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Comparing the two big newsletter industries with Matt McGarry

• John Newtson

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Here in Financial Publishing we've all watched the rise of The Morning Brew, The Hustle, Milk Road with interest.

The media attention and venture attention on them and the newsletter boom fueled by the Substack & Beehive boom made newsletters finally seem "cool."

Here in FinPub we've been running newsletter subscription businesses for over 60 years. 

So what do these two industries have in common?

Matt McGarry joined me to explain the model & thinking of these rising "Newsletter-First Media Companies".

Matt's got a ton of experience here as he managed acquisition media for The Hustle and Milk Road and now has a media agency helping newsletters in that world acquire customers.

Check out Matt McGarry's Newsletter Operator

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If you're in the Financial Newsletter or Trader Education industries then check out FMS PRO, the business community for Financial Publishing. 

FinPub Pro is produced by The Financial Marketing Summit, the #1 networking and marketing conference for financial newsletter publishers, trader educators, and digital financial media.

John Newtson, host and founder of The Financial Marketing Summit can be reached via LinkedIn at John Newtson

John Newtson:

All right, hey everyone, I'm excited today because we're going to be talking about newsletters, but not newsletters like we think of them. I've got Matt McGarry here, who is your third employee at the Hustle.

Matt McGarry:

A little bit later I came on also about 2020. So maybe we had a team of 20 at that time on to the hustle, um.

John Newtson:

so we're gonna be talking about the newsletter boom that's happened outside of finpub um, and how that has um, how's it grown? How it's gone from the world of the morning brews to influencers now using and other entrepreneurs kind of launching their own newsletters. And matt's kind of at the center of this these days. He's got a newsletter and podcast for that world about how to kind of build a newsletter subscriber base. He's got an agency helping people who get to a certain size actually go out and acquire. He managed all the acquisition, I think, and learned customer acquisition or e-letter acquisition for the hustle. So, matt, thanks for being here, thanks for having me, thanks for having me. So, for people who maybe aren't as familiar with, like that newsletter world, how would you describe kind of the newsletter boom from the direction that you are coming to it from, in the newsletter businesses that are out there, versus kind of what we have here in the financial publishing world?

Matt McGarry:

Yeah, there's a lot of similarities, but usually a little bit of a different business model. It's not direct to consumer, they're not selling their own products. Usually we call these newsletter-first media companies. Usually the most popular one everybody knows of is Morning Brew, which is north of $100 million in revenue and had a big acquisition or had a big sale in 2020. I worked at the Hustle, which is a newsletter that started around the same time. We sold HubSpot for about $27 million in 2020.

Matt McGarry:

And then there's other ones, like the Skim, which has north of 10 million subscribers. It's focused on a female audience. And there's other ones like Well Before, like the Daily Candy. They kind of pioneered the model, um, but in, of course, after, after the success of morning brew, the hustle, the skin, many others have popped up too, um, like, like the milk road, which is another one that I worked at. So that's kind of um some of the players, but the business model just works a little bit differently. Usually these are um daily editorial newsletters and usually there's there's brand or direct response ads within them that they're selling to third-party advertisers okay.

John Newtson:

So so the, the newsletter itself is they're generally not faced by a personality, right. They're um, like, yes, so there's not a personality, um, they have a, uh, a topic strategy or or you know, that is usually like. Morning Brew is a little bit like just a general news site, but some of the other ones were more like kind of niche, specific right, in terms of like they'd have a more defined audience.

Matt McGarry:

It started broad. You know, the skin was kind of business news and personal development news for women. Morning Brew is business news for young professionals. The Hustle focused more on like tech and startup news, a little bit more of like a Silicon Valley angle, an Austin angle, than Morning Brew, which is more like a New York perspective. So those started broad. But now we're seeing a lot more success with the niches like Milkroid, which is all about crypto. Lots of AI newsletters have popped up and grown to 500,000 or a million subscribers really quickly, just focusing on how to use AI in your professional career, stuff like that and many other initiatives.

John Newtson:

So I mean those are big numbers in terms of subscriber bases, right, like when you're talking about acquiring names in that model. Could you kind of walk through, just so everyone understands, understands here the acquisition kind of math, how that works and then how? I mean also, are these funded businesses? Are they generally raising VC in order to be able to cash flow that acquisition in the beginning? Because if without a product like kind of the chicken before the egg problem, you need an audience to sell to advertisers and advertisers to fund the model, so how's that working?

Matt McGarry:

Yeah, so the big three we talked about in the beginning Morning Brew, et cetera those raised a small amount of money. I think they all raised approximately a million dollars back in 2015, 2016. But the ones that have kind of popped up since 2020 and onward. It's much less common to raise money. Bootstrapping has really become more popular and also really the best path for this type of business model, and it is bootstrappable. A lot of these audiences can be built and have been built organically, first through social media growth on Twitter, linkedin, whatever it might be, converting that social following to a newsletter subscriber, building that up to a decent size, like a list of 10,000, 50,000, even more, and then using that revenue from sponsorships to invest back into paid growth to scale to hundreds of thousands of subscribers or more. So there's a mix of both, and there's also a lot who have just raised a small amount of money but wouldn't call themselves venture backed.

John Newtson:

Okay, that's not, that's not like wildly different than than our space, cause I mean, like the like. You know, I use the morning brew. I think if one uses morning brew it's kind of like the oh, this is what this space is. On that side we use the Mot, that brand, and the motley fool is, I think, the one of the biggest advertisers in the morning brew. But they also raised I think they raised 100 million um back in the 90s, um originally, um, whereas almost everyone else was bootstrapped. So it's a very similar kind of um sounding growth in the industry. Then, um, what I want to get when you're advertising well, let me step and sit back the social piece versus the um paid acquisition piece. When you say that they're starting with like social audiences first, like what, like, what does that look like? I mean, did the hustle start that way? I mean, did? Did milk road, you said, start that way, like yeah, I can give a few examples.

