Newsletters as an unlikely new audience platform

Your Morning Brew with theSkimm and new operating formulas for media

Newsletters aren’t, well, new. For centuries, going back to Ancient Rome, they have served as a way to communicate with extended families, friends, acquaintances, officials, and business collaborators. They’ve been used to organize communities, disseminate information out of reach from the prying eyes of various authorities, and to tell you when your favorite retailer is starting its biggest sale of the year. Long a tool of engaged communities, today’s newsletters are adding both a tech angle (distributed through newer platforms – like yours truly – such as Substack, with new audience segmentation capabilities via ConvertKit, Klaviyo and others) and a commercial aspect (they may be the key engine powering significant e-commerce and DTC activity). Paid newsletters are also having their moment: Reputable journalists from mainstream imprints are casting off on their own, betting that the audiences they’ve accrued over the years will not only follow but financially support their work. Casey Newton, who recently left The Verge after a lengthy tenure as its Silicon Valley editor to start his own imprint on Substack, summed up the new quest for independence and the commercial opportunity of newsletter content perfectly: 

“When you look at the economics of newsletters, there are opportunities that are bigger for some writers than any media company can match. If you can find 10,000 people to pay you $100 a year, you’re making $1 million a year. No one in media is going to pay you that unless you’re the anchor of a popular news show or something.”

Who would have thought that the lowly newsletter could be so sexy? Increasingly, newsletters – and especially paid newsletters – are to media what DTC is to commerce: anew commercial channel challenging the economics, distribution, and operations of its predecessors. Why newsletters, and why now?


In marketing and advertising terms, (free) newsletters began taking off in the ‘90s when free email services meant that more people had their own email addresses and broadband started becoming the norm in many homes. Everyone began embracing this new channel as a way to speak directly to their customers. Fast forward some 20 (!) years and today not having an email list of some kind would be considered strange. We’ve moved on from the mass media audience of large, anonymous groups to a more streamlined, opt-in, semi-authenticated one, so much so that media companies today can be started with someone’s email list – that sweet, sweet smell of first-party data

How many newsletters are waiting in your inbox each morning? In a very informal survey at Sparrow HQ, we tallied up the newsletters each of us receives on a random workday. A typical Wednesday haul netted a daily average of 23 (!) different newsletters across our team. (There were some extreme outliers, too, with > 50 – yikes.) That may seem like a lot, but we encourage you to try it out with your own inbox and see where you land. As with any other type of content, the sheer abundance of those newsletters may influence how you devote your attention to them and, hence, their individual impact.

Email marketing automation vendor Campaign Monitor conducts annual research on global email trends. Its most recent full-year report (Jan.-Dec. 2019) found that marketing emails in general have a 17.8% open rate. The rate fluctuates across different industries; for media, entertainment, and publishing, the open rate is 18.1%. It’s increasingly clear that just landing in someone’s inbox doesn’t mean much unless your audience actively and regularly engages.  

But, predictably, there’s much more to this story. While this increased interest in newsletters and their various commercials is entertaining, there's a greater underlying pattern at play. It's not about newsletters as a separate format or a single channel – they’re part of the larger unbundling and rebundling of content.

This challenge is less traditional vs. new media company and more of a niche vs. general audience battle that we see play out across all segments of media, including television, magazines, newspapers, radio, and more.

With the proliferation of newsletters and the rise of an individual creator, we are entering a new dimension along the bundle > unbundle > rebundle trajectory. (We tackled the streaming services rebundling and the Rule of Threes in an earlier One.


This brings us to the newer crop of email-centered media companies. What does that content rebundling cycle look like from their perspective? Leave aside the paid vs. free dimension that’s dominating newsletter-related conversations today. The wider challenge we’re interested in is broad vs. niche and which of the two approaches has more staying power. The value of newsletters is in that direct connection with their audience, and what better way to explore this point than to examine two newsletters that are, in terms of execution, almost carbon copies of each other, but which serve different audiences?

We think we’ve found the perfect examples to compare: theSkimm and Morning Brew. What makes these two particularly interesting?

  • Both companies blur the lines of business models by taking a framework traditionally supporting media companies (advertising) and extending it to newsletters. 

  • Both newsletters are free to subscribe to and rely on sponsorships, advertising, and/or content co-creation for revenue. 

  • They appear to be moving in lockstep with one another. TheSkimm was founded in 2012 and the Morning Brew in 2015. Much of their respective go-to-market is quite comparable. 

