Bad news for newsletters? | The Financial Express

Bad news for newsletters?

Subscriptions to digital newsletters continue to dwindle as biG tech moves towards more lucrative avenues

Bad news for newsletters?
Twitter is shutting down Revue, its newsletter product.(Photo Credits- Reuters)

By Siddharth Pai

As BigTech’s traditional revenue streams are changing—for a variety of reasons—there has been a perceptible shift. And that shift is the shift away from free access for the everyday consumer. Free access—which caused ever more people to sign up for services, had allowed BigTech to make money elsewhere—primarily in advertising.

As advertising revenue has begun to dwindle, BigTech has been looking for ways to make money off their massive user-bases instead. Primary among these has been the introduction of subscription models in order to garner revenue from users. These are now everywhere—subscription services for Amazon Prime, Apple’s iCloud, Google One, YouTube Premium etc now make users of these services pay for what they are receiving, if they want any decent level of performance, since the ‘free’ services are now truly the bottom of the barrel when it comes to receiving useful services from these companies. For instance, the 5 GB of ‘free cloud space’ that comes with Apple’s iCloud is woefully inadequate for most users in the age of streaming services, computer cloud back-ups and so on.

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Elon Musk’s announced recently that he would start charging its users to be “verified” by Twitter. In Twitter’s case this was a direct example of where falling ad revenues has forced a tech company to start to look for revenue sources from its users, rather than from advertisers. Big-Tech has been experimenting with a lot of these subscription revenue streams. Apart from the more obvious ones which are bound to do well—such as music services, video/cinema/TV services, and cloud back-up, there are other services where tech firms have been trying to raise their game but have not truly succeeded at all.

One among these is in the area of subscription newsletters. And here, to be clear, I am referring to start-up subscription newsletters—not the natural extensions that come out of publications like the Indian Express or the Financial Express—which have always had news reporting at their core. There are plenty of these startup newsletters—and one seemed to be popping up every week for some while. These can be lucrative to their creators/owners because they are a form of recurring income. Once a person subscribes to your newsletter, they remain a subscriber until they make an active decision to cancel. Each month, their subscription automatically comes from their bank account or credit card until they decide otherwise.

They are squarely competing against established news houses which have been at the game for decades, if not centuries, and who have a loyal following. Subscription newsletters are not really easy income. It takes a considerable amount of work to build a successful newsletter to the point where people are willing to hand over their credit card numbers or sign up by using another digital payment method. Independent newsletter owners must create content worth sufficient value each month to ensure that people don’t cancel their subscriptions. At the same time, they need to encourage new people to sign up. It takes time to build a reputation, an email list, and sufficient trust with people who are willing to jump from a free newsletter to one that they have to pay for.

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For some time there appeared to be a robust market for subscription newsletters, led by the publishing platform Substack, which raised $65 million in initial capital, and similar start-ups such as Pico and Ghost, and in India, newsletters such as The Print. Last year, Twitter purchased Revue, another newsletter platform. Facebook’s parent Meta also jumped on the bandwagon a couple of years ago, by launching a newsletter platform called Bulletin. Meta looked to curate content around sports, fashion and the environment that it framed as “apolitical”. It signed six-figure deals with high-profile writers such as journalist Malcolm Gladwell, activist Malala Yousafzai, reality-TV star Tan France, and sports reporter Erin Andrews, paying them a flat rate to create content on the platform until 2024. Meta also announced a $5 million commitment to support 25 selected local news writers. In addition to providing publishing tools, Meta also offered third-party services to Bulletin creators including legal resources, design support and editing assistance.

But the newsletter boom has cooled in recent months. Precarious economic conditions are making this a tricky year for publishers. Consumers and businesses have reined in their spending against a backdrop of ongoing inflation, employment uncertainty, and an energy crisis in Europe due to the war in Ukraine that is likely to cause major repercussions globally. In addition, we now have looming fears of a recession. Substack laid off 14% of its staff in June and put plans for further fundraising on pause, and pundits began questioning Bulletin’s long-term strategy of signing creators to big contracts while at the same time avoiding the kind of political posts that draws controversy—and conversely, readers and subscriptions.

And now the Washington Post reports that Meta will shutter its newsletter platform Bulletin in early January, less than two years after it was launched. As part of this, Meta said it regularly evaluates products to ensure they are focused on giving consumers a meaningful experience on the platform and said it would pay out the remaining contracts in full. Bulletin creators will be able to publish until early January, and the site will remain in read-only mode for a short period after that.

It appears that independent newsletters will continue to have a tough time if BigTech is abandoning them.

The writer is Technology consultant and venture capitalist

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First published on: 22-11-2022 at 04:30 IST