John Newtson:

How are they building out a large social audience? First they're grinding that out and then converting that into a newsletter model.

Matt McGarry:

Yeah, everybody's a little bit different and so back when the hustle was getting started, social wasn't as big. So they wrote a lot of viral blog posts, they got shared a lot, they got subscribers. That way, the Morning Brew really had like a student, like college student referral program and ambassador program where they got their first 100K that way or close to that. But now it's more about like a big catalyst for the growth of a lot of these newsletters was Twitter threads from 2020 to 2023. There's this massive reach on Twitter through threads and so people like Sahil Bloom he now has a newsletter of north of 600,000 people. He's kind of I would call him a content creator, but he got his first 100,000 or more just through Twitter threads.

Matt McGarry:

Cody Sanchez is another one who I've worked with. She's a newsletter north of 600,000 people now, too, a lot of growth through Twitter and also through other platforms. Now she's become big on YouTube, so they kind of follow the content creator route but instead of being a YouTuber like a tick tocker, usually it's more education based content in the platforms they're posting on, usually start with Twitter and LinkedIn and expand from there. They're, but it's a mix, right? So the milk road I was the first employee there and we started with paid ads from day one and we spent a lot on Facebook ads and TikTok and Twitter ads and we acquired a lot of 500 or 600,000 subscribers. They did a combination of both. They blew up on twitter.

John Newtson:

Everybody wanted to hear about what was going on in ai and they also ran paid ads right, right, so okay, and when you do the paid ads, like what's the math going to look like on that? Like how are they figuring out their math on that? Because you know, obviously the subscription we're looking at, roi based on, based on initial sale and follow-on sales. Obviously, this is sponsorship revenue. So how do you figure out things like what you can pay for a lead and a reader?

Matt McGarry:

Yeah, it's unique to the space, so it works something like this. These are going to be a little bit rough numbers. So we do this for clients. Our average CPA cost per email subscriber for a client is $2. But it can vary so much depending on the niche of the newsletter and the audience. We have some clients and newsletters that we know that have hit $1 CPAs consistently at scale and then some who are more comfortable with like $3 or $4 because they have a higher LTV for that subscriber. But let's just say we used $2 on average. So you're going out on Meta. Meta is the best platform, but Twitter and TikTok have been secondary platforms for a lot of these folks. So paying $2 per subscriber.

Matt McGarry:

A lot of people are using a tool like Sparkloop Upscribe or Beehive Boost to have co-registration in their signup process and so they'll earn a small amount of money during the signup process.

Matt McGarry:

They might earn 50 cents all the way up to $1.50 per subscriber in earnings from that co-registration from Sparkloop or Beehive Sparkloop's the most popular and so that lowers the cost on day one to a net acquisition cost of 50 cents or $1 per subscriber Sometimes more, sometimes less, but these are just general numbers, sometimes less, but these are just general numbers and then over a period of three to six months they'll make that revenue back and hopefully more through the sponsorships that they're selling, usually like a payback period.

Matt McGarry:

A really good payback period for this would be like three months, but you know, six months and longer is more common for the more established newsletters, like a morning brew for the hustle. When we worked at the hustle or, excuse me, when I worked at the hustle we used a lot of meds, meta ads and through the lifetime of that business they acquired well over a million subscribers just through meta ads, any Facebook ads, just just that platform alone. And if we look at um you know I've been lucky to talk to a lot of people these bigger newsletters 1440, morning Brood of the Hustle, meta is always their number one acquisition channel for their entire email audience.

John Newtson:

Okay, Okay, it's such an interesting thing to me because I think like there's so many parallels. But one of the things that's that I've been talking to the Finp, to all you guys in Finp about is kind of the mainstreaming of financial publishing and that, like the retail investor is becoming much more prevalent and there's more people and there's more like there's this boom in content creation. But what's fascinating to me about like the, the hustle and the milk roads and the morning brews is that it's taken the newsletter content model and that in and of itself is also kind of mainstreaming and that's becoming very well known across all kinds of sectors. The types of advertisers that you guys are getting are different than people who are in our space. I mean, Notley Fool may be over there, but there's a wide variety of advertisers, right?

Matt McGarry:

There is, and there's still within some, a couple of main industries. So, like financial publishing is big. So the Notley Fool was like a top three advertiser, morning Brew probably in the hustle too, and other newsletters. They kind of incubated and funded a newsletter called the Daily Upside which now has north of a million subscribers and they're probably still a huge sponsor there. I don't know if the other Agora companies are like market-wise sponsor these newsletters as much. I haven't seen that as much. But um, some other financial publishers can be big. Obviously financial tools like brokers or apps like a robin hood, those are huge sponsors of this robin hood. Um recently acquired a newsletter called charter which had about 400 000 subscribers, also in like the business and and finance news category. Um, and then a lot of big ones are like what I would call like personal or consumer software. It's like personal finance software, credit, karma, productivity software.

Matt McGarry:

Anything that's like personal sass is huge um and it's basically yeah p2c sass, not as many d2c brands selling a physical product or merchandise or you know, athletic greens, that's. That's more like the podcast space, but like the financial products and the consumer sass products are really popular and that's just for prosumer or b2c newsletters. When you get into b2b newsletters and b2b media, of course there's a whole bunch of b2b advertisers that play in those niches right yeah, b2b is a different animal in a lot of ways, but there's a similar model.