  • Both use a conversational style, with an emphasis on mimicking a chat one would have with a friend. This translates into a very similar visual presentation format. 

  • They’re both aiming to reconstitute certain tried-and-true profitable media company models for a new, mobile-first, always-connected audience. 

While theSkimm is more general and scale-driven (primarily female audience, covering news and politics, and reaching 7 million subscribers), Morning Brew is niche and attention-driven (narrow business-reader focus, now adding additional verticals, with 3 million subscribers). Compared to legacy media properties, theSkimm seems to be the newsletter version of ABC’s “Good Morning America” television infotainment talk show, while Morning Brew markets itself as a distilled Wall Street Journal. The broad vs. niche motif strikes again. 


While they have many similarities, there are a few key differences in their capitalization, rollout, go-to-market, and commercial strategies that are interesting to analyze. 

  1. Financials

TheSkimm has raised approximately $28.4 million in funding. During its latest round in 2018 – six years after its founding – its valuation was $100 million. TheSkimm was profitable and generated upwards of $20 million in revenue in 2019. In comparison, Morning Brew, now in its sixth year, initially raised capital only through a $750,000 friends-and-family seed round before selling a majority stake to Insider Inc. in October 2020, when some valued the company at around $75 million. Morning Brew reported $13 million in revenue in 2019 – a significant jump from only $3 million in 2018 revenue – and it’s on track to hit $20 million revenue in 2020. 

Key takeaway: A niche approach certainly seems to award more flexibility for how much money you’ll need to have in the bank to execute than a more generalist play. 

  1. Customer acquisition 

Almost identical: Subscribers are the lifeblood for media newsletters and they must actively hustle to cost-effectively attract new customers. To achieve this, both companies lean heavily on their respective referral programs (the Skimm’bassadors and Brew referral program) and paid acquisition channels (Facebook and Instagram are largest for Morning Brew). Both newsletters court readers with access to a private community at 10 referrals per person and a milestone program with different incentives for different milestones (i.e., swag, mugs, early access, additional issues, etc.). For theSkimm, referrals are responsible for about 20% of its audience, while Morning Brew revealed that around 30% of its subscribers have come in via referral. Morning Brew grew its audience from 100,000 to 1.5 million in 18 months in part by implementing “a milestone-based rewards program that was extremely calculated and demand-driven.” 

“One of the best pieces of advice we got from our investors was that you can either focus on growth or monetization ... We were able to raise a little bit of seed funding and so we made the choice to focus on user growth. “

- Daneille Weisberg, theSkimm’s co-founder speaking to "Twin Cities Live" co-host Steve Patterson during The Big Week for Small Business

Key takeaway: This approach and choice between audience or growth harkens back to old media formulas where increasing your audience by X would lead to a predictable bump in revenue of Y. Does this formula still make sense today? What other new formulas should we consider? TheSkimm has been more focused on audience growth while Morning Brew on attention and open rates. 

  1. Operations

Both companies are headquartered in New York City. Morning Brew has roughly 60 employees. TheSkimm laid off about 20% of its 130 employees mid-pandemic, bringing headcount to roughly 100. Part of the attractiveness and appeal of niche media is the promise of a smaller operational footprint:You need fewer people to deliver high-quality content This especially holds true for solo auters or small collectives. (Defector Media, made up of the team that wrote for G/O’s Deadspin, comes to mind here.) 

Key takeaway: How much should one expect to incur in operating costs to generate ~$20 million in annual revenue? We need a slew of new operating formulas.  

  1. Content/product 

Both companies produce a main daily newsletter, with additional content and podcasts. TheSkimm’s Daily Skimm approaches its content production with a very wide net by covering news and politics – you can read anything from a Kardashian family update to the murder of journalist Jamal Khasshogi. In 2020, theSkimm dove into financial advice and launched a separate paid app, Skimm Money, which focuses on money management tips and was made available for free due to the pandemic. Morning Brew started firmly in one vertical – general business – and is now expanding into different products and verticals, including retail, marketing, emerging tech, and product and lifestyle recommendations. The UX for both is almost identical, except for the color scheme. In addition to their core newsletters, both are expanding into podcasts and continue experimenting with other content and product types. 

Key takeaway: This type of format experimentation is easier when you ‘own’ your email audience: Instead of having to acquire it again for each new product, you can count on a significant overlap of interests and compound audience effect over time. This expansion wouldn’t be possible without the newsletter component and its direct connection to the audience – which is something traditional media companies didn’t understand was an option until recently. 

