Why Paid Newsletters Are The #1 Way To Monetize Your Knowledge
Personal Updates:
My apologies for missing last Friday’s post. It wasn’t for lack of effort!
I’m still learning about running a newsletter, and I ran into two challenges:
I kept seeing ways to dramatically improve this article. As a result, things got pushed back.
I co-organized an in-person mastermind retreat with friends. As a result, every second of my days was scheduled. I thought I’d be able to squeeze out some time, but I wasn’t able to.
Our mastermind formed in 2013, and we’ve done 20+ weekend retreats since then. We started out as supportive peers and turned into close friends.
In retrospect, these challenges and the resultant stress could’ve been avoided.
I could’ve gotten ahead on newsletter posts earlier in the month. Or, I could’ve announced Friday as a vacation day sooner. Of course, hindsight is 20/20. I tried getting ahead these past few weeks, but I haven’t been able to thus far. And, I didn’t announce a vacation day sooner, because I kept on thinking I was almost done with the article.
I appreciate your patience as I figure out this model. I’m still learning how to:
Balance quality and quantity
Balance personal and professional responsibilities
How and when to communicate personal / vacation days
With that said, I’m counting last Friday as one of my vacation days for the year.
Quick Post Summary:
Over the last 20 years, I’ve experimented with 7 different ways to monetize my knowledge, and I’ve earned 6-7 figures per year with each approach. Therefore, I not only understand the pros and cons of each path, I understand how to succeed with each.
However, with many of these approaches, I hit a ceiling either internally (i.e., loss of passion) or externally (i.e., difficulty scaling). But all was not lost with these plateaus. With each invisible ceiling I hit, I learned something new about myself and about the pros and cons of that path. This helped me identify better and better approaches to monetization over time.
All of this is to say, IMHO, newsletters are the best way for people who love learning to get paid to learn. In this post, I explain why.
This post might save you years of wasted effort, by helping you avoid the invisible ceilings it took me years of painful trial-and-error to understand.
Today’s Game Plan
The fascinating history of the pay-for-knowledge field. By understanding history, you gain a better situational understanding for what’s happening now, and you can make better predictions of how things will evolve in the future.
3 reasons why now is the best time to start a paid newsletter. The newsletter field is new, which leads to several time-sensitive opportunities.
10 non-obvious reasons why paid newsletters are the #1 way to get paid to learn (paid subscribers). Each reason is important, because it gives you the scaffolding to make a better choice on one of your most important thought leadership decisions.
6 hidden risks, challenges, and caveats of starting a newsletter (paid subscribers). I try to always explore the counter arguments to my ideas so I can generate better ideas that are stress-tested.
To get all four sections of this 5,700-word post, subscribe to the paid version of the newsletter.
The History Of Online Knowledge Monetization Is Fascinating And Instructive
Paying for knowledge from independent, online teachers is only 25 years old. And it has evolved in phases…
Rise of online courses
From Software-as-a-Service (SaaS) To Knowledge-as-a-Service (KaaS)
Rise of online newsletters
Rise of the creator
Rise of the rich creator
Phase #1: The Rise Of Online Courses In The Early 2000s
When I first heard of courses in the early 2000s, I was skeptical. Why take an online course from a random person when you could just enroll in a local in-person class, especially one facilitated by a university?
Now there are millions of respected, independent, online courses generating hundreds of billions of dollars per year. This explosion has happened for a few reasons:
The world is changing more and more rapidly. Learning is how we adapt to that change. Therefore, we need to learn more and more in order to keep up. I call this the Law Of Accelerated Learning.
The quality of courses is increasing. As the quality of courses increases, they create better results. Therefore, people are more willing to pay for them.
The tools for course creation are improving. This makes it easier for more people to produce, deliver, and market online courses. Thus, the number of course creators is exploding.
Courses fill an important role in the info ecosystem. More specifically, they help students get specific results. Different mediums are good at doing different things. Books are great at opening our eyes to new paradigms and starting new conversations. Social media is great at keeping us up-to-date. Courses are great at helping us learn a specific skill.