John Newtson:

There's a very large B2B newsletter world at this point.

Matt McGarry:

Yeah, it might even be a lot more interesting and lucrative than the B2C and the prosumer, which are the ones we've been talking about so far.

John Newtson:

Yeah, yeah, I think B2B is, you know, um and FemPub we're all B2C Um but I definitely think that the B2B space is one of the most interesting spaces out there in digital marketing and in um, the newsletter stuff and just the from some of our offline conversations, some of the things you showed me on that side I think we're really, really interested in um much bigger companies there, because B2B is different price points and if you have a large B2B audience, you have a much more substantial business right.

Matt McGarry:

Yeah, if you look at Industry, dive sold for $525 million, I think in 2020 or 2021, that's one of the biggest acquisitions in media ever. And they're a B2B publishing company with about 30 brands, and newsletters and emails are a big focus for them. It's basically web and email are where their audience is and, of course, of course, axios. A lot of people wouldn't consider them b2b, but they really are. Um, they had a huge acquisition. It's around the similar numbers I don't remember the number off the top of my head um, and that industry dive.

John Newtson:

I mean, you said 500 million, that's like 200 million more than investors. Business daily sold right and they had an enormous amount. They're getting, I think, 20 million uniques a month in traffic and I don't know what their list sizes were, but like so it's a very substantial business there. Um, and speaking of acquisitions, um, do you have any idea what the multiples are in in this space in terms of exits lately?

Matt McGarry:

there's I'm not an expert on this, and there's been a big variety too, and there's also not total transparency, as you know, with all these right. So I think you can go I don't, I don't know the numbers off the top of my head, but you can go back and kind of figure out what they were for the hustle, morning brewed industry, dive, um, and now they're a little bit lower the hustles.

John Newtson:

I mean, if you can say it like do you know roughly where the revenue fell on that?

Matt McGarry:

I'm forgetting now because it's been so long, but is eight figures in revenue. They actually had a low multiple in my opinion. I think could have been a lot bigger acquisition. I think it was. The founder was kind of a musician where he wanted to get out of the business. He was ready for the next thing. Morning brew had a better multiple than the hustle In the hustle had. You know a lot of things that morningbird didn't have they had recurring revenue through a subscription.

Matt McGarry:

So um the morning before I forget, was it 70 75, I think, um, I think it was 75, and now, a couple years later, they're doing they've said they've done more than 100 million revenue, annual revenue, um, and, of course, like there have been economic challenges, especially that started in 2023, that have made these multiples go lower. And some people like, I think morning brew has slowed in growth, um, because the whole advertising economy is slow too, um, so there's there's those changes as well yeah, we're very familiar with the uh 2023 slowdown as an industry.

John Newtson:

It definitely hit here. I I'd say second half of 2022 and first half of 2023 were some of the hardest in the industry in 10 years. You're also out there teaching people how to build newsletters in this model who are kind of completely unfamiliar with this. How's that space looking to you? How do you do you see like the a lot of interest and a lot of growth happening in terms of people looking at like? We saw Substack obviously as a platform providing the beehive coming in and making it really easy for somebody to do the kind of technical stuff to get a newsletter going, and that's really fueled the boom. Do you see there's a lot of excitement and a lot of interest in building both free and paid newsletters?

Matt McGarry:

Yeah, there's a lot more. I think it really started in 2023. It first started in 2020 with Substack, and some of those acquisitions kind of triggered it. Substack and BF have made it a lot easier. Convertkit is great too. Really, those three platforms have driven this wave and, along with acquisitions and people seeing success out there, and then finally, people like me and Sampar and other people actually talking about how these things work, and you and many others too. Those are just a couple of examples, but that has helped. Yeah, it's just. You know, I've done email marketing newsletters for a long time and it's just, it's way easier now to spin something up and to start publishing. And I think people are starting to also see the value of the email audience. I mean your audience, and you know this. You've known this forever. Like building an email list is so important and it's an audience that you own. But that simple concept has become more widely known and popular in the past year or so with a lot of other people.

Matt McGarry:

So that's kind of the wave I've ridden a little bit and I've been a promoter of right, so I have like a small newsletter and podcast that promotes that. The audience size isn't huge there. We have about like 16,000 newsletter subscribers and thousands of podcast downloads per episode. But on the back of that I've been able to build a service business agency. It's been more successful and put a big positive, positive impact on my life for sure.

John Newtson:

Yeah, no, that's great. I think that's like you know. We're like, we're over here in very small kind of. It's a big revenue niche but a small number of companies, and so we have we have kind of a an insular view. And it's interesting to me because on almost every other marketing strategy, um, I would say that finpub tends to lag, like internet marketing world and digital marketing world, because, um, for a bunch of reasons, um, and it's not a bad thing we tend to focus on like fundamentals and then things.

John Newtson:

You know, we were buying media maybe more aggressively than everyone else for a longer period of time, but it's funny that the newsletter boom is really taking off in 2023 from our perspective. Now, just because I mean, when we think of newsletters, we're thinking like you know, you might argue, argue, did this start in the 40s or the 50s? With off because it was offline. It was an offline business, um in direct mail and, like um been doing internet e-letters. Uh, this is the one thing that you could say. I think you were probably started. Um was the e-letter back in the early 2000s because it was like, hey, we just take the print newsletters and put them online and now you can turn it into an acquisition source, and so, um, it's interesting to me, just because we've been doing this forever, but now, to see, um, such an amount of excitement and energy happening in other spaces with the model, at a time when, like, finance is also kind of mainstreaming it, just it creates a really interesting set of opportunities.

