Newsletter hustlers

This week, I wrote about the newsletter economy and how different it is than the legacy media world. On PvA, Alex and I go into the similarities of newsletters and video games, plus what happens when we go post-reading and writing.

A few things to know:

• Check out our recent Online Forum. I spoke to Valnet director of marketing for gaming James Kosur and True Anthem CEO Chris Hart about how Valnet is using Facebook and other social platforms to drive both engagement and traffic. Watch the replay. 
• Partner with The Rebooting. We work with a wide range of clients to connect them with media decisionmakers. See how we do that. 

The information entrepreneurs

Last week, there were two very different media gathering. In Washington DC, Semafor gathered a group a grandees to handwring discuss the state of the news business. In a planned community in Austin, I was with a group of about 100 information entrepreneurs at the The Newsletter Marketing Summit.

What struck me most about the event, which brought together about 100 at a religious facility patrolled by a very Texas armed security guard in a bulletproof vest, was the optimism. There wasn’t much grousing about algorithms, keyword blocklists, Trump or AI scrapers. 

There was less talk about Trump and DEI and more about unit economics. The newsletter economy has grown vast. It is filled with mom and pop and solo operations that are pure internet businesses. That means the focus is more on the mechanics of acquisition, monetization and retention. The content is an ingredient, but it is often a part of the picture. I don’t think the Semafor event had an entire 45-minute session on optimizing landing page copy. Or went deep into CAC payback periods.

The Newsletter Marketing Summit was about growth, not playing defense or hoping for the return of a bygone world. This is not the case of most mainstream media companies. Chuck Todd recently told fellow mainstream media refugee Chris Cilizza that he was “depressed” his last year at NBC because “it was the first time I worked at a company that didn’t want to grow.” 

This is a different crowd from your typical media conference. I did a session with Yossi Levy, who  has turned a pseudonymous Twitter meme account, Car Dealership Guy, into a thriving B2B media company focused on car dealership owners. He’s expanded into a daily news operation, podcasting, as well as a content agency and recruitment firm. I connected on the walk over to the conference session with a Cincinnati real estate agent who is using his newsletter to drive deal flow. 

Tim Huelskamp, CEO of newsletter heavyweight 1440, detailed how the newsletter upstart has created a flywheel to acquire 300,000 newsletter subscribers each month for its middle-of-the-road daily news newsletter. It now has 4.4 million subscribers and generates over $1 million per employee. There aren’t many companies in the news business that have those economics. 

Ryan Heafy, COO of local newsletter operation 6am City, showed legacy media as literally a dumpster fire while detailing how 6am grinds the unit economics of its local publications and skips journalism conventions. (Why waste time going to the local event when you can aggregate UGC from it?) 

The headliners at this kind of event are different. Sam Parr, founder of The Hustle and co-host of the My First Million podcast, is something of a demigod. Alex Lieberman, cofounder of Morning Brew, has similar status as a newsletter OG. It might be a negative signal that both are now building non-newsletter businesses. Sam has pivoted to building a community for entrepreneurs with Hampton, which he thinks can be a far bigger business than newsletters. Alex is building a B2B content marketing agency, Storyarb. 

The M&A buzz at this kind of event is how AI newsletter The Neuron in two years expanded to 500,000 subscribers and was acquired. And it was done by a teenager. There’s no doubt the newsletter hustler world has fumes of the get-rich-quick, cheat-code ethos that powers modern currents like FIRE (financial independence, retire early), DTC, passive income businesses, even crypto and memecoins. 

The Information Space has seen information entrepreneurs run circles around more staid legacy media that clings to outdated conventions. Most journalists aren’t cut out for the hustle. The Information Space rewards and often requires scrappiness.

One thing mostly missing from this newsletter conference: Substack. I see a bifurcation of the newsletter world into the hustlers and the writers. This event was filled with Notion energy. The hustlers are epitomized by platforms like Beehiiv (I’m an investor) and Kit, while Substack is home to the craftsmen. Substack is more of a content-led platform, while the others are small-business engines. You don’t find many Substackers hustling courses and getting CAC on Facebook ads under $1. 

Substack isn’t a good fit for these types of information entrepreneurs because they are less about the purity of the subscriptions model and more about owning an audience to drive LTV in a variety of ways. Subscriptions are a tool, not a destiny. 

