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One of the best sources of wealth is recurring income. Matt Paulson knows this, and is effectively using that business model with his paid newsletter subscription business.
00:32 – The email newsletter subscription model
01:24 – What does “freemium” mean?
01:59 – From free subscribers to paying customers
05:00 – How Matt promotes his content
06:22 – Let’s talk pricing
09:15 – The role of split testing
10:37 – Matt’s product explained
12:01 – What’s next for Matt
13:42 – Where else is it applicable?
14:54 – A backend affiliate practice
16:21 – Ads in other newsletters
19:24 – How Matt got started
20:19 – The technical side of things
23:23 – Additional content channels
24:30 – Subject lines that do well
27:56 – Some parting words of wisdom
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James Schramko here. Welcome back to SuperFastBusiness.com. Today’s topic is email newsletters and I think this is really interesting. It’s something that is a simple business model to set up if you want to monetize a website. If you want to go beyond AdSense or affiliate marketing and I thought it would be great to get back someone who I’ve had on the show before. Welcome to the call, Matt Paulson.
Matt: Hey, James. How are you?
James: Good! Now last time we caught up, we were talking about AdSense and you mentioned that there are other monetization models and one that you’re doing effectively is an email newsletter subscription model and I think this would be a great topic to talk about today because most of our listeners have a website.
Most of them have some kind of opt-in or newsletter or giveaway or OwnTheRacecourse thing where they’re emailing people, telling them to go back to the website when there’s new content. But what you’ve done is pretty cool. You’ve got a freemium newsletter model. So let’s start out by explaining what freemium actually means.
What Freemium Means
Matt: Sure! So, freemium means there’s a free product and if you get that and you only get that, you get good value out of it. It’s not like a trial or something cheap and kind of useless that’s just an ad to get you to do or buy something. It’s in and out itself is a good product but there’s also, a part of that there’s an option to upgrade and get more if you like what you already getting.
James: Excellent! And you have found a way to turn your email subscribers into paying customers. Let’s talk about how that works.
How To Turn Email Subscribers Into Paying Customers
Matt: Yup. So, I have about 55,000 subscribers to my free newsletter. It’s an investment newsletter that goes out every… everyday and it covers what brokerages are saying about stocks. So if JPMorgan Chase upgrades whatever, Apple, and gives them a good rating, and say we think the stocks are worth this in a year.
I compile those about for about 300 brokerages everyday and that goes out in the newsletter. But then some people want to get that information earlier in the day and there are more information that goes out in the free newsletter.
So I also have a paid version that’s 15 bucks a month where you can get that say half hour before the stock market opens so you have time to place your trades before kind of like the general market does. So that’s how it kind of plays out in what I do.
So far I’ve got say maybe 1200 people subscribed to that and I make maybe 150 grand a year from that business. So it’s kind of a neat way to make some money that’s not Google AdSense, that’s not something that’s dependent on search traffic. It’s… you know you own the customer. You own the payment method. You own the content.
Google can’t come in and change the algorithm on you and take your subscribers away so that’s kind of a neat business model that’s diversified from what a lot of people are doing.
James: Well, I’m a huge fan of owning the racecourse so I like that and It’s got very few moving parts so I imagine to do this, you’re going to need a website of some kind where you can put your offer for people to join the newsletter. Then you’re going to need some way to take subscription like a payment gateway or a merchant facility or a PayPal account.
James: And you’re going to need an email system.
Matt: Yup, and there should be stuff that, I mean most were echoed, but there’s no reason that you couldn’t do it with a couple of different lists and say MailChimp I’m using PayPal subscriptions or it would just be, you know, when somebody signs up, you have to add them to like a distribution list so, you know the technology is not really that hard.
You have a free list and then say, a landing page will send you the PayPal subscription and then when they can sign up for that then you can add and do the paid list if you wanted to.
James: Now do you send people the free daily newsletter once they’re paid subscribers in addition to it or do you take them off that list?
Matt: No, I take them off the list because the paid version is kind of a beefed-up version of the free version. So you get the same information but then you also get more.
Matt: So, we just call it the free versions ARN Daily and the paid version is ARN Daily Premium. So it’s kind of a superset of what’s in the free newsletters. There would be no reason for them to get both editions.
James: Nice. So, for a listener, if you’re wondering how to do this, even systems like AWeber will allow you to have little rules when someone joins this list, take them off that list and it will also work well with OfficeAutoPilot or Infusionsoft. Now, interesting, when you send out the free one, does every single one of those have a sales pitch for the paid membership?
