Are We Past Peak Newsletter?

Meta, which owns Facebook, is killing Bulletin, its newsletter product. Substack, a much-ballyhooed newsletter start-up, has cut back on advances to writers. The Atlantic is retooling its newsletter deals with writers.

After a rush of excitement around the potential for paid email newsletters to transform the media industry, there are indicators that the bubble may be popping.

“Text on the internet is arguably the most competitive medium in all of human history,” said Ben Thompson, who writes Stratechery, an influential media and tech publication. “If you’re going to ask people to pay for a newsletter, it has to be something they’re not getting anywhere else.”

Email newsletters have been a part of the publishing tool kit for decades, powering media start-ups like Politico, Semafor, The Ringer, Axios, Punchbowl News and Puck. Amid the noise of social media, journalists use newsletters to forge direct connections with readers, persuade them to pay for news and deliver them advertising.

In recent years, the humble email became a star in its own right. During the pandemic, media companies sought to cash in on a surge of excitement around the format from both readers and writers. But the fast-changing priorities of tech giants and the unforgiving economics of digital media have led to a reckoning at the inbox, as executives take a harder look at deals they struck with writers.

“Everybody had time to both create and consume,” said Jacob Cohen Donnelly, the publisher of the Morning Brew business news outlet and the author of the newsletter A Media Operator. “As the world has started to open, people don’t have as much time.”

The Atlantic has been one of the most prominent recent adopters of email newsletters. Last year, Nicholas Thompson, the chief executive, rolled out a program that allowed writers of certain newsletters to rack up major bonuses if they converted readers to Atlantic subscribers. At the upper end, some writers could earn total annual compensation approaching $400,000 if they converted 14,500 readers, according to people who spoke anonymously to discuss the details of confidential deals.

Newsletter writers were also paid a base salary, some exceeding $100,000, and some hit less aggressive targets for lower compensation.

The program attracted writers such as Charlie Warzel, Molly Jong-Fast and Nicole Chung.

But many of the targets proved too ambitious, and The Atlantic is reassessing the way it structures those deals, Mr. Thompson said in an interview. The company has offered to extend the contracts of its newsletter writers to assess how the emails affect the likelihood that readers maintain their subscriptions. Still, he said that the newsletter program had most likely made a small contribution to The Atlantic’s bottom line and that the company planned to continue the program.

“It’s not as hot and as frothy as it was 16 months ago, but I also don’t think this is the end of newsletters,” Mr. Thompson said. “There are going to be lots and lots of successful newsletters.”

“The secret sauce of Substack is enabling that sense of ownership and independence for the creator or the writer, and it’s expressed through the direct relationship they have with their audience,” Mr. McKenzie said. “Email is a useful means to achieving that end, but it’s not the end.”

“If you take a look back to the history of the magazine industry, it was a business that had a total addressable market that ranged in the tens of billions of dollars focused on affinity-based creative products that people subscribed to because they absolutely loved them,” he said.

Mr. Kelly said Puck’s paid subscriptions had grown an average of 20 percent each month, but he declined to comment on any fund-raising conversations or the company’s revenue or profit targets.

Mailgun, the email delivery service used by Substack and Ghost, said the online publishing industry had more than quadrupled its sending volume over the last two years. The New York Times is continuing to add to its newsletter offerings for subscribers, including one written by the restaurant critic Pete Wells that just began as well as another by the opinion columnist Ross Douthat, a spokesman for the company said.

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