John Newtson:

Because one of the things that we've had as a industry is that when you go to talk to other people like they don't understand what we do, right, they don't understand newsletters, um, and like the subscription side, and and so now it's much more like it's a transformation that's happened, in my view, that people can actually see you say, oh, we have a newsletter business, and they have, at least, if they don't have the model, the same model in mind. They have a concept of what it is in a way that they didn't before, and it doesn't seem like a big deal. But when you're having business conversations, it actually is kind of a big deal, um, because now it's like there's less education that has to happen. It's more about like, well, our model's different. Well, how's it different?

Matt McGarry:

oh, it's subscription, you know, um, and so I do think there's probably gonna be a lot of um, cross-pollination, um, yeah, and I think there should have been already, and I'm kind of Because I kind of first I'm not an expert on FinPub, but I kind of first started researching it back in 2017 and was fascinated by this business model and the morning brew type business model at the same time, I kind of got into exploring both those worlds at the same time. I kind of got into, um, exploring both those worlds at the same time and there hasn't been as much overlap outside of you know, kind of buying ads. Um, yeah, then I would.

Matt McGarry:

I would expect, you know, I think one of the failures of newsletters like morning brew, the hustle um, the hustle started doing this before they got acquired, but they never really developed their own products to sell and they never really had much revenue from selling their own products, going direct to their subscribers and selling something. A lot of people at Morning Brew thought they should basically start their version of the Motley Fool and I think that would have been a huge success, but it never got off the ground, because you kind of build a business around one model and it's really hard to transition and add different revenue streams after you're already big. It's really hard to transition and add different revenue streams after you're already big, yeah, and it's like one of the.

John Newtson:

There's like limitations of our model that are also strengths, right, like, in order to make our models work, you need much more aggressive promotional copy, and one of the largest, I would say, limiting factors is the amount of capable copywriters who can write that copy, because it makes a massive difference and we can't even get enough from them, and so it's one of those things where the Motley Fool has a less aggressive approach to copy, because they also have a media business too, but the rest of the, the industry has, like, I mean, you look at these promos and they're, if you print them out, it's 50 pages long, 60 pages long yeah, and that's something you know morning brew is never going to be able to do.

Matt McGarry:

But because they have this massive audience and they built up a lot of trust with that audience, they don't need to do it in quite the same way. They can get away with something more like what the Motley Fool does and they'll have their unique spin on it. In the hustle we tried this a little bit. We had a product called Trends which was more kind of in the business opportunity space, and we had not a great conversion rate, but over a two-year period we had 15,000-plus members at $300 a year and that was growing really rapidly before it got acquired. And then it got shut down by HubSpot, which was a big disappointment. So it's definitely possible.

John Newtson:

Yeah, no, that's very cool. So adding the, yeah, that's interesting. So I think of this as, like, the media, the media business, right, the info, the niche media business is becoming more and more varied and we see a lot of that out there, um, from video and written newsletters. Uh, like you know, I worked at real vision for a while, which had some good hope, and then it kind of fell apart in a lot of ways. You've got really cool businesses like the information out there, um, that are mixing right, like they're mixing strategies, right. So you have a core subscription for the, basically the news site, the niche news site, and then they'll add events, other products and things like that. And I've seen that where, like, we're seeing this mix of product lines across a niche media business and that works when you have a niche audience. Do you see any of that kind of stuff happening too? Do you see, like, groups adding events and things like that to their, to their media mix?

Matt McGarry:

yeah, I think niche is really the future of newsletters and um really media in general, and it just unlocks these additional revenue streams. Like you can't really do a broad event, um, it's. It's, you know the hustle had one, but it was more. The newsletters are more general and the event was focused on founders and entrepreneurs, so it wasn't a broad event. But, yeah, I think it makes sense to not that.

Matt McGarry:

Diversification is always good, because if you have one business model that's just absolutely crushing it, you don't need to diversify. But you know, advertising is not perfect. Perfect, and so the ones that I'm seeing are that are succeeding is where they have um sponsorship in the new, in the newsletter, maybe other sponsorship products. They might have a subscription or an information product. That's, that's a one-off offer. We'll have an annual event, maybe more events, um, and that's just to start. Those are like three and I think the ones that are struggling, the media companies that are struggling right now, whether their newsletters or not, are the ones that just have one revenue stream, um, which is usually advertising. That's the one where most people are struggling. Um, the only place where I see kind of one revenue category working well is like B2B sponsorships, because there's so many different types of ad products you can sell. You can sell sponsorship in the newsletter podcast. You can sell sponsored webinars, sponsored um podcast interviews.

Matt McGarry:

Yeah, branded content all kinds of stuff yeah, branded content, deep dives, advertorials, so that's like it's really more than one revenue stream, but it's one category and so that works great for b2b. That's never going to be a b2c thing, um, but that's that's kind of one example.

John Newtson:

That's a little bit different than what we're talking about yeah, yeah, but I think I mean b2b, like I mean, audience selection determines your price points in a lot of ways, or the price ranges, and so that's one of the nice things about the b2b newsletters is that the price points are fundamentally higher and so, um, because you're dealing with a business trying to generate business, and so they can spend more money, and that makes it a very, very attractive space, um, and so, what kind, what kind of groups are you working with now as an agency? Um, to help grow their, their newsletters?

Matt McGarry:

or what kind of couple. I can name off a few just to give some good examples. So charter, the one that got acquired by red robot hood, we've worked with for a long time. We work with a lot of newsletter focused creators like sahil bloom. I mentioned cody sanchez. They've opened a client.