  1. Reader/subscriber loyalty 

Where does each newsletter sit in users’ media diets? This might be the most important differentiating factor. With the abundance of choice and proliferation of content, these two newsletters bring much needed curation to a user’s inbox for free. However, even when something is free, there is only a limited amount of attention any given user can and is willing to devote to it consistently. What we’re seeing across the media landscape is that one of the first categories that gets deprioritized in media diets is general interest. This has been the pattern in traditional media companies whose previously reliable, sizable, and advertiser-friendly audiences seem to have disappeared overnight; it’s a challenge to create engaging content when you have a general milquetoast approach to coverage.

Key takeaway: TheSkimm has the scale, but in the world of Facebook and Google scale, the value and the key KPI should revolve around attention; that is precisely the metric that Morning Brew chose to zero in on with its most valuable subscribers – a technique that will sound quite familiar to commerce professionals, but it remains counterintuitive to media companies focused on scale. 

“For example, ‘total number of subscribers’ is a vanity metric. After all, anyone can purchase large lists or use shady practices to acquire email addresses, and then say that they have hundreds of thousands of subscribers. This is not what Morning Brew is about, and it goes against our code of ethics. Rather than focusing on total number of subscribers, we focus on quality subscribers who are passionate about our content and engage with our emails regularly. This is why the only metric that we focus on is unique opens – and to that point, we plan to reach millions of unique daily opens as soon as possible.”

– Tyler Denk, Morning Brew’s growth engineer in conversation with Campaign Monitor


Perhaps it’s rather meta to write about other newsletters in a newsletter, but here we are. It certainly seems that the next evolution of media companies – if not outright based on email – will be DTC. How we get there may vary, and as theSkimm and Morning Brew examples show, the paths to success can look nearly identical, even if your targets are different audiences. It’s also interesting to compare theSkimm to About.com and Morning Brew to Dotdash (but with email instead of web-based and SEO-driven content at their core). About.com used to be a generalist and command a large audience prior to its transformation into Dotdash, where the strategy focuses on strong market share in a vertical before expanding to others. It appears that theSkimm is currently in the transformation phase, shifting to individual verticals, while Morning Brew skipped the initial generalist approach and is now continuing to scale by building out different verticals.   

There is another shift underway: TheSkimm packages its offering similarly to media companies, while Morning Brew operates on a renaissance/artisan creator model. This shift calls for a different skill set for content creators, who now need to understand audience acquisition, tracking, and analysis – things that traditional media companies (especially those with newsrooms) work(ed) hard to keep separate. Morning Brew embodies this new energy by putting its creators front and center – similar to a rock star jam session, rather than working with studio musicians. We’re not the only fans of the musician metaphor so we’ll leave it to Jarrod Dicker to sum up (we love his ‘media as A&R, creators as rock stars’ model):


One Question:

Does niche vs. general have a different length to market or timeline to prove whether it is viable? Our examples seem to be operating on a similar timetable. Given that the middle has fallen off from other forms of media, it is reasonable to expect that the same may be happening in newsletters, leaving the top 20 and the long tail. How long does it take to grow and scale a newsletter-based media company? TheSkimm and Morning Brew are 8 and 5 years old, respectively. What’s the timeline here? 


Thanks for reading,

Ana & Maja

P.S. Programming note: One will be off next week in honor of Thanksgiving. If you absolutely miss hearing from Ana, she will be keynoting IAB Serbia’s annual conference (in what’s a rare, albeit virtual, hometown appearance) next week. You can find more details and register here.


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Who we are: Sparrow Advisers

We’re a results oriented management consultancy bringing deep operational expertise to solve strategic and tactical objectives of companies in and around the ad tech and mar tech space.

Our unique perspective rooted deeply in AdTech, MarTech, SaaS, media, entertainment, commerce, software, technology, and services allows us to accelerate your business from strategy to day-to-day execution.

Founded in 2015 by Ana and Maja Milicevic, principals & industry veterans who combined their product, strategy, sales, marketing, and company scaling chops and built the type of consultancy they wish existed when they were in operational roles at industry-leading adtech, martech, and software companies. Now a global team, Sparrow Advisers help solve the most pressing commercial challenges and connect all the necessary dots across people, process, and technology to simplify paths to revenue from strategic vision down to execution. We believe that expertise with fast-changing, emerging technologies at the crossroads of media, technology, creativity, innovation, and commerce are a differentiator and that every company should have access to wise Sherpas who’ve solved complex cross-sectional problems before. Contact us here.