Matt: Yup, they’re pretty minimal. It’ll say, Subscribe to ARN Daily Premium for $14.97 per month and get this, this and this. So that’s we might put one at the top of the newsletter and one at the bottom. But there’s nothing that would kind of throw people off.
James: And they click on that link, where does that take them?
Matt: That will take them to a landing page that’s got a video and some text. But then just a link to sign up to it straight or through PayPal.
James: Right. So it’s very minimal technology required to set this up. Do you do any other types of promotions or price testing or offers in your content elsewhere? Or Is it really just driving people to the free email that causes the migration to pay?
Matt: So, typically what I do is I try to make it as easy as possible for people to get on the free list. You know if they like it, there’s an autoresponder series to get them to do a 30-day trial that tends to get on people than say, like in November, we do Black Friday sale and like say in May, I do a thing where people sign up for a year, I’ll give half of the payment to charity: water.
So I do a few things like that in a year that kind of encourage people to take action. You know with the certain kind of window of time.
All About Pricing
James: Right. Let’s just talk pricing for a second here. Have you tested different price points and do you have different subscription options other than monthly? You mentioned an annual one just then.
Matt: Yup. So when I first started to kind of figure out the price, you know I was looking at what paid-for investment newsletters cost on kind of annual basis and I tried to price myself somewhere in there. I’ve done some tests, up and down and I found that you know $14.97 is a pretty good base price than you know if I want to do a sale, I can drop it down to $9.97.
I do offer annual plans and now I recently started offering biannual plans where people can pay 149 bucks so that’s 10 months, and get kind of a year, or they can pay, I don’t know, equivalent to five months free if they want to pay for two years.
And you know that a certain percentage of them will cancel every month that’s your churn rate and so if you can get them to pre-pay for a year or two years even, one, you got all the money upfront, which is kind of nice; and two, you know that they’re guaranteed to stay subscribed for 12 or 24 months which will reduce return rates significantly. So we hit a few one offer month free or two months free to pay for a year that is definitely worth doing.
James: And do you have a warm-up campaign close to the end of that two year period?
Matt: Well, what I typically do is when somebody is about to have a renewal, all I do is send them an email say, “Hey, you’re going to renew on this date. If you don’t want to continue, cancel.” So I don’t do anything specifically to try and activate them again. But maybe that would be a smart thing to do if I…
James: Yeah, I have an annual subscription plan for my memberships at SuperFastBusiness.com and at the 11-month mark, it just sends them a reminder that soon to the renewal period and same thing you’re talking about.
But I’m sure that it could be enhanced and updated with what’s current or new at the time because inevitably, there’ll be some changes. Now, does the business grow? Do you have more people coming in than who leaves due to natural attrition?
Matt: Yup. So right now, the way I track our revenue is an annual recurring revenue so how much is a subscriber worth me over a year. So right now the business is about 155 grand in annual recurring revenue and that’s been going up by about 10 grand a month this year.
So I had a pretty good growth the way SaaS metrics work is you know eventually there will be a point where it kind of the cancellation rate hits the sign up rate and you’ll peak. And I’ve kind of figured out that would be about 250 grand a year for me. So I will have to find a way to kind of improve kind of like cancellation rate, you know, get more people to sign up for improve my conversion rate if I want to grow beyond that.
James: You do stuff like send split tests for your broadcast where you’ll send 50% of your free newsletter, one call to action and 50% a different call to action and see what, you know, track the cohort metrics, like, of that group of people if they migrate through to a longer subscription or a high sign-up rate?
Matt: So the split testing I do is typically on, is not in the newsletter itself. If I do it more when I do, like, a campaign for, say, a discount or something, you know try different subject lines, different opt-ins, different calls to action and maybe even different price points. And so I do that and then I also do a lot of split testing on the landing page itself.
One of the things that I recently split tested is when I have a sale, I do the original price and cross that out and put a new price. Just doing that alone increased my conversion rates by 5 to 20% which that was the better split test for me I’ve done lately.
James: Nice! Yeah, I was interviewing Brent Hodgson about how to force multiply your online business just recently. Everything from the open, the subject line to the email copy to the call to action to the landing page to the pricing, these things can all be tested. And I guess you got enough volume to make this work.
I do have a question regarding the product itself: Do you also make stock trades? Do you have to use things like case studies or are there owner’s disclaimers that are required for business model like yours?