Over time, courses have evolved from simple on-demand video lessons hosted on stitched-together software into two types, with many features, hosted on world-class software.
The two main types of courses are on-demand and cohort-based:
On-Demand. Students get access to all the lessons, and they can go through the material at their own pace. Now that high-quality webcams are the norm, it’s easier for teachers to create videos.
Cohort-Based. Students go to live classes with a cohort of people going through the materials at the same time. Now that most people have broadband, doing live classes is easy.
As tools have evolved, courses have included more features—often some combination of the following ones…
Video Lessons
Community
Templates
Exercises
Coaching / Office Hours
Co-Working
Tools
Etc.
Finally, course creators can publish their course in different ways:
Course management systems (i.e, Teachable, Kajabi, Thinkific)
Course platforms (i.e, Udemy, CreativeLive, Skillshare)
Self-created software
Bottom line: The e-learning industry is still very new. And, it’s both growing and evolving rapidly. There are incredible opportunities to create the first, highest quality, or most targeted course in any niche.
Phase #2: From Software-as-a-Service (SaaS) To Knowledge-as-a-Service (KaaS)
In 1999, Salesforce (now valued at $200B+) started the Software-as-a-Service (SaaS) revolution.
Before the SaaS revolution, people bought software forever as a one-time purchase and stored it on their local computer.
After the SaaS revolution, people pay a smaller amount upfront, but pay for it monthly and access it via the Internet. As a result of the shift from the computer to the Internet, software also gained new functionality…
Faster feature delivery (rather than annual upgrades)
Integration with other software (via APIs / plug-ins)
Social functionality (collaboration / sharing)
Today, SaaS is the dominant way that software is sold.
At first glance, software and knowledge seem like completely different industries. But upon closer inspection, code and content are similar on a few levels:
They both entail a large upfront expense to create
They both are stored digitally
They can be shared instantly and globally at close to zero cost
Perhaps then, one-time big purchases of knowledge (i.e., courses) might shift to low cost subscriptions (i.e., - paid newsletters). Furthermore, perhaps we are at the beginning of the Knowledge-as-a-Service (KaaS) revolution.
Similar to software, when we deliver Knowledge-as-a-Service, it is improved:
It becomes easier for people to try, because you can sample it and because it’s cheaper upfront.
The lifetime value of the customer is higher for the creator, if you have a great product people use forever.
It gains superpowers. It can be easily shared or be the seed for a conversation in a community.
Bottom line: If content is like code, the future of knowledge monetization might be Knowledge-as-a-Service, not courses.
Phase #3: The Rise Of Online Newsletters
Physical paid newsletters delivered via mail have been around for decades.
But, many people didn’t believe they could be mainstreamed online. Why would people pay for information when the Internet was based on the premise that information wants to be free? For example, ten years ago, almost every single media publication except the New York Times gave away their information for free.
People started to pay for online information for a few reasons:
Media publications started charging. Fifteen years ago, media publications could employ a small number of journalists to create free content and a sales team to sell advertising on that content. Because of the publication’s brand and because there wasn’t that much online content, publications could charge a premium. However, two things upended this model. First, with the rise of social media, suddenly there was an explosion in the supply of online content created by billions of active social media users that could be advertised on. Secondly, Facebook developed a world-class advertising system that provided cheaper rates and better targeting than going through media publications. As a result, publications could no longer break even on free content funded by ads. Thus, they started moving to subscription models.
Readers started trusting mainstream media less. As ad rates plummeted, media publications fought to make their ad-based model work. One of the ways they did this is by lowering their cost. This meant paying writers less and/or lowering editorial standards. As a result of this shift, the quality of content decreased, and as a result of that, trust in the media overall has plummeted. This created a demand and respect for independent writers. It also created the opportunity for high-quality writing that could be sustainable on the low-end and extremely profitable on the other hand.
