Have we passed the peak of the newsletter?

Meta, who owns Facebook, kills bulletinNewsletter Producer. Substack, a well-received newsletter startup, has scaled back the book’s advances. The Atlantic is retooling its newsletter deals with writers.

After excitement surges about the potential for paid email newsletters to transform the media industry, there are indications that a bubble may be emerging.

said Ben Thompson, who writes StracheeryAn influential informative and technical publication. “If you’re going to ask people to pay for a newsletter, it has to be something they don’t get anywhere else.”

Email newsletters were part of the publishing kit for decadesSupporting emerging media companies such as Politico, Semafor, The Ringer, Axios, Punchbowl News and Puck. Amid the hype of social media, journalists use newsletters to establish direct contacts with readers, persuade them to pay for news and deliver advertisements to them.

In recent years, humble email has become a star in its own right. During the pandemic, media companies have sought to profit from increased excitement about the format from readers and writers alike. But the rapidly changing priorities of tech giants and the unforgiving economics of digital media have led to an account in the inbox, with executives taking a more serious look at the deals they struck with writers.

“Everyone has had time to create and consume,” said Jacob Cohen Donnelly, publisher of business news outlet Morning Brew and author of the newsletter. media player. “As the world begins to open up, people don’t have much time left.”

The Atlantic has been one of the most prominent users of email newsletters lately. Last year, CEO Nicholas Thompson rolled out a program that would allow certain newsletter authors to collect big bonuses if they convert readers into Atlantic subscribers. At the higher end, some writers could receive a total annual compensation of close to $400,000 if they convert 14,500 readers, according to people who spoke anonymously to discuss the details of the secret deals.

Newsletter writers also earned a base salary, some of which exceeded $100,000, and some achieved lower-risk goals for lower compensation.

The show has attracted writers such as Charlie Warzel, Molly Jung Fast, and Nicole Chung.

But several of the goals have proven too ambitious, and The Atlantic is reassessing the way it structured those deals, Mr. Thompson said in an interview. The company has offered to extend newsletter writers’ contracts to assess how email messages affect the likelihood that readers will retain their subscriptions. However, he said the newsletter program likely made a small contribution to The Atlantic’s bottom line and that the company plans to continue the program.

“It’s not as hot and foamy as it was 16 months ago, but I also don’t think that’s the end of the newscasts,” said Mr. Thompson. “There will be many, many successful newsletters.”

There have been setbacks to email newsletters elsewhere. he said dead This month That it was shutting down its newsletter service, Bulletin, which included writers such as Malcolm Gladwell and Mitch Albom. The New York Times has seen some of the newsletter’s notable writers, including Kara Swisher and Jay Caspian Kang, leave in search of other opportunities.

Substack slashed the upfront payments it was making to attract writers to the platform, then Cancellation plans to raise money And the laying off some of its employeesPeople familiar with the startups said. Information, a publication covering technology and finance, earlier mentioned On Substack’s decision to cut progress.

One of the most read political posts on Substack, The Dispatch, came off the platform last week. In an interview, Jonah Goldberg, editor-in-chief and co-founder, said the publication “bypassed” Substack.

“Substack really wants to be a front-end platform that relates to Substack,” he said, adding, “We wanted to be our own independent media company.”

In an interview, Substack co-founder Hamish McKenzie said it was incorrect to associate Substack with other media and technology companies that have scaled back newsletter products. He said the company was more like tech platforms like Twitch and OnlyFans, which connect creators to financial backers through a variety of formats including podcasts, not just email.

“Substack’s secret blend enables a sense of ownership and independence for the creator or writer, and is expressed through the direct relationship they have with their audience,” said Mr. McKenzie. “E-mail is a useful means to this end, but it is not the end.”

Substack, like other privately owned newsletter startups, does not publicly disclose its finances or earnings forecasts, but people familiar with the matter said in May that Revenue was about $9 million in 2021.

New participants also stay away from email after trying the format. Zestworld, a digital comics platform, Initially similar to itself On Substack, email storyboards from signed creators to exclusive deals. But when user growth stalled a quarter after the start of the service, Zestworld realized that email wasn’t a natural environment for entertaining content and switched to posting on its website. Since then, Chris Gilberty, CEO of Zestworld, said growth has bounced back.

“It’s really hard to control the user experience over email,” Gillibert said. “You can’t do a lot of rich and interactive things.”

This does not mean that the newsletters will be out any time soon. Some companies have found success with the format. Puck, a newsletter media company with close to 20,000 paid subscribers, recently held talks with potential investors with the goal of raising about $15 million with a valuation of at least $75 million, two people who requested anonymity to discuss the secret conversations said.

Puck co-founder John Kelly said subscription newsletters were part of a new publishing paradigm, and compared them to magazines in their heyday.

“If you look at the history of the magazine industry, it was a business with a total addressable market in the tens of billions of dollars focused on creative affinity-based products that people signed up for because they absolutely loved it,” he said.

Mr. Kelly said Puck’s paid subscriptions grew at an average of 20 per cent per month, but declined to comment on any money-raising talks, the company’s profits or its goals.

Mailgun, the email delivery service used by Substack and Ghost, said the online publishing industry has more than quadrupled its sending volume in the past two years. A company spokesperson said The New York Times continues to add its offerings to its newsletters to subscribers, including one written by restaurant critic Pete Wells that began this week and another written by opinion columnist Ross Douthat is coming soon.

Many writers continue to benefit from the rush of enthusiasm around newsletters. Emily Nunn, a food writer who has worked for The New Yorker and The Chicago Tribune, writes a twice-weekly newsletter focusing on the salad that made more than $20,000 in March 2021, a month after it began charging subscribers. Signups have steadily increased since then, Ms. Noun said in her newsletter, oath of powerShe made more money than any of her previous jobs in journalism.

“The salary you get in the papers rarely jumps,” said Ms. Nunn, who took an advance from Substack. “You can win a Pulitzer, and they don’t say, ‘That’s a big part of the change. Thank you for being yourself.'”

Axios co-founder Jim VandeHei said his company’s newsletter engagement has been higher than ever, especially among influential readers.

“But I’m sure the market for bad newsletters that few people read has collapsed,” said Mr VandeHei. “It’s not the height of newsletters – it’s the end of weak newsletters.”