The emerging Information Space means there is room for both approaches, and each could stand to learn from the other. Few of the people I met in Austin were journalists or even people with professional media experience. I always say this is an unaccredited field, so the more the merrier. The risk of putting distribution and monetization too far ahead of the actual content is that these models can firmly land in the arbitrage bucket. Their flywheels are often dependent on customer acquisition, similarly to how many direct-to-consumer e-commerce brands were really marketing companies, not product companies. 

And the risk, just like in DTC, is this model works until the arbitrage disappears. In DTC, ad costs skyrocketed, and many brands collapsed when they had to compete on product, not just marketing. In newsletters, AI-generated content and inbox algorithms could make traditional acquisition strategies obsolete. Email’s death has been greatly exaggerated for a couple generations at this point.

There are something like 3,000 AI-focused newsletters on Beehiiv alone. The pattern matching of building The Morning Brew of X or The Milk Road of Y rarely produces durable brands, although I’m not even sure if it’s practical to aspire to build long-lasting brands based on the track record of digital media. 

I still believe the newsletters that survive will be the ones that go beyond audience hacking and build actual brands with real differentiation. I’ve seen too many iterations of publishing where early entrants found distribution seams that enabled fast growth only to quickly fizzle. (RIP, Little Things.) The Morning Brew of X clones will mostly falter because this model was built in an entirely different era with far less competition and vastly different distribution opportunities. At some point, every industry—whether it’s skincare, mattresses, or newsletters—has to stop relying on growth hacks and start competing on substance.

On People vs Algorithms, we discussed the dynamics of the newsletter economy that are similar to the direction of video gaming, which after a long period of strong growth has seen parts of it stagnate. Both industries have seen an explosion of entrepreneurial activity fueled by cheap acquisition tactics, aggressive monetization strategies, and a reliance on arbitrage opportunities. Just as the newsletter world is filled with growth marketers engineering low-cost subscriber funnels, mobile gaming has been dominated by developers using ad-driven installs and in-game micro-transactions.

But just like in newsletters, the gaming gold rush is facing a reckoning. Customer acquisition costs are rising, and discovery is increasingly controlled by platforms like Apple and Google. In newsletters, AI-generated content and inbox algorithms are shifting the rules, making it harder to sustain arbitrage-driven audience growth.

YouTube | Apple | Spotify | other platforms

On my radar

UGC won: This is a very bad time for many publishers that rely on SEO to evergreen content. The combination of Google favoring user-generated content and ChatGPT taking share of answering those questions is hammering the traffic at WebMD, G2 and others. Not so much for Reddit (and Substack). (Elena’s Growth Scoop)

YouTube is a default. It used to be that if you had time, you would turn on ESPN or CNN. Those daysa are over. People now turn on TikTok, Instagram and YouTube. Like Amazon, YouTube is an “everything store” that has managed to become a dominant force in all kinds of entertainment, short and long form, and information programming. (Posting Nexus)

RIP reading and writing. The attention crisis is mutating into sub-crises, including the concern over whether reading is in permanent decline. Writing itself is being challenged by “easier” and passive modes like listening and watching. The market for commoditized writing will shrink. Expect a lot more dear-diary writing on Substack. (David Perell) 

Counterpoint: “There is far more content being written online than anyone can consume, even if they narrow the scope to their interests. And this is why generative AI won't be that big a deal for text: there's already an effectively unlimited supply of people who are writing completely deranged things but can present them with the same design standards and theoretical distribution as a major media outlet (blogging! Substack!) and the same text-level production values, too (spellcheck!). We already implicitly opt out of the overwhelming majority of what we could read.” – Byrne Hobart, The Diff

Community is a moat. Everyone with an audience wants a community. Digital media has fragmented to such a degree that winning on breadth is a fool’s errand, making the most sensible path to take narrower and, well, smaller. Publishers are caught in a bind. They must continue to cater to audience-based models while narrowing to build community models. (The Verge)

The meme economy. The attention industrial complex places a premium on catching people’s attention in a feed. That’s why memes are so powerful. It didn’t take long for the Trump-Zelensky Oval Office blowup to become a meme. AI will accelerate this shift to the performative – and, in my view, the counter-reaction as alternatives rise to the attention of the industrial complex. (Michael Mignano) 

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