Matt: Not so much. Typically the general disclaimer for investing is that you’re not making specific recommendations to buy and sell any security and that kind of gets you out. What I do differently than most kind of investment newsletters is stay off telling them “buy the stock, buy the stock.” What I do is I say these people are saying buy the stock and here’s these people’s track records.
So I can say, “Merrill Lynch says the stock has a strong buy ratings… Then I say, well, you might want not want to ignore that because Merrill Lynch says strong buy ratings have a good record track over the long haul. So that’s how I can get around than most people I think.
James: So you’ve taken on the role of the reporter or you’re kind of like an analyst of analysts.
Matt: Yup. So I take 30 different data sources for ratings I get everyday. I stick that in the database and that generates the newsletter. So I’ve just been able to see a place where the information is not well-reported and compile that in some kind of a format that is well-reported and people find value in that.
James: Nice! So what do you think the next steps for you will be as you grow this business, Matt?
Matt: In the last six months, kind of my big push has been to increase my revenue per subscriber. So I had an investment guide that came out that was 40 bucks that I may have made about 10 grand from. And trying to do… probably add a couple more products to my portfolio in the next year.
Right now I have three different newsletters and then kind of an investment research software. So I try to get people sign up for one, then they’ll maybe sign up for the other one. So if I increase you know, get people to sign up for two or three different things, then the revenue per subscriber is up. Obviously, that’s a lot better. That will increase how the business is worth for me for a year so that probably will be my big focus.
James: Do you ever see yourself creating a community of investors like a subscription forum, paid Facebook group or Ning or something?
Matt: You know there’s a lot of those out there. There’s a lot of investment forums and I just don’t see that as a big opportunity for me personally because I kind of know where my gifts are and I don’t think that would be it.
James: That’s honest and refreshing. So the thing that appeals to me about your business model is that really is quite straightforward. You have predominantly a website with an email opt-in that is relatively automated in terms of how it works and you’ve got software compiling and curating.
So you’ve been able to get the deliverable and you’re filling in a gap that wasn’t there in the marketplace. It’s a very clever business model and have you seen this business model applied by people in other niches? Perhaps a listener is in a different niche altogether. Could they consider a paid newsletter market or is it specific to investments?
Matt: No, it can be just about anything. Justin and Joe from the Adsense Flippers did something like that about a year ago. After the interview, they had a paid newsletter called Niche Site where they would tell people domain ideas and then they could buy them for whatever. So they’ve done something like that and I’ve seen that applied in other areas as well. There’s a podcast and a 5by5 network called Quit!.
They have a newsletter that’s three or four bucks a month that people can sign up for. You know Kevin Rose has a paid newsletter that people subscribe to and they can get access to his podcast early.
So there’s… a lot of people are doing it in kind of a lot of different ways and I think, you know if you have people that would want to receive email from you and you have content that’s valuable to them, you can format it in such a way where a newsletter can work to be the content delivery mechanism and you know if they want more of that, they can pay you for that.
James: And do you have any backend, sort of affiliate things, like recommending brokers and getting a trailing commission or that sort of stuff?
Matt: Yup. One thing I started doing since about January is, once they sign up for my newsletter, on the Thank You Page, there are I think five offers for other kind of things they can sign up for and then I’ll get, say, three bucks for everyone they signed up for.
So that’s turned into a revenue stream of one grand a month. I guess from those because I get say four or five thousand people that sign up every month, at a certain percent they also sign up you know, the kind of offers at the end of the sign-up form.
Then once kind of they’re on my list, you know certainly they promote my products as the main thing but every now and then I would do an email blast for, say, something they want to advertise or through an affiliate product. I haven’t done all that well with affiliate stuff so far. So maybe I just don’t know how to do it right or I haven’t found the right fit. So maybe there’s an opportunity. I just don’t know what it is yet.
James: Well, I’m sure people would pay to be advertised in your newsletter like the solo mails, etc. I also think your format would lend itself very nicely to a daily podcast and a little bit of social media support driving people to that website. Do you ever take out ads in other people’s financial newsletters referring them to yours?
Matt: Yup. So typically with newsletters, the way to get new people to sign up is called co-registration. So when somebody signs up for another newsletter they may get an ad from my newsletter as well. There’s a network called After Offers that kind of Tim Bourquin runs that I advertise to them and I pay, say, 2.50 for every subscriber.
And then I know somebody that subscribes to that list will be worth seven bucks to me over the lifetime so I make money doing that. I have tried a few other investment-specific things and I haven’t gotten those work out quite as well.