Successful online newsletters proved the model. One of the first one-person newsletters to scale and prove the power of paid newsletters was Ben Thompson’s Stratechery in 2014. Thompson’s success not only inspired other newsletter creators, it inspired the founders of Substack, which launched in 2017. From there, Substack inspired other newsletter platforms like Beehiiv, Ghost, ConvertKit, and Memberful).
Phase #4: The Rise Of The Creator
We are now in a phase where the lines between courses, community, and newsletters are blurring. Software providers in each category are providing functionality from other platforms.
For example, as Substack evolves, it has become much more than just a tool to send content via email. Offering email delivery and subscription management was just the first feature set of Substack. Other features now include…
Course management. The user interface and taxonomy of Substack are very similar to course management platforms like Teachable.
Social media. While Substack likes to juxtapose itself against traditional ad-based social media publications, it still is a social media company in many respects. There’s a news feed with short posts and long posts that people can comment on, like, and share.
Community. Substack now has community features like Chat.
Multimedia. While Substack started as a text and photo platform, it now has video, audio, and podcasting functionality built in.
Each new feature set of tools enable new, emergent models.
Bottom line: Substack and tools like it are more than paid newsletter tools. Rather, they symbolize a new paradigm for monetization of the Internet. More specifically, they represent our shift from ad-based, free content to subscription-based, paid content.
This is a big deal for readers. They get higher quality content delivered regularly from people they trust.
This is a big deal for creators too. Instead of having small, unpredictable revenue with customers they can’t even contact directly, creators now have direct relationships and are creating predictable wealth.
Phase #5: The Rise Of The Rich Creator
As I mentioned earlier, code and content have a lot in common.
One commonality is that they are both extraordinarily scalable. In other words, once you create knowledge, you can replicate it at almost zero cost. Thus, one piece of code or content can scale fairly easily to millions of people overnight.
At the same time, code and content have evolved very differently over the last 50 years.
The main difference between code and content is that the software industry is 20 years ahead of the knowledge industry on multiple levels:
Size. The largest companies in the world are software companies.
Funding. There are tens of billions of dollars invested into software startups every year.
Education. There is a whole ecosystem of support for software startups (accelerators, bootcamps, and degrees).
Methodologies. Many methodologies like lean and customer development have evolved and been stress-tested over the years.
Quality. While software started out buggy, most software runs pretty well now.
But, now that there are more and more ways to monetize our knowledge, we are seeing content catch up to code.
Harbingers of this reality are already in the headlines.
For example, in the last few years, several podcast creators have gotten deals worth more than $10M per year…
Newsletter and course platforms are raising a significant amount of money:
More and more one-person newsletters are earning millions of dollars per year…
Ben Thompson is not alone. Other one-person(ish) newsletters making millions of dollars include Lenny’s Newsletter, The Pragmatic Engineer, Letters from an American, The Browser, Sinocism, and at least dozens, but likely hundreds, more.
Not only that, one newsletter was purchased for $75 million showing the size that newsletters can grow to…
Finally, social media companies are suddenly in the position of competing for the best work from the best creators. They can no longer expect the best work of creators for free. Therefore, they’re figuring out how to pay creators livable wages after more than a decade of not doing so. YouTube is leading the way…
Bottom line: The world is bright for thought leaders as there are more and more ways to monetize knowledge.
Early Silicon Valley entrepreneur Steward Brand is often credited with the quote:
Information wants to be free.
—Stewart Brand
What he actually said in 1984 was more nuanced…
Information wants to be expensive because it is so valuable—the right information in the right place just changes your life.
On the other hand, information almost wants to be free because the costs of getting it out is getting lower and lower all of the time.
So you have these two things fighting against each other.
—Stewart Brand
In other words, information wants to be free, and it wants to be expensive. That tension will not go away. And, after years of swinging too far toward free, it seems to be swinging toward paid.
Now that you have a historical understanding of the field, you’re able to understand why now is a particularly good time to launch a paid newsletter…
3 Reasons Why Now Is A Good Time To Launch A Paid Newsletter
#1. People are willing to pay for a subscription to online information
People I would never expect to pay for online courses are now taking them.