Matt McGarry:

Um james clear, the author, is a client. He's growing his newsletter to over three million subscribers and he's sold like last year his book was the best-selling book out of all the books on amazon and a lot of that is through email. Like he wouldn't be able to do that without his two million subscribers than 3 million now, right. So, um, that's kind of the some examples of the creator space. And then we work with a lot in B2B. Like we started working with work week recently, um a couple other B2B in different niches healthcare, entrepreneurship, fitness, tons of different categories in B2B. That's probably one our best types of clients we can work with and um, all those are kind of newsletter first, media companies or creators and we've started to dabble in helping a little bit more people in like finpub, um, so really just one or two um financial gurus or publications right now that are clients. So it runs the gambit, but that's a little bit of what it looks like. Okay, and the like it runs the gambit, but that's a little bit of what it looks like.

John Newtson:

Okay and the like. It's interesting. So, like the influencers, adding in authors and people. Like you know, we've known this for a while and it's cool to see other spaces looking at, like, well, if I have a paid subscription product, that changes the math of everything that I'm doing with my media and it becomes a really valuable distribution source, everything that I'm doing with my media, and it becomes a really valuable distribution source, and, and so to see it kind of explode outside of finance, even though it is very like finance adjacent in a lot of these cases, um, I don't know, I think I think it has a lot of, just a lot of.

John Newtson:

For me, I'm like this. Just another like thing put in the back of my head is this trend is happening. Um, it's changing the way people relate to their media. It gives, uh, it changes the economics of your acquisition, for sure, because you can acquire differently or spend more on acquisition, um, but still, I'm still shocked at how big these publishers are growing with just a sponsored model before that, um, but you have groups like sorry, I'm rambling a little bit here, but it's more. I'm thinking this through as we talk because, um, how are you like? What are some of the, the parallels and differences and what are the most striking things that you see between, kind of what we're doing over here, what's happening over there and where do you see, like, whether it's opportunities or things that maybe we're not thinking about as a publishing business?

Matt McGarry:

um, that's pure subscription, um yeah, I think, and I'm still learning here, so I'm definitely a beginner when it comes to finna. That's why I'm trying to learn more from you and I've kind of devoured the resources out there, but, honestly, there's not much outside of going and talking to people and I I got to go to more events. Do that Go to your event? So I'm working on that too. So I think and again, this is not a totally informed opinion, so I'm just going to I'll just say my opinion I think there's a lot of reliance on almost total reliance on paid acquisition sometimes and there's not maybe an organic growth channel. What do you think that's? Do you say it's accurate?

John Newtson:

I think that's a hundred percent accurate. And actually I was talking with, um, uh, one of the CROs, that one of the market wise groups, the other day. We were having coffee and he was saying that, um, what he would really love is to start to understand how, um, social growth, building a social audience, looks and then converting that to a paid newsletter, because it isn't an area that has traditionally been something that we've been good at or really put a lot of effort into, and the people who have put a lot of effort into it didn't really seem to get it right, because they're again taking an existing model and trying to shoehorn it in to you know. So, even our whole messaging model, the editorial teams, everything is designed for a very specific type of business and it's not necessarily designed from social.

Matt McGarry:

Yeah, but I it can be a great top of funnel for these businesses, I think and you got to look to the, the creators to truly learn here. So the creator that I mentioned on this call there's many more, there's like zane khan is a one. There's so many examples you can point to, whether it's like finance creators or various different categories. I just haven't seen the same type of focused effort on social from financial publications, and one of the challenges is, literally every one to three years, social growth is going to change dramatically. We talked about Twitter threads being huge 2020 to 2023. The reach on Twitter has been shot recently with the algorithm changes there, so that may not be a great platform for these publishers.

Matt McGarry:

What is popular now is short form video, so TikTok, reels, shorts, etc. That is the place to be and that's where you're going to get the most reach for the effort that you put in. And those have challenges too, because you have to be on video. I don't know if the gurus or creators or people at those brands can do that, but it would be worth doing if they want to have an organic growth channel and, I think, if they're able to drive these social followers and views to a free newsletter and then that free newsletter can convert them to paid, which is one thing pinpubs are great at, is conversion essentially right, but I feel like they don't have. A lot of them are missing that top of funnels. So that's easier said than done, but that's just one of the many tactics they could do.

Matt McGarry:

And this is another thing that's more up to debate is like I don't see as many really good editorial newsletters from the industry. I don't see. Not that I think Morning Brew is the best content in the world, but there's just it's a lot of it's more like 80% sales, 20% editorial, whereas some of these other newsletters might be 90% editorial value-add content and then 10% sales. Or they segment the list a lot more and only send aggressive sales promotions to subscribers who are really engaged. It might be a different culture or it might be just. The aggressive strategy works way better. It's up for debate.

John Newtson:

Well, I think it's a mix of things in that, um, there is actually like a pretty robust so I mean everyone's sending out daily newsletters, content, and if you have a large publishing business, it might be sending out 20 different newsletters from a content standpoint, and then there's different ones for free, there's exclusive newsletters for the paid ones, and then you have 30 products. All those people are getting a newsletter just because their customers maybe. So there's a ton of content too that's behind the paywalls and the free side. The other part of that is that there has been a proliferation of, I'd say, sweeps email sweeps across newsletters, and so you opt into one place and one of the media buyers in the space was telling me this the other month. He's like yeah, I opted in over this one place and with a new email address, just to see how many different emails, and he's like within two days I had 100.

John Newtson:

So there's this explosion of kind of aggressive marketing that's happened, um, which is kind of a? Um, I don't know. It's like the snake eating its tail because, uh, now the attention is getting splintered even more, which means you got to hit them even more often to get that attention, and so it's like it's. It could be a slippery slope, and it's it, I think, as an industry that we are struggling with across the board.