So right now, the only thing I’m doing is the co-registration thing with After Offers. There’s another one called Investing Media Solutions or something like that that I did. That was OK but it wasn’t enough to justify throwing three grand you’re doing every month. So right now most of my traffic are just organic and that’s done pretty well for me.
James: Have you tried replacing AdSense banners with banners for your own product in those niches?
Matt: Typically, the Analyst Ratings Network website is not really the front door for the newsletter. I have a few different investment sites, one of them is www.americanbankingnews.com. They get traffic from, like, Google Finance and Bing Finance. Those would really drive traffic to the newsletter. The Analyst Ratings Network website is really the place the people that are really all already on the list.
James: Gotcha. And have you tried re-targeting or a banner marketing?
Matt: I did try re-targeting. I don’t… you know the metrics that they give you are, I think they’re kind of…some of them are kind of fishy because they’ll track somebody that looked at your ad and signed up later as a conversion and just because they looked at the ad doesn’t mean that’s what caused them to sign up.
I don’t know that I’ll entirely trust the metrics I was looking at so I just don’t see how to create results from that so I just decided to not move forward from that.
James: Cool. And have you been doing stuff like forum marketing or Facebook groups?
Matt: I have not done either of those.
James: Well, I’m sure you’re sitting on a gold mine there. So what do you think the biggest mistakes you’ve made in setting up your newsletter been so far?
Matt: I think I was probably too aggressive in promoting the premium newsletter early on. I would do, like, a campaign every month and I think that caused people to expect to always get a discount and everything. So if I were starting again, I wouldn’t do that. Probably the other big mistake I made was initially when I started the only payment method I accepted was PayPal.
And when I started with adding credit cards through Stripe, that was a pretty big increase when I turned that on. I’m sure there have been some but I can’t think of what they’ll be on the top of my head.
James: Right. Why did you even get started with this business model?
Matt: Now that is a great question. I have a website called American Banking News that was just got a ton of traffic from Google News and Google Finance and one day I tripped up for whatever there is on my website and I got removed from Google News and all of a sudden my traffic got cut overnight so my AdSense got cut overnight and I was like, well, if I’m going to succeed in this long term, I can’t be dependent on Google for every dollar I make.
So I figured, if I’m going to do this right, I need to have my own list and find a product that I own, that I can sell it to them so that I don’t need to be dependent on Google or Apple or any other company to fill my coffers every month.
James: That’s very cool. It’s nice now. I imagine with this plus your AdSense income, you’ve got a little bit of spread on your risk.
James: Tell me about the email stuff from a technical point of view. What system do you use to capture and to send your emails?
Email Delivery System
Matt: So for email delivery I use SendGrid. They have a light plan that’s 10 cents per email so it’s pretty cheap to do the email delivery. All of the code is Custom ASP.NET and C-sharp stuff I’ve written.
I’m kind of a web dropper writer so I figured I could use that knowledge and go to system networks, almost completely automated so all of the sign-ups are automated and there’s really nothing I need to do other than handle customer service email which I’ve hired a girl that lives in my town to do that for me so I can… you know if I really want to, I could step back from the business for quite a while on now to run by itself which is kind of nice.
James: Very cool. Alright. With the emails themselves, what type of format are you sending these? Are they text-looking emails or templated html?
Matt: Sure. So I can put a link in the show notes to what I use but it’s… there’s a template but it’s pretty basic. It’s just got the logo on top. There’s a place for the ad and that’s all just content straight down. And then there’s a footer on a different color. So it’s… there’s a template but it’s pretty clean and I think that’s kind of the way to go.
I think people will see big image, heavy templates and they just think about it as an ad and archive them or delete them right away. So I try to avoid that. My marketing emails, those are just plain text and those seem to do better than fancy templates for me.
James: Yeah, same for me as well. So, that is very interesting. What do you think will be a lesson that someone might get some value from about the email component of this? Do you do single or double opt-ins? Have you had any major hiccups with delivery or spam reports or white listing or blacklisting of certain words?
Matt: So right now I do single opt-in, and I’ve always done that. And then I just go through SendGrid every week where my assistant does and takes out everybody who bounced off the list so that we don’t try to keep emailing them.
I’ve had a SendGrid account suspended just once because I sent out like I think three email or three marketing emails in three days and apparently a lot of people noticed and didn’t take too kindly to that so that probably was a mistake and I just sent too many spam reports so had my account suspended for a day and then they turned it back on.
And one thing that I’ve done to minimize their spam reports is if you put an unsubscribe link at the top of your newsