Why Bundling is the Future of Paid Newsletters?
“Gentlemen, there’s only two ways I know of to make money: bundling and unbundling.” - Jim Barksdale
On April 13, two of Substack’s most popular newsletters — Divinations, on business strategy, and Superorganizers, on the world’s smartest people — joined forces.
For $20/mo., you can now subscribe to the Everything newsletter. On their own, these newsletters will run you $35/mo.
Makes sense, right? I mean, how many newsletters are you really going to pay for?
So, I want to say one word to you. Just one word. Bundle.
Bundle as Buffet
Before the internet, a writer worked for a newspaper on a beat — say, baseball. Every day of baseball season, the newspaper bundled this writer’s stories with all the other writers’ stories. A la carte pricing wasn’t available. You bought the newspaper as a bundle.
Then came the web. This same writer now had multiple platforms to choose from. They could publish a blog and build an email list. Writers with fan bases delivered content via a newsletter. Some bloggers, including Ben Thompson, the famous internet analyst, monetized their newsletters.
Back to the question above: how many people will pay for your newsletter? Every week, I get 20+ free weekly and daily newsletters. I skim most of them and a couple I read in-depth. Why would I add five weekly newsletters with a price tag of $100/mo.?
It’s a question of value, yes? Let’s say two of those weekly paid newsletters, which each run $20/mo., get together and offer $20 for both — like the Everything bundle.
When the newsletters are standalones, the consumer is a SuperFan, a consumer that pays retail price for a product and will seek out the product. Bundling, however, will give the author access to another type of consumer — the CasualFan, a consumer that has only one of the criteria of a SuperFan.
In “The Four Myths of Bundling,” Shishir Mehrotra offers a brilliant explanation of how this works.
“Let’s take a simple example of the McDonald’s value meal. Picture a set of customers standing in line. The first customer remarks: “I really want a Big Mac, I kind-of want fries, and if I get those, then the drink is free.” Directly behind them is a second customer who is thinking differently: “I really want a drink, I kind-of want a Big Mac, and now the fries are free!” And finally, behind them is a third customer with a crying child who is thinking “I really need a toy for my kid, and if I get this deal, then not only do I get a toy, but the whole meal is free!”
“Bundling produces value for both consumers and providers by giving access for (and revenue from) CasualFans.”
Writers like Dan Shipper, creator of Superorganizer, and Nathan Baschez, creator of Divinations, each has a base of SuperFans. They realized they had a group of consumers willing to pay for each newsletter separately, but together they would access a new group of consumers that would only purchase them as a bundle.
Two months later, Dan and Nathan added three new writers to the Everything publication, and it’s a bundle exclusive. Those five newsletters are only available in this bundle. Substack is planning to offer bundling for all their writers.
One of my favorite bundles is The Athletic, a subscription-based sports website — or digital magazine. The publishers poached the best sports journalists from local newspapers and bundled them together to create a new media product.
The future of paid newsletters is bundling. (See Mehrotra’s article for more information on well-designed bundles.) The right bundle maximizes revenue for producers and gives consumers valuable content. If writers, curators, and publishers want to expand the Total Addressable Market of the industry (and they do, trust me), then I just have one word for you: Bundle!
Thanks to Randal Doane for helping me write this essay.