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Best Business Model Ever?
How newsletters work...
979 Words | 4 Min 7 Sec Read
Today we’ll be discussing how the newsletter business model works.
In particular, how to forecast and analyze the numbers so you can launch and scale with confidence.
Let’s dive in.
Learn about a platform focused on payment processing, financing clients, deal closing, financial management, and affiliate management that enables coaches and digital entrepreneurs who sell courses and services online, to scale their business.
They work with major brands, including Tai Lopez, Alex Hormozi, and Ryan Pineda, that have scaled their businesses to millions a month in revenue.
I, the founder of Passionate Income, filmed a video sharing my experience…
Watch it here.
If you're a longtime PI reader odds are you've gotten dozens if not 100+ emails from us. But do you understand how the underlying business model works?
While this particular newsletter is part of the larger Passionate Income brand, the numbers work the same whether you're adding a newsletter to an existing business or running it as the business itself.
First, similar to a book that doesn't sell a single copy, understand your newsletter doesn't exist without readers.
While entire blogs, courses, and DFY agency services are dedicated to different aspects of newsletter growth, all of them fall into one of two categories: Organic or Paid.
As you likely know, organic refers to "free" marketing like search engine optimization, blogging and social media marketing (the most common).
On the flip side, paid refers to advertising, sponsored influencer partnerships, and most anything where you have to spend money (including cold email, which believe it or not works well for some B2B newsletters).
Which you rely on depends on your budget, any potential funding and how you plan to monetize.
This is a critical point, as your monetization method will dictate most everything about your newsletter business, from how fast you can recoup your ad costs to how fast you can scale.
If you're monetizing with some kind of high ticket service, e.g. consulting or a DFY agency offer, it's possible you only need 1-2 sales to offset any expenses you have (writers, ads, etc).
Assuming you're putting out high quality content, generating 1-2 high ticket sales can be achieved with a couple hundred readers.
If you're monetizing like a media brand, however, and selling ad spots on a CPM or CPC basis, it's likely you'll need tens of thousands of subscribers before you can generate a substantial income.
As you can see here, we're talking about a factor difference of 100x.
So figuring out your monetization method before you launch is arguably the most important - and strategic - decision you can make.
Once you have a plan for monetizing and one or two methods for driving new readers, it's time to write your newsletter.
If you're a legitimate topic expert or passionate about the niche you're in, you may choose to write your issues yourself.
If you're not - and don't consider yourself to be a strong writer - you will likely need to outsource the writing aspect of things (inserting images and dealing with the tech side is fairly easy).
As you can imagine, we don't have the time or space do provide an in-depth lesson on how to write newsletters (which at its core, boils down to understanding how to write compelling content in general).
What we can tell you is that:
Having strong opinions / taking strong stances will build you a more loyal, more engaged fanbase
Sharing insights instead of "how to..." educational content will make people more likely to buy from you (assuming you're selling something)
The more advanced your content is, the smaller your audience will be (which is not necessarily a bad thing)
The more basic your content is the wider your audience will be, but on average they'll be worth less on a Revenue per Reader basis
Which direction you go should come automatic.
Because unless you're an advanced practitioner of something, it's going to be hard (if not impossible) to create content for an audience that's much more advanced than yourself.
Especially if there are legitimate experts producing legitimately advanced content in your industry. There are two reasons for this.
First, true experts can smell fakers from a mile away.
But more important, people's time is limited. So if they have to choose between your content and the actual expert's newsletter, you better provide a strong reason for them to choose yours instead of the actual expert's.
From there, the newsletter business is really just a numbers and analytics game. Important KPIs you'll need to pay attention to include:
Cost per Reader / Subscriber
Revenue per Readers / Subscriber
Open Rate (is not accurate)
Click Through Rate (CTR)
Monthly Churn
Average Subscription Length
And so on
Sounds easy enough right?
Joking aside, we're huge fans of how few moving parts there are to this business model. But make no mistake about it: From attracting new subscribers to writing content that's worthy of reading, the newsletter business is by no means "easy."
In fact, while thousands of people launched newsletters during the boom of 2023, there's a reason upwards of 60% of them have been abandoned.
From not planning their monetization strategy to not anticipating earn back periods, newsletters require patience, strong writing skills and some funding (or a serious level of organic marketing skills).
But if you can pull off (or outsource) some or all of those moving pieces, newsletters can be one of the least time consuming, most freedom enhancing business models on the planet.
💡 Takeaway: Most people underestimate the success required to succeed with a newsletter. But if you plan right and work hard, they make for an incredible business model.
🎁 Resources:
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