Matt McGarry:

Yeah, I feel like what these newsletter-first media companies have been great at is that they're great at building habit products. There's literally millions of people who open and read Morning Brew every single day and they love that brand. They consider it part of their routine. Same thing with the Hustle, even before HubSpot. I think that the content was a lot better.

Matt McGarry:

It's hard to continue to big corporation, but there's many other newsletters that really have built a strong habit and an amazing brand affinity. Um, they never had a product to sell, so I don't know if it would have worked or not if they did that, but I I think there's some value in doing something like that If these companies can build just one brand that has great editorial. It doesn't have to be long editorial content, but short editorial content every weekday. There's something there. It's hard to get into exact prescriptions on what people should do, but that's worked well for all these newsletters and every single one of them talks consistently about building habits with their readers and that other publications may not have that same philosophy yeah, I've never actually thought about that.

John Newtson:

We, that's not. That's not a. It's not a um conceptual model that we use in finpub, but it's an interesting one, right. But the idea that you have you're trying to build a habit, um, because it is like there's very like adjustable short form content you can kind of scroll through. You're not making a big commitment to a story, um, we have, there's definitely room to explore that, I think, um more. So anyone who's listening, who's tried it, I'd love to hear from you yeah, and I think it's not rocket science.

Matt McGarry:

If you go read axios um, read morning brew, read the hustle there's a couple other really good ones, um, you can see what this looks like, um, and I think there's a way to marry the two, two models, in some way yeah, that's interesting.

John Newtson:

Axios has that kind of bullet centric, like um content model, which is really interesting because it's just real fast, consume like almost like little headlines and pieces of information you need to know, and they'll have a story and they'll just hit like five, six, seven bullets on that story um yeah, they call it smart brevity and I wish they would kind of share more about their philosophy and framework behind how they do that.

Matt McGarry:

But it's really good and it's so simple. But they built a surprisingly huge media company around smart brevity. I mean there's more than just the content, right. They've been able to sell these like corporate advocacy and like lobbying ads to large Fortune 1000 companies and that's kind of their business model large Fortune 1000 companies and that's kind of their business model. But through the smart brevity content they've built an audience of policymakers and executives and CEOs that's one of the biggest in the world. So there's something there.

Matt McGarry:

And I think Axios now has a bunch of different newsletters. They have local newsletters and stuff like that too. But there's a lot other publishers can learn from that. And I think one thing a lot of people miss is just that your relationship in someone's inbox is so intimate and it's very easy to ruin that relationship very quickly with even mediocre content. So I think the bar of content in the inbox is really high.

Matt McGarry:

Bar of content in the inbox is really high and I imagine if you were to look at some of the open rates between a newsletter-first media company and some who are more focused on marketing. They're going to be drastically different. There's a company called 1440, which has 3.5 million subscribers. Now they're eight figures, very profitable, and at that number of subscribers they're consistently hitting 55% 60% of Uber rates every single day, five to six days a week. And that's because it's all content-focused and the only ads you're getting are small native ads within the newsletter. They could monetize that audience more if other ways right, but that's just what they're able to do with that type of content.

John Newtson:

Yeah, no, that's very interesting. I mean larger companies, company business space in particular probably more interested in this in the sense that they need to like they, they spend so much external media so they can, they can build something themselves that that kind of functions that way and keeps that attention. Then it becomes a very useful thing. And I think that, um, it's an interesting kind of axis of attention. You talk about these two models, right, because you're talking about getting everybody getting a very large list of people who have kind of axis of attention. You talk about these two models, right, because you're talking about getting everybody, getting a very large list of people who have kind of habitual opening.

John Newtson:

What is essentially like the nature of the relationship is very interesting, right. I'm focused on kind of consuming my news this morning in this way. It's part of my routine. And then on the other axis, we have like we're trying to go deep engagement with a personality, because people are buying from a person and so you want to get this guy's view on this trend. So it's not just like, hey, ai investing is a thing, but I want to know what does Porter have to say about this?

Matt McGarry:

Is it always personality-driven these publications? Because I don't know if this is a deep issue yes. Is it?

John Newtson:

like 100% of the time, I'd say 80% of the time, 90% of the time. On the trader education side there's a little bit different, but it's very, very personality-driven, because you're trying to build a relationship, because it's not about getting the $'s, not about getting the you know 50 to $300 price point, right, it's, you have that product and then you're going to have three to five, 2000, $3,000 price points, um, you're going to have um in the larger groups, like you might have a 20,000, $30,000, um, uh, private group, and so the personality that they are engaging with is a huge part of it, because it's that person's worldview, right, it's their worldview, their perspective on things. It's not just their track record, right. Track record is not like oh hey, you were a successful investor, it's, you were a successful investor. It's you're a successful investor in a way of looking at the world that I understand and I and I appreciate and want to be a part of and so having that, like there are on the trading side, you'll see more groups that have a little bit less personality forward kind of content.

John Newtson:

But newsletters traditionally have been fringe content, fringe ideas, niche ideas, not as much niche audience, niche ideas, like things that you can't get from the Wall Street Journal things that you can't get from your broker, and because of that they're fringe. So wait, why should I listen to you? You know that part is a huge part of it.

Matt McGarry:

In that personality model totally makes sense for what you're doing there and also the model of marketing more makes sense because the way these media companies make money is by having the best subscriber retention and getting someone to open a newsletter three times a week for three years, and so that's very different than trying to sell someone product in the first 90 days. So I mean I'm giving this prescriptions, but it kind of the business models explain themselves and why we're we're marketing the way that we do or why we're sending emails in the way that we do, and it's just a different thing. I'm sure there's some company that could balance the two, but then they would have to be less aggressive with the promotion.

