Get $20k/year from 10k subs

(2 min read) How to run a lucrative newsletter business

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Why do people write newsletters, aside from marketing some product or service?

Newsletters are LUCRATIVE!

Like podcasts, they have great ad economics.

Unlike podcasts, you don’t need some huge subscriber minimum to get paid.

There are generally 3 models for newsletter media:

  • Flat fee - You negotiate a flat fee for the sponsor spot, regardless of subscribers or open rate. This generally works well for brand-based campaigns, but is pretty rare.

  • Send-based - You negotiate a fee based on the number of subscribers at the time of the send - that is, the number of people who will receive the email.

  • Open-based - You negotiate fee based on the number of opens, calculated as subscribers x open rate

There’s actually a fourth model - CPA aka Cost Per Acquisition aka Affiliate. As discussed in past articles, I like affiliates as a passive income source for products you’re already talking about, but not as an actively-placed endorsement or ad spot. For that reason, I generally turn these down.

Let’s do some math on the earning potential of newsletters! I’ll focus on the Opens-based model because it’s closest to how many marketers - especially performance marketers - might consider pricing a YouTube or podcast ad spot.

In general, the CPM for the Open-based is $20-$60 per thousand opens. Sometimes, if a newsletter has a lucrative niche audience, it can go above $100.

Let’s say you write about a niche passion of yours.

You get to 10,000 subscribers, with a 40% (industry  benchmark) open rate - so 4,000 opens.

That’s 4000 opens x ($100 / 1000 opens) = $400 per email.

Meanwhile, 4000 views on YouTube is maybe $20 in your pocket ($5 RPM).

Let’s assume you’ve been around in your niche for a while, and you’re either getting lots of inbound sponsor interest or you have someone great selling for you, so you’re selling out your inventory.

If you send 50 emails a year (1/week), that’s $20,000 (50 x $400).

With just 10,000 followers, $20k in revenue ain’t bad at all.

That’s an annual subscriber value of $2.

If you sell out for a few months, you can create new inventory by sending another email each week.

Now it’s (2)50 emails x $400/email = $40,000.

Some newsletters even sell multiple ads per email.

Now it’s (2)50 emails x 2($400/email) = $80,000.

See how this can scale? Increase the number of emails, the number of ads, or both, and you can scale revenue without really growing the audience at all.

Throw audience growth into the mix, and you can see how big newsletters with 100k+ subscribers make $millions.

Compare to YouTube, where you’d need >57,000 views per video and a $7 RPM to make $20k in a year. You probably need >100,000 subscribers to get those views, so your annual subscriber value is $0.20.

Want to make $20k from 10,000 subs?

You’ll have an easier time doing with a newsletter than a YouTube channel.

What do you think?

Thanks for reading!

My mission is to enable a million people to find freedom in the Creator Economy.

This was an extended version of a previous LinkedIn post! Follow me on LinkedIn for more actionable insights on the business of Creators. 

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Written by Avi Gandhi, edited by Melody Song,
powered by TheFutureParty

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