Newsletter Value Decline

Austin Rief believes that the newsletter business has fundamentally changed since the early days of Morning Brew, with different economics and challenges facing new entrants today.

Key Points:

• The newsletter arbitrage that existed in 2017-2018 no longer exists:

  • "The value of a subscriber is significantly less than it was when we started because there are so many newsletters out there"
  • People mistakenly think the same economics apply today because they read outdated blog posts

• Content quality is paramount:

  • "People aren't focusing on the content it's all about the content"
  • In the early days, they were "maniacal over the content" and printed the newsletter daily to ensure quality
  • "That'd be like selling a saas product and the code not being variable the product not working that well"

• The common mistake new newsletter creators make:

  • Focus on growth hacks rather than quality content
  • Write "C+ or B- content" while expecting to reach millions of subscribers
  • Assume ads will sell for premium prices ($50,000) when they actually sell for much less ($3,000)
  • "The economics don't work because there's not enough engagement because the content's not good enough"

• The more niche, the better:

  • Alex Lieberman adds: "The internet is just this long tail of millions of niches"
  • Niche newsletters can command higher CPMs
  • B2B has been less impacted by advertising pullbacks
  • Niche audiences are easier to monetize directly beyond advertising

• Newsletter economics plateau:

  • Morning Brew spent $6-7 million on paid acquisition
  • They began questioning if continuing to pump money into a single newsletter made sense
  • This led them to explore industry verticals with higher CPMs and more engagement
  • "It's not a race to the bottom it's more of an engagement play"

• Subscriber value metrics:

  • Sam Parr mentioned their value was around "$18 per subscriber" or "50¢ a month for advertising"
  • Understanding this metric helps determine growth strategy