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So you just need to look at the growth of Substack over the last few years to quickly see how effective email newsletters are at generating revenue. Substack, seemingly overnight, created thousands of solopreneuers.

With that said I want to delve into this investment idea.

I'll cover:

• Email newsletters - starting with the stats
• How much money do newsletters make
• Step-by-Step Guide on How to Buy a Newsletter
• Key risks
• Active vs Passive Consideration

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Email Newsletters - Starting with the Stats

n 2010, Facebook’s COO, Sheryl Sandberg, predicted that email would soon come to an end.

Over a decade later, email is still here, which is why it’s an interesting investment opportunity.

Even more important is that it’s not just hanging in there. Email is making a comeback.

And, while many people rave about how amazing email newsletters are, plenty of them are blindly basing it on their subjective opinions.

The question is, how do you separate facts from opinions when it comes to email newsletters?

The data.

There are over 4 billion email users worldwide

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The Global Email Marketing Industry Is Valued at $7.5 billion (Statista)

In 2020, the email marketing industry worldwide was valued at $7.5 billion US dollars. By 2027, this number is expected to more than double to $17.9 billion (Statista).

According to these numbers, the compound annual growth rate (CAGR) is forecasted at 13.3%.

These numbers fall into alignment with the upward trajectory for email as proven by the growing global user base, the number of emails sent, and the return on investment of nearly $40 per $1 spent.

55% of Consumers Prefer Email as Their Top Business Communication Channel

When communicating with businesses, 55 out of 100 consumers prefer to use email (Constant Contact).

This number far outpaces other channels like social media (27%), and even SMS message (17%) marketing.

99% of Email Users Check Email Every Day

Of the 4 billion email users, 99% of them check their email inboxes every single day (OptinMonster). Some email users are even checking their inboxes up to 20 times per day.

Of the survey responses listed above, 58% of them check their email as soon as they wake up.

This means the vast majority of email users are in their inboxes, giving email senders an opportunity to stay in touch and build a relationship through an email newsletter.

60% of consumers say they’ve purchased as a result of a marketing email they received.

6 out of 10 consumers admit that they’ve made a purchase as a direct result of a marketing email they’ve received (Constant Contact).

This aligns with the impressive ROI email offers, showing that the personalization and highly targeted marketing capabilities email marketing provides are able to convert consumers well.

How much money do newsletters make?

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The amount of money a newsletter can make varies significantly based on a range of factors, including the number of subscribers, pricing structure, topic, content quality, and the audience’s willingness to pay.

There are generally two primary methods to ensure profitable newsletters: through advertising and through paid subscriptions.

There are many newsletter platforms/email service providers, including MailChimp, Constant Contact and Medium, but we’ll take a look at Substack, which has grown in popularity quite steadily over the past few years.

According to the PressGazette: Future of Media, the top 27 most profitable newsletters on Substack generate over $22 million annually.

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Step-by-Step Guide on How to Buy a Newsletter

Here are the major steps:

1. Negotiate the terms of the acquisition (price, earn outs, how much cash upfront, etc)
2. Sign a Letter of Intent (LoI)
3. Perform deeper due diligence
4. When happy, sign an Asset Purchase Agreement
5. Setup Escrow and deposit funds
6. Perform the newsletter transfer (transfer website, email list, social media, assets)
7. Inspect all assets, logins, and transfer of knowledge
8. Release funds if happy with the transaction
9. Receive any post-sale support from the seller

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Where To Find Newsletters For Sale?

Two top names get mentioned when looking for the best place to buy a newsletter business and they are:

• Duuce
• Flippa

Duuce

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Duuce is the premier newsletter marketplace.

There are plenty of newsletters in varying niches that you can consider acquiring. Their directory of newsletters for sale is easy to navigate and gives important base information for each newsletter, such as:

• The number of subscribers (List Size)
• Monthly revenue
• Category
• Founding date
• Asking Price
• Open rate
• Technology stack
• Traffic channels
• Monetization details
• Future growth potential
• Assets included in the sale
• Newsletter description

Right now this is probably the best marketplace for buying or selling newsletters.

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Flippa

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Flippa is a place where all types of online businesses are up for sale. There isn’t a specific category for newsletters so this will require some digging to find good potential pickups.

Flippa is also an unvetted open marketplace, so make sure of any due diligence before making a purchase.

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What to consider before buying a newsletter?

Due diligence is important before buying any online business and newsletters are no exception. Crucial information can tell an investor whether a newsletter is priced reasonably, a steal, or has enough red flags to warrant walking away.

When doing due diligence, make sure to get in-depth information by answering these four questions before making any newsletter purchase.

1. How old is the newsletter?

Age matters a lot. Is this a newsletter that has been around for years and continues to have a solid response rate? Or has it exploded at a few months old and has the potential of being attached to a fad?