John Newtson:

They have a different division. I mean they're different. Yeah, you know that's. I think that's. That's actually a very interesting area of exploration is the revenue models you know are great until they're not and everyone can have a you know, a bad year or two. And in those hard times what I've noticed is the people who do have kind of multiple revenue models tend to be the most secure because, okay, like my list, for like I've kind of been crushed on my subscription side right now because of the market and where everything is, but the ad revenue over here is still pretty good. And then also there's a there's a benefit to having two different acquisition models that both work and can feed off each other, because that's going to lower their price, the cost of both. So you have to be a certain size to be able to do that. But I think there's probably some interesting opportunities there for folks.

Matt McGarry:

Yeah, that's what I see working well and I'm more operating. Finance in general is just so competitive, so I'm more operating with these kind of niche newsletters. That's what I see is growing really quickly and I'm helping a lot of more entrepreneurs with these kind of niche newsletters. That's what I see is growing really quickly and I'm helping a lot of more entrepreneurs at the start of their journey or in the middle of their journey. But the same lessons apply to these as well.

John Newtson:

Yeah, yeah, no, I think, like, I think it's like I love the things that I've seen from you so far, and I think there's a lot of fundamentals in there, too, that people can need to be reminded of, sometimes as well.

Matt McGarry:

Uh, I I gotta ask you a couple of questions. Um, is that? Yeah, I'd love to hear a little bit more about um, like what is on the back end of these products, cause I think that's what so many people miss. Um, they see the front end offer, or maybe even that they don't even see it because they don't bother to watch the whole video or read the whole sales page. Right, right, so they see that front-end offer for 79 bucks or 99 bucks, but that's not the money maker, right?

John Newtson:

no, that's essentially so. That's essentially to subsidize your media and acquisition costs while identifying a customer, right, like that's why it's there's who going to put, who's somebody that will put money out, and how can I subsidize my media to get them. And then, once you have those people you're going to try and go to, you want to keep, you want to use that product as that, like that product becomes your retention tool. You want that to be the thing that they love and keeps them in, not so much your front-end free e-letter, and then from there you're going to have a suite of back-end products that are there's a few different ways to break this down, depending on what part of the industry you're in, right. So if you are a trader, educator, right, and you're very guru-centric like use my method, a very guru centric, like use my method your front end products are going to be more um. Or your, your ascension ladder is going to follow a path of proximity to the guru, right. So the lower price product is like here's some how-to stuff. Next product is kind of like here's how, here's why don't I help you do that, like here's my trades, things like that. And then there's high-end coaching, right. So it's like kind of more intimate, personal not directly personal, but like feeling like you're getting closer to the guru.

John Newtson:

That's one model. Another model is based on risk right. So all right, this is my worldview. I'm going to invest in blue chip stocks in my low-end product right. So all right, this is my worldview. I'm going to invest in blue chip stocks in my low-end product right, because that's the lowest risk, the most stable way to play this. But there are also you can use the same kind of worldview and approach to the markets and play higher risk small cap stocks, that they might be higher risk, but there's also higher rewards when it works. It works better when it's higher risk or options or something like that and so you can go based on risk, and so there's a few different ways that you can kind of add that in, and so the products might look from a deliverable standpoint.

Matt McGarry:

The format might look very similar, but either the frequency of the trade or the proximity of the guru or something is going to be a little bit different right in there could you share an example of what the second or third product in the funnel like, what a price point for that might be and what the deliverables might be for something like that?

John Newtson:

Yeah, so I mean it's going to be. Let's say, if you had a, you could have a backend newsletter that is $1,500 to $3,000. You have an upsell for either a two-year subscription or a lifetime subscription in the cart usually, and then the product will be some combination of trade alerts where it's like a buy sell kind of strategy, with editorial about those trades in the markets. That's one, and then on the the coaching side, you might get up to like a five thousand dollar product that has more of a. Here's a set of courses or modules, training modules, and then we'll do a live webinar for the group every month with the guru, and so there's some variations on that and, depending on this trading strategy, some trading strategies might be very frequent and so they'll have much faster kind of trades and alerts. But they're all just variations on those things, right, there's a trade alert component with market analysis that will have varying amounts of frequency, and then on the trader education side it's, you know, more in-depth training.

Matt McGarry:

Yeah, so would you say front front end is 50 to 100, the middle's 1500 to 3k. I'm sure this varies a lot.

John Newtson:

And then yeah, there's variability. I'd say like, the front ends go down to like 49 to up to 299 that I've seen um, and then in the middle there, uh, you know you're going to go to usually a thousand annual is usually the lowest. That I'm you know, but most of it's like at this point probably twenty five hundred dollars, um, you see, that very commonly is as an annual um, and then, uh, the easiest upsell is like a two year where you get the second year at half price or something. Um, you get a high take rate on on that in the cart as well. Um, then you have you have some groups that also sell events, um, or, like you know, stansbury has their atlas club, which I think is 32 000, and then there's a to join and then there's an annual um maintenance fee after that.

Matt McGarry:

And that's one of the things this industry is really good at is increasing LTV and increasing average order value, and I think a lot of people don't realize that, and so it's cool to hear you kind of walk through that. Do you think this, and it has been, do you think this kind of model can be duplicated? Things outside of investing or trading Right? Yes, have you seen good examples?

John Newtson:

of that. I haven't seen a ton of examples, but you did see it. I mean this started, I mean in BizOp it should have been is the easiest way right? The core thing about an investing audience and an entrepreneurial audience is that you have a large enough universe to scale of people who will spend a high amount of high dollar in the thousands of dollars. And so if you're, if you're marketing like to a group of people who can't spend and justify spending a few thousand dollars on a product, then that model doesn't really get that attractive, right? Um, the health space is harder because of that than the newsletter space, and so even though there are health newsletters, none of them are as big or substantial as the um investing ones. So in any type of biz op environment, any type of B2B environment, this model works phenomenally well, I think.