People who buy courses once-in-awhile now make them a line item in their budget. They view it as key to their career success and personal happiness.
Not only is it becoming normalized to purchase content online, it’s becoming expected.
This is a historic moment as the trend is only a few years old.
#2. Software tools now exist to run your paid newsletter easily for free
Those tools are free to start, and they don’t require that you be tech-savvy. This means you can focus on what you’re good at and what you enjoy—researching and creating content. There is no guarantee that this era of free newsletters will remain forever.
#3. Newsletters aren’t crowded yet
Although paid newsletters have been around for a few years now, they’re still in their nascent stage. This is a big deal on three levels.
First, consumers are still trying things out. Readers are still open to exploring many paid newsletters for the first time. As time goes by, they will have many pre-existing subscriptions, and they will likely be more discerning in what they pay for. This means that it will be harder to get people to subscribe to something new and harder to retain them.
Second, many niches don’t have a newsletter yet. There are thousands of niches that people would pay for newsletters in that do not yet have a paid newsletter.
Third, many niches only have low quality newsletters. Many paid newsletters are hobbies. Sure, people have monetization turned on. But, it isn’t clear what subscribers are getting and why that’s worth paying for. Furthermore, the frequency is too low to be worth paying for, because the newsletter creator isn’t putting that much time into it.
With that said, let’s jump into the broader, more timeless reasons why I think newsletters are so powerful. It took me years to realize the significance of these…
10 Non-Obvious Reasons Why Paid Newsletters Are The #1 Way To Get Paid To Learn (Paid Subscribers)
In this section, I unpack each of the reasons why newsletters are a uniquely powerful strategy for thought leaders who love to learn…
Email addresses hold their value more than social media followers over the years.
Paid newsletters allow you to focus on just creating great content rather than having to learn a basket of complex skills (growth hacking, funnel hacking, teaching, etc) that take years.
Paid newsletters are 100x more viral than courses, coaching, and consulting, because every newsletter post is sharable.
You get to spend most of your time on what you love—if you love learning and writing
You can scale without needing to build a big team or make big investments.
Having a public posting schedule is a super powerful forcing function that boosts your productivity by holding your feet to the fire.
Paid newsletters create feedback loops that lead to virality and money—not just virality.
It's super easy to get started on multiple levels—financially, mentally, etc.
Paid newsletters stay top of mind for readers, because they are sent an email for every post.
Paid newsletters are easier to consume, because they appear in full in your inbox, without the need for logging into a course management system or clicking to another site.
Understanding each of the reasons in detail is important because it will help you make a more informed decision on how to monetize your knowledge. Without understanding each nuance, you are more likely to under-estimate the benefits of paid newsletters.
#1. Email addresses hold their value exponentially more than social media followers
Social media platform algorithms eventually take the value of the follower to zero. The reason is simple.
Social media platforms have ad-based business models.
Therefore, they succeed when they show people content that they love so much that they keep coming back.
As a result, algorithmic news feeds prioritize content that gets the most engagement.
While followers may be a good signal when someone is just following a few people and the platform is less crowded, it gets worse and worse over time.
Email is different, because:
It’s not ad-based.
We receive emails in a chronological feed rather than an algorithmic one based on engagement.
Thus, we can be confident that people will at least see our newsletter in their email inbox.
Thus, the value of an email follower has held way more of its value than social media followers.
This pattern has stood the test of time. In 2003 when I first started writing, I was skeptical of the value of email. Blogging was just taking off and everyone was saying that email was dead. But 20 years later, independent blogging is faltering along and email is just as popular as ever. There isn’t any sign that this will fundamentally change.
At the same time, we can expect the value of an email to lose some of its value over time as…
People get more and more newsletter subscriptions
Gmail puts newsletters in a separate folder to manage that crowdedness
Gmail deprioritizes emails from strangers
Bottom line: In the next few years, many of your social media followers may not even see your content, but the majority of your email subscribers will still be reading each article you send out.