Newsletters are more “intimate” as they reach an individual’s email inbox. It takes time to garner trust of the end-user. Therefore, newer newsletters are less valuable than older ones that have not sent many emails.

Takeaway: Make sure to ask when the first newsletter/email issue was sent to users. This is key information.

2. How often were subscribers sent emails?

Was this a quarterly newsletter? Monthly? Weekly? Changing the frequency can have benefits in some cases, but it can also be very detrimental. Especially with audiences set in their habits.

This information is also going to give insight into how much work can be expected to keep the newsletter at its current level. Or the work required to expand it.

Takeaway: In the newsletter business, consistency is key. If an email list has not been sent in a while, it’s a dead list. It’s incredibly difficult to revive a dead email list.

3. What are the open and clickthrough rates (CTR)?

How users were obtained can tell a lot about the type of audience the newsletter business brings with it. Were they bought from another list? Gained from a promotional giveaway? A sign-up form on a blog?

For example, users obtained through a promo giveaway tend to have low open and CTR. This is because they signed up not for your newsletter but just to get the giveaway.

On the other hand, subscribers obtained through word-of-mouth or organic search traffic will have the highest statistics. This is due to the intent of the user.

Takeaway: Ask the seller of the newsletter to provide screenshots of open and CTR rates for all issues of emails sent. This information can be easily obtained through their email service provider (e.g., Mailchimp, Campaign Monitor, Aweber).

4. Where were the users collected?

Was this a signup from a personality-driven blog? Was it an informational niche site that then just didn’t do much with the list?

Understanding where the email list came from will help a buyer determine how likely that list is to be interactive, neutral, or even hostile to a new owner.

That’s extremely important when trying to figure out just how valuable the existing newsletter’s subscribers are likely to be.

Key risks

If you’re considering purchasing a newsletter, there’s probably two major risks you need to think about in advance:

The audience doesn’t know who you are

If the newsletter was linked to a personal blog or driven by the unique personality of its original author, a new owner might find that the sold email list is unresponsive.

This significantly undermines the potential value an investor might see in the newsletter.

While this risk can't be entirely eliminated, it can be mitigated through thorough due diligence.

Additionally, your first issue to the email list should include a thoughtfully crafted email introducing yourself, openly discussing the change in ownership, and expressing your enthusiasm to join and expand the existing newsletter community.

Growth:

Scaling a newsletter can be a tough slog and require a lot of hard work and consistency. So if you’re betting on your newsletter growing quickly but that’s growth plan isn’t clearly articulated or if you don’t have marketing experience (or a good business head re. how to grow it), then it’s likely going to be a steep learning curve.

However, there are of course plenty of avenues to help e.g. Substack’s referral engine is, in effect, a built in marketing channel for you. Writers recommend other writers (for free) and so it acts as an organic growth tactic.

Active vs Passive Consideration

When considering an investment in a newsletter business, it's crucial to understand the level of effort required for effective management.

Running a newsletter can range from being an active to a passive investment, depending on your approach and the resources you allocate.

Active Investment:

If you opt for an active investment, be ready to immerse yourself in the details. Here are some tasks you might need to handle:

Content Creation:You’ll need to regularly produce engaging content, which could involve writing articles, designing graphics, or recording podcasts/videos. Essentially, you’re the driving force behind the operation.

Subscriber Management:Actively managing your subscriber list is crucial. This includes adding new subscribers, segmenting them based on their interests, and handling unsubscriptions.

Marketing and Promotion:Attracting new subscribers requires effective promotion, which might involve social media marketing, collaborations, or even paid advertisements.

Engagement:Keeping your audience engaged is key. This means responding to emails, comments, and feedback.

Passive Investment:

Conversely, a passive investment requires less hands-on involvement. Here's what that could entail:

Buying Established Newsletters:You can purchase a well-established newsletter that already has a steady stream of content and subscribers.As mentioned earlier, use sites like Duuce and Flippa if you want to go with this approach.

Outsourcing Content Creation:Hire writers, editors, and designers to handle content creation and management.Example: Use services like Upwork or Fiverr to find freelance writers who can create content based on your guidelines.

Automated Marketing Tools:Utilize automation tools to manage subscriber lists and marketing efforts.Example: Services like ConvertKit or HubSpot can automate email campaigns and handle subscriber management with minimal input from you.

So, Which One's for You?

If you enjoy being hands-on, have creative ideas, and love interacting with an audience, the active route might be for you. However, if you're looking for a more laid-back approach, investing in an established newsletter and outsourcing the work could be the way to go.

Hope this deep dive on newsletters has got you thinking about the very interesting world of newsletters! 🧠

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Jason

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DISCLAIMER: None of this is financial advice. Finbrain is strictly for educational purposes.