Matt McGarry:

And I see a lot of people doing it poorly in biz op and B2B and professional development. We'll have, you know, one course that is at a weird price two, 50 or something or $300, or it's way underpriced. There's no backend. Yeah, so that's when you come on our podcast later and I just love to hear about how we can use this model for, or learn more about this model so other people can use it Um and also the. It's not just the pricing um ladder, it's it's the marketing strategy and the psychology behind it. Obviously there's more to it Um, but I think a lot of people are missing that.

Matt McGarry:

At Trends we had this At the Hustle. We had this product called Trends 300 bucks a year, 15,000 members and it really struggled because there was no back end. It was just that kind of no man's land pricing 300 bucks a year. I was kind of telling them let's make this product a little bit less, lower the price and then have a back end for for 2000. That was actually the plan um and of course got acquired. The back end got shut down, but it would have been a lot bigger. I think it would have been one of the bigger biz op products if that didn't happen um, I think biz op.

John Newtson:

I've been saying this for years and it's just a question of like. Which direction do I ever want to go, and is it but like?

John Newtson:

the the biz op space is ripe for stuff here. Um, there's a lot of stuff like when you look at offers, um, there's benefits to having like the subscription thing. It's just that like how you, it's not even just biz op, actually, actually I would say. I would say that there's actually a huge opportunity with beyond BizOp into, just like I said, b2b businesses, entrepreneurs, founders. There is, you just have to find the subject matters. That requires information consumption and you can build multiple products with right, because that's kind of the thing.

Matt McGarry:

Investing is fundamentally information dependent and not all niches are information dependent, and so yeah, but there's a lot out there that do and that's kind of the business model I'm building. I started this agency. I have a cohort-based course now and when we brought in, we did the first course and brought in about 120k for like a small limited cohort and I'm hoping to do, you know, cohorts every quarter and then next week I'm launching kind of the, the coaching program, the membership, which is an upsell to that, which is going to be 5k per year. So I'm learning your ways and trying trying to apply that, but I'm still in the very early stages.

John Newtson:

Yeah, yeah, no, that's very cool. That's very cool. I think that there's a lot of overlap and a lot of play back and forth. It's one of the things that I've thought about for the publishing space, especially some of the mid-range companies and smaller ones that do they also take advertising. There's a whole other world of advertisers that could come in that are not there, that are not investor relations kind of public hose, which is a whole nother area, but like there are other people who want to get in front of this audience. Um and uh. I think that that is one of the things that interests me the most is hey, there's other advertisers that might be interested in the space that are not currently coming into the space, and so for us, adding that other revenue stream just another pocket of revenue to come in to help bolster profits, basically on existing media seems like a really good thing.

Matt McGarry:

That might be the biggest low-hanging fruit for this and for some people to take away. I think, some sponsor-intelligent tools people can look at. There's who Sponsors stuff. There's a company called openratesco where it just shows who's sponsoring newsletters. They focus on about the 300 largest newsletter-first media companies. You can identify who's the top 100 sponsors in morning brew or the hustle or something that's someone relevant to your publication and you can start reaching out to them or developing um a relationship there or something a sponsorship to sell them um.

John Newtson:

because, like I said, it's a goldmine of information yeah ratesco, you said yeah, open ratesco and who sponsors stuff.

Matt McGarry:

There are two different ones. They're kind of competitors who's, I think, which one one is best for you. They can become kind of expensive, but if you can close, you know, you know six figures and sponsorships from these, it will be worth the investment. And you can do this manually, of course, but those are data products that save you time. Yeah, so that makes a ton of sense, because if it's mostly investor relationship or investor relation ads, that's just one category in a whole big world of people who want to sponsor newsletters.

John Newtson:

Yeah, yeah, and there's there's conflicts on our side with um investor relation stuff, right like there's. Not everybody is thrilled with it, um, because it kind of goes against the ethos of a newsletter that's stock picking, right, is we're saying that these things that we have, our analysis is really great and these are the stocks that we want. And, oh, here's an ad from a company that we would never recommend, and so it's a problem for some people to do that and so, but having that other revenue is really attractive for sure, and so awesome. This is really cool. Man, I really appreciate you coming on here and and kind of talking through and sharing um, looking forward to having more conversations.

John Newtson:

Uh and uh, we I'm probably going to be doing in June, a small little event, private thing, on different acquisition models, specifically Um, and so we should talk about that separately, um position model specifically, and so we should talk about that separately. We're going to have one of our groups, alta, you know from market wise, is going to be probably hosting and talking about their model, and we're bringing people from other spaces to talk about their models, so I'd love to have you there for that. Let me do that.

Matt McGarry:

That'd be awesome. Yeah, I really appreciate you giving me an education here in your YouTube videos. It's super helpful, so I'll be in touch.

John Newtson:

Awesome, thanks, man. All right, thank you. Oh wait, wait before we go. Yeah, where can people reach out to you? Where can we connect with you?

Matt McGarry:

Oh yeah, yeah, the best way is my website newsletter, which is newsletteroperatorcom, and I have very actionable stuff on the strategies and tactics that we talked about, and then I have a podcast, which is the same name. If you search newsletter operator on YouTube or your podcast app, you'll find that.

John Newtson:

Yeah, and I'll put those underneath here for everybody and send it out because, yeah, check it out, it's really good stuff. I've been reading it and listening and you had Matt Paulson from market beat on there Fantastic, it's great interview, great conversation. Yeah so.