☕️ Morning Brew A Business Break Down, The Economic's Behind Newsletters 📨

💰 Newsletter Sales

• Morning Brew - Reported $75 million

• The Peak - Reported $5 million

• The Hustle - Reported $25-$30 million

• Milk Road - Estimated 7 figure sale price in 10 months!

Now that I have your attention with these huge sales prices lets understand the business model behind fast growing newsletters and where the value is when it comes to buying or selling something like Morning Brew.

📈 How do newsletters grow?

0 - 1000 | Subscribers

Here is when its time to be scrappy, in blog a blog post from December 2022, The Peak goes over how they grew the first 1000 readers, and it was nothing special, basically DM’s to everyone they know asking them to check out their new newsletter. This allows you to test out your writing style and gather data for later on, since if you can’t find your voice and tone that readers enjoy they will not stay around, one way to know this is by the open rate if you can keep it above 30% you might have something. This also leads to a customer acquisition cost (CAC) of $0. So your first 1000 readers shouldn’t break the bank.

1000 - 4000 | Subscribers

Now is when a newsletter should start to think about paid reader growth through channels like Facebook, Instagram, other news letters, etc. Jenny Rothenberg who lead growth for Morning Brew from 2020 - 2021 says the key here was the to ensure you focus on high quality channels that continue to keep open rate high, if an ad is bringing lots of readers but low open rates, and high un-subscription rates you might need to rethink that channel and find one that leads to a higher quality sub even if it costs slightly more. We will get more into CAC in a bit but the think to keep in mind here is your want to build your tribe of loyal readers during this stage, your goal should be to continue to refine your content and ensure that while your scaling your open rate stays above 30%.

4000+ | Subscribers

You have now build your core community of readers, so its time to let them share with the world, and reward them for doing so. According to a blog post by Beehiiv, you can do this with physical goods or a digital download like Milk Road did. Ben Levy one of the OG founders of Milk Road says that he spent one afternoon putting together a digital reward for readers of Milk Road that they could earn after just one referral. This created a clear value + low friction and instant gratification so that readers would want to share the newsletter.

Growth & Beyond 🚀

What got a newsletter past the 4000 reader mark might not be the same thing that gets them to the 4 million reader mark that Morning Brew stands at today. It will be important to continue to monitor proven traffic sources to ensure that the standards do not start to fall off. When they do is when you must fix part of your fly wheel.

Know Your Costs 💲

As with any business its important to know your costs to acquire a customer, and newsletters are no different, however not all customers for a newsletter are created equal. You will want to acquire the most engaged customers & this might not mean the cheapest CAC. You will want to find a acquisition channel that leads to a over 40% open rate for your newsletter. Most newsletters that are using paid growth are finding customers for about $2.

How they make money? 🤔

Newsletters can make money in several ways.

• Paid Ads

• Premium Subscribers

• Offering a service

• Selling a class

As a newsletter writer you can offer one of the above or all it just depends on how you want to shape your business focus. Morning Brew’s focus is on selling adverts to a extremely large mailing list, this is partly why they were able to command such a large sell price.

Paid Ads

Typically newsletters price paid ads as PPC or CPM. For PPC the newsletter takes the risk that their readers will click any sponsored links in a email, and for CPM the advertiser takes the risk that the newsletter readers will convert at another time banking that the clicks might not come now but could come later.

Premium Subscribers

Newsletters that offer a premium subscription can offer a number of upgrades to readers that take this option such as an additional email each week, a private community, etc..Most newsletters that offer a premium subscription see around 5% conversation, so if this is the sole source of income for the newsletter its going to take a very large list.

Offering a service

Newsletter writers have the option to include their own service inside the newsletter, this could be something as simple as a coaching service centered around the topic of the newsletter, if this is a high end offering you might not need to sell very many to make this worth while.

Selling a class

As we have already talked about before, build something you can sell twice, giving your newsletter readers something they can purchase like a class from you could also be a great way to monetize your newsletter.

📦 Wrap Up

Growing an authentic newsletter can be a great way to build a community, and a low overhead business idea that could lead to a one day large buyout offer if your maximizing your newsletters potentional. However the alternative is that its an extremely difficult business to scale with hidden costs to growth that might not be seen at first glance. If your thinking of starting a newsletter you should definitely work to find your voice and not focus on monetization while just starting.