Audience DevelopmentSubscriptions

Media investments centre on strong newsletter plays

Via Unsplash

Newsletters have been one of the hottest tickets in media over the last 12 to 18 months. Favoured for forging long-term reader relationships, companies are looking to invest in newsletters to build engagement and subscription revenues.

  • At the end of March, leading paid-newsletter platform Substack confirmed that it had raised $65 million in new VC funding. The new money placed the value of the four-year old business at about $650 million.
  • The success of Substack has fueled an industry-wide interest in newsletter development. Twitter acquired paid-newsletter platform Revue in January; Facebook announced its own plans for a subscription newsletter offer in March.
  • Responding to Substack poaching leading columnists, The New York Times beefed up its own newsletter portfolio, now numbering 70+. It also banned staffers from publishing on ‘competing’ third-party platforms.
Local investments
  • Washington-based digital publisher Axios is entering the local news market with newsletters. Its initial newsletter investment will focus on eight locations for 2021, but the business has a stated goal of expanding to 50 locations by the end of 2022.
  • Axios is keeping its local operations lean. Two or three reporters will cover regional politics, business, education and cultural events. Revenue is expected to come from local advertisers; ad sales, promotion and technical support will be managed centrally.
  • “Most of our investment is going to be in journalism,” said Axios co-founder and chief executive Jim VandeHei. “If we can hire two or three of the best reporters in each market, we think we can develop a loyal following.”
Staffing up
  • Subscriber-funded business and tech news publication The Information invested in 22 additional staff over the last 12 months. The new hires were brought on to expand existing coverage and add more newsletters to drive subscriptions.
  • One of the new hires was Sam Rosen, previously SVP, Growth at The Atlantic. His job now is to grow the company’s subscriber base from “tens of thousands” to “hundreds of thousands” over the next few years.
  • Editorial hires corresponded with an increase in The Information’s newsletter output; the business now has a total of seven. Recent newsletter launches cover the creator economy, augmented and virtual reality and cryptocurrency.
Investment opportunities
  • TheSkimm is a $40-million media business founded in 2012 off the back of a daily newsletter. One of the remaining standalone digital media companies, it may be seeking a buyer outside media.
  • TheSkimm’s main newsletter The Daily Skimm has over 7.5 million active subscribers, mostly women under 35. Potential targets include companies in financial services and luxury brands as they are very keen to reach TheSkimm’s audience of millennial women.
  • A deal outside media would not be unique, as non-media companies look for ways to bolster customer acquisition. Marketing software company Hubspot bought The Hustle, an email newsletter targeting entrepreneurs, in February for $27 million.

Investment in newsletters is seen as an investment in customer acquisition, engagement and retention. With the increasing importance of reader revenues, newsletters are likely to continue getting attention from both publishers and investors.

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