Digital Publishing Reader Revenue
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‘All-time highs on the paying subscriber front’: Newsletter publishers buoyed by victories in a difficult media market

Newsletter publishers are closing out 2021 buoyed by the victories they have won in a difficult media market. From all-time highs on the paying subscriber front to an ever-expanding local news operation, the newsletter success story looks set to continue into 2022.

Takeaways

  • Following strong growth in 2020, media management doubled down on newsletters in 2021. The Industry Pulse survey of 200 senior executives showed 87% of publishers and marketers actively investing in email and 94% scaling their email programs this year.
  • Substack, just four years old, gets credit for igniting the current firestorm of interest in email newsletters. The platform’s big bet was that it could provide the infrastructure for individual newsletter publishers to distribute and monetise their work. The recent announcement of 1 million paying subscribers suggests the bet has paid off.
  • In the statement announcing the business had reached the 1-million milestone, it revealed that the top 10 newsletter publishers on the platform collectively bring in more than $20 million a year. The news comes just six months after Substack raised $65 million in new VC funding.

Local success

  • Matching Substack’s success in the creator space, US digital news publisher Axios has grown its one-year old Axios Local operation from a single city to a network of 25 city-based, free, local newsletters.
  • Beginning last December with the acquisition of the Charlotte Agenda, Axios Local has 500,000 email subscribers and is set to achieve $5 million in revenue by the end of 2021. It plans to expand to another 25 cities and net $10 million in revenue by the end of 2022.
  • Running lean appears to be central to Axios Local’s success. With just 50 staff, a centralised administration and business function supports two local journalists for each newsletter published. Writing for Adweek, Mark Sternberg said:

By staffing a skeleton crew of two reporters per city and centralizing operations and business functions, the program has expanded as legacy news operations continue to shrink.

Future business models

The success of both Substack and Axios lies with the introduction of newsletter-based business models that challenge traditional ways of working in legacy media.

Substack revenue comes almost exclusively from subscriptions, with management claiming to be supporting a rush of new money into the media ecosystem, most of it going directly to writers rather than publishers.

These are subscriptions that didn’t exist before – they’re not being siphoned off from traditional media outlets or redistributed from other platforms.

Axios Local relies on a mix of advertising and reader revenues. While the newsletters are free, the publisher promotes memberships that bring exclusive content and events for a suggested contribution of between $50 and $500 a year.

Rapid growth suggests the model is working and Axios CFO Fabricio Drummond told Adweek:

We’ve mapped out 100 markets in cities where we think this product can have a meaningful impact for local readers. But 100 is the minimum. We also want to have alternative paths that enable us to expand into even smaller communities.

A more robust advertising market could see more newsletter publishers develop an advertising revenue line in 2022, maybe even on Substack.

But as Substack’s one million paying subscribers and the Axios Local expansion attest to, the biggest factor for succesful newsletters will continue to be content and audience engagement that builds monetisable communities.

This piece was originally published in Spiny Trends and is re-published with permission. Spiny Trends delivers updates and analysis on the industry news you need to stay on top of if you’re running a media and publishing business. Subscribe to a weekly email roundup here.