either of those.

For #2, it’s generally because the person doesn’t have the resources in their main business to pull it off. Due to the fact that The Wisdom Group has 40+ businesses, we have both the resources and the businesses that need attention and would pay for it anyway.

For #3, we now own 15 newsletters and will own well over 30 by the end of 2023. We’ve been working on building "segmented” rollups of 5–6 newsletters in a single group. This allows us to share the core resources that aren’t needed for a single newsletter (you don’t need a full time project manager, writer, or most things for a single newsletter).

In this way, we’re building what I believe is the largest weakness of the newsletter business— which is very similar to what occurred in blogging during its early days. For the most part, it was those with a blog, who did it all themselves, that did well. However, as time progressed, you saw two types of people succeed. Those who built true backends inside the blog, along with those who created networks of blogs.

For this reason: I believe the business of newsletters must be played very carefully, and a major downfall must be avoided, if possible.

What is that downfall?

Relying on sponsorships for your core revenue generation. When I first got into this side of our business, one of the people I spoke with let me know that 95% of their revenue came from sponsorships. I was shocked.

Of course, part of me was happy— because it meant that there was a lot of untapped potential. While I’m really big on sponsorships (I’m hosting a workshop on May 31st on how to use them and launching Sponsorships.com shortly). There is not a bone in my body that believes that sponsorships should be the main source of your income if you have a newsletter.

Why? Because it’s not a great business model. 

Why is that? You have a limited amount of control over how you are able to generate new revenue, and in essence, you are getting a tiny portion of the potential revenue from your audience.

In all of the media we’re building, our guiding principle is simple: While we welcome sponsorships and want to generate revenue using that model, our media network must work without sponsorships.

That means, that while we are motivated to generate revenue from sponsorships (and have built a lot of infrastructure around it), if our media doesn’t create it’s own revenue, or revenue derived from our group of education of software companies that pay and profit from our media group— I wouldn’t consider it a success.

I’m not in the business of building hustles, I’m in the business of building businesses.

Selling sponsorships, by themselves, is a hustle. Sponsorships, as an added benefit, generate 80% profit margin revenue that looks great on a P&L and boosts your ability to sell your business by increasing the return by subscriber (RBS).

Based on this, while I know there is a lot of hype on newsletters, I believe it’s critically important to know how you're playing the game.

Is it a one-person hustle?

Are you playing portfolio, roll-up, build, and sell?

Are you using it to fuel your core business?

Any of those options are great options.

There is zero judgment. All of us are on our own path. However, ensuring you understand the path you're on, allows you to make the best choices for building, growing, scaling, and selling your media-focused business.

- Scott

PS. Make sure you signed up for my workshop on the 31st (or if you're reading this later, you can buy the recording) right here: www.sponsorships.com/workshop/ 

Inside, in over 2 hours, I’m going to show you everything I know on the other side of this conversation—using sponsorships to grow your business.