Would you buy a Newsletter Series?

Is acquiring a newsletter easy to do? And what happens after the purchase is complete? Following up on the emerging trend, I interviewed Stefan von Imhof @stefanvonimhof, Head of Product for Flippa, the # 1 marketplace to buy and sell online businesses, and recent (January 2021) purchaser of the MakerList newsletter.

NM: First things first, Stefan, where are the best places to find newsletters for sale?

Stefan: There are several resources to help your search, including:

-- Subscribing to Jakob Greenfeld's products such as Newsletter Spy or Product Explorer databases to find dormant or abandoned assets
-- Reviewing the listings on Duuce
-- Searching through Flippa for newsletter opportunities (site mostly lists websites & software products)
-- Cold email outreach to dormant (or desired) newsletter creators (this is the avenue that Stefan used for MakerList)
-- Dormant or defunct Facebook pages - this is a decent DIY place to start your research and can provide additional avenues to search through.

NM: How do you decide on the right prospects for you?

Stefan:
--Adjacency: If you already have an existing offering in the market, then your best opportunities are constrained to options that can compound or leverage your previous assets. This was the path taken by Stefan since MakerList was similar to his existing Alternative Assets publication. Acquiring the subscriber list almost immediately resulted in a 30-40% uptick in subscriber count for his new, combined newsletter.
--Expertise: If you already have experience and skills in a specific area, it only makes sense to pursue a newsletter with a pre-existing subscriber base that's already interested in that same topic. It means that your new content has a better chance of providing value to that audience, which should reduce the early attrition rate.
--Interest: It's been said before — choose something you'll enjoy doing, or it can be difficult to sustain passion once you've been up and running for a while.
--Vision: Do you have a kick-ass plan for growth and monetization? Without some or all of the first three points on this list, you may have a more challenging route to success. But if you've got a dream, you do you!

How to price a newsletter

In his own excellent article on the topic, Stefan von Imhof offers three different methods for establishing an appropriate purchase price:

Quick Tip: verify your understanding of the number of subscribers, open and click-through rates at the earliest opportunity.

--Revenue: If the target newsletter is already monetized, typical valuations run between 3x to 4x annual net profit.
--Subscriber acquisition cost: If the newsletter is not generating revenue but has a decent audience size, it's possible to work out a mutually acceptable valuation based on how much it would otherwise cost to attract that number of strong leads.
--Monetization potential: You may be planning to convert a previously free newsletter into paid content. Once you've factored for the potential conversion rate, multiplied by your anticipated subscription fees, this could give you some insight. Alternatively, if you already have some experience in selling advertising, sponsorships, or other marketing revenue sources, that should offer some ideas.

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Outreach & Purchase: Once you've got your vetted list of potential acquisition targets, Stefan recommends knowing your budget going in, and making your first cold email count.

"You might as well plant a seed from the outset by showing the math you did for your valuation and making an offer upfront."

For the purchase structure, Stefan outlined several creative approaches. Certainly, an outright purchase would be simplest, but there are other options to consider, such as revenue-sharing, for example. Alternatively, the seller may want to keep his brand alive through an earn-out strategy, or he may be more interested in a merger or combined approach versus a full sale.

Risk Management: The most significant concern you face will be the "Key Man Risk." Original-content newsletters are the most challenging to transfer seamlessly since the subscribers opted-in based on the original creator's skills and charisma. The risk is lessened somewhat if the newsletter is mainly driven through aggregation or curation, but it's still an issue to monitor carefully.

Quick Tip: As the purchasing entity, you can reduce the risk by carefully choosing your acquisition targets based on the list of "fit" attributes described above.

Case Study: So, how did it work out for the MakerList acquisition? When Stefan von Imhof acquired MakerList in January 2021, AlternativeAssets had close to 1000 subscribers and was generating approximately $ 1,800 MRR through advertising and sponsorships. MakerList had approximately 350 subscribers, and the purchase was valued using the "subscriber acquisition cost" model, at between $2 and $3 per sub.

Stefan maintained the MakerList brand for a little over one month, long enough for the MakerList subscribers to see a few new issues and build comfort, and for Stefan to manage the communications appropriately. Once he migrated the subscribers over to the "new" AlternativeAssets set-up, Stefan was able to retain the majority of the MakerList audience and is now generating approximately $ 3,000 MRR from the combined subscriber list.

Bottom Line: These are very early days for the newsletter acquisition model, so there aren't many precedents or established patterns. The market is barely developed at this point, and almost any approach could be successful (or not, as the case may be) — your mileage may vary.

However, a newsletter is by far the easiest digital business asset to transfer and sell. From a process standpoint, once the new owner is provided with the admin account, the next steps to success are wholly up to their own ingenuity and capabilities.

Are you thinking of buying (or selling) a newsletter?