Can a newsletter author win AND lose when selling a bundle?
Some make money, some lose it. Both use bundling. Here is the difference you must know.
This is News Bundler, a newsletter about innovative ways for paid newsletter authors to make more money from your newsletters. My name is Matthias, I’m the founder of the News Bundler platform.
3 valuable things for you this week:
- The progress of the News Bundler platform
- A super-interesting call that I had with a well-established newsletter author
- The week’s 15-minute activity that will change your newsletter’s life!
Making progress with News Bundler
News Bundler will transfer money from subscribers to authors. To avoid heated discussions among authors how big each other’s share of the revenue should be, News Bundler makes the decision for them: That’s benevolent dictatorship. 😀
To make this work, I wrote the code for two things last week:
- Affiliate links that you as an author can copy and send to your subscribers. When they click and subscribe to your newsletter bundle, News Bundler now recognizes that they came from your invitation.
- A Revenue sharing formula that takes the number of subscribers that an author acquired with their affiliate link, and combines it with the price of their newsletter, to get the size of this author’s share of the revenue.
What this means for you as an author: The more subscribers and the more expensive your newsletter, the bigger your share of the incoming revenue will be in your Stripe account. 💰 All fully automatic, no human decision involved. By the way: You can already play with that formula to see what’ll come out for you when you “go bundled”. Use this online form.
The formula already works in my dev lab and will go live this month.
My recent call with Eric, the skeptical established author
Recently, I had a ☎️🖥 call with one of you (let’s call him Eric), the author of a well-established paid newsletter.
Eric had questions about News Bundler’s business model and imagined what would happen if he and his friend both sent an invitation to their lists, saying something along the lines of:
Hey subscribers, I have bundled my newsletter X with my friend’s newsletter Y, please buy the bundle on News Bundler (affiliate link goes here), and save 20% OFF the sum of the single newsletter prices!
Eric realized this during the call:
If a certain percentage of his subscribers bought the bundle, they would cancel their existing subscriptions with him and his friend, afterwards. And (Eric is a fast thinker!) he summarized this immediately like this:
So, I’m just taking a gamble that whatever revenues I lose from my subscribers switching over to the bundle, whoever I’m partnering with brings in enough new subscribers to make up for that?
At first, I answered “Yes” to this. (Spoiler alert: Eric and I were both very wrong about this – but read on!)
Erics voice (if I remember correctly) sounded a little uneasy at this point. 🤔 Of course: Nobody likes to put their money at risk! This made me think because all of you, I mean, every author will have this same question on their mind before you decide to invite your subscribers to a bundle.
❓I asked myself: “How many new subscribers does Eric’s friend need to bring so they will easily make up for the 20% loss that Eric feels when a subscriber cancels the original subscription with him?”
And I simply entered the values in the revenue calculator form on newsbundler.com. Let’s make an extreme case that addresses Eric’s fear of losing money:
Say, Eric has 1000 subscribers who pay $10/month each, and all of them accept his invitation and buy the bundle. They cancel their original subscription with him immediately.
Eric’s buddy author also has 1000 subscribers who pay $10/month each, but only 1 of them accepts their invitation to buy the bundle!
Happy Eric or happy buddy – what do you think?
First of all, it means they can sell a $16.00 bundle to 1001 subscribers, producing a gross revenue of $16016/month (assuming that all subscribers get a 20% discount). News Bundler will take a service fee of $1602.
Finally, Eric gets $14400, and Eric’s friend gets $14.
The interesting thing to note here is that both Eric and I(!) who were on the call, we did not immediately see that he’ll win 44% gain instead of the 20% loss that Eric feared – even when his buddy only manages to bring a single subscriber to the game! And what’s also important: Eric’s buddy didn’t lose money, either – he has $4 more than before!
Now I asked myself: “Okay, but Eric’s buddy might be unhappy because Eric takes it all and his buddy only gains $4. What must be true so that both authors make a nice profit from this, and in which case could all this fail and cause a loss?“.
👀 The result was amazing!
Please join me in two thought experiments: 🤔
- What happens when Eric and his buddy have 0% overlap in their subscriber lists?
- What happens when Eric and his buddy have 100% overlap in their subscriber lists?
In the second case, everyone on Eric’s list is also on his buddy’s list. You can see that the first case is much better, because any subscriber who comes from one list makes an additional subscriber for the author of the other list.
However, in the second case, when the overlap is 100%, all subscribers will think “Wow, I can get both, for $16 instead of $20!” and will immediately accept the offer. Because the subscribers are the same, Eric and his buddy lose 28% of their original $20,000 (20% for the discount, 8% for the platform fee for News Bundler). 😡
In the first case, when all subscribers accept, both Eric and his friend make $14,400, a total of $28,800 – again a 44% gain! 😎
So, all this greatly depends on the amount of overlap of the two subscriber lists.
(To be totally honest with you, the Stripe fees will also play a role: Stripe keeps 2.9% plus 30 cents of each monthly payment coming from the subscribers. I made a mistake and ignored this in the story above but it does not change the picture very much.)
Your 15-minute activity to do right now
Think about the story above. What would you say if News Bundler had a “safety net” to avoid the loss before even making it?
I can offer you this:
Before selling the bundle, both you and your buddy have the option to upload your subscriber lists. News Bundler will calculate the overlap and will tell you the possible gains and losses that you and your friend can make from the bundle. For a machine, that’s easy to do. News Bundler will throw away these subscriber lists after it has given you the prognosis.
Would this be good for you? Would this kind of “safety net” make your decision easier? (I mean the decision to really go ahead and invite your subscribers to buy a bundle).
Please hit reply to this email newsletter and tell me what you think. I’m so curious!
Thank you so much
Thanks for reading News Bundler Weekly. Please give me feedback, ask me anything about what you read here, and share this newsletter with your friends and colleagues. I need your support to grow this, together!
Want your own small media business, together with another author you trust?
Download our FREE eBook called "2 Writers Making Money". It shows you exactly how to raise your income as a paid newsletter author by teaming up with a buddy, selling a bundle of your newsletters, and splitting the revenue.
Set this up once, then forget about it and get back to writing.
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