Newsletter Publishers Struggle While Trying to Prove Their Model Still Works

The Morning Brew instituted another round of layoffs today as many newsletter publishers fight for relevancy.

A man looks at a printed newsletter.
The newsletter business model is threatened in this advertising economy. Europa Press via Getty Images

Morning Brew is laying off 40 staffers, or about 13 percent of its workforce today (March 9), Axios reported. The daily newsletter company covering tech, healthcare and retail previously cut 14 percent of its workforce in November.

“We’ve been undergoing a cost-cutting initiative to ensure our business is properly organized for our next stage of growth in this volatile advertising market,” CEO Austin Rief wrote in an internal memo published by an Axios reporter.

Other media companies oriented around emailed newsletters have instituted layoffs and cost cuts in recent months as well. TheSkimm, a daily newsletter marketed to millennial women, laid off 17 workers, or about 10 percent of its staff in January. Substack laid off 13 staffers, 14 percent of its workforce, last year. Meta announced it would shut down its newsletter service Bulletin in October, and Twitter shuttered its newsletter publisher Revue in January.

The media industry as a whole has been struggling as advertisers have pulled their spending due to economic conditions. Many media companies have implemented cuts to protect their bottom lines, and newsletter publishers are no exception. The very business model that supports email newsletters is taking on water.

A boost in newsletter subscriptions during the pandemic

During the Covid-19 pandemic, news publishers saw an uptick in newsletter signups. Newspapers like the New York Times, the Washington Post and the Los Angeles Times all built out their newsletter businesses in 2021 to engage with existing subscribers and obtain new ones. Companies solely focused on newsletters experienced a boost as well. The Morning Brew, founded in 2015, earned $50 million in revenue in 2021, up from $20 million the year prior, Rief told CNBC.

Emailed newsletters can be a lucrative way to reach readers. Many show advertisements, require paid subscription or earn money from affiliate links. They don’t need a big audience to be profitable, and oftentimes, the more niche a newsletter is, the more a publisher can charge for it. Apple’s iOS 14 update made audience tracking in apps more difficult for advertisers, so newsletters with niche audiences could be a valuable alternative. Having a direct channel in which to communicate with customers means publishers can promote products and subscriptions as well.

But Generation Z doesn’t rely on email as much as previous generations have, said Mike Blinder, newspaper industry consultant and publisher of Editor & Publisher Magazine, which reports on the news media industry. In 10 years, Gen Z will be the target consumer, he said. “Why are these companies all-in in a delivery model where the future doesn’t seem to be?”

Newsletters aren’t dying, Blinder said. But it’s hard to get money behind them when they compete with every other type of content, he said.

The best place to publish isn’t newsletters or traditional articles, but in short-form video, he said. If he were to create a newsletter right now, it would have short-form videos created by social media influencers incorporated into the email.

Standout newsletter companies are Axios and 6am City, he said. Axios was founded in 2016 and reports on U.S. politics and local news. It was reportedly valued at $525 million last year. 6am City covers local communities. After earning $2.4 million in 2020, the company was reportedly on track to earn $10 million in 2022. Because it is a private company, 6am City doesn’t regularly release its revenue numbers. Substack also reached a new high of 2 million paid subscriptions and 20 million monthly active subscribers, it announced last month.

Newsletter Publishers Struggle While Trying to Prove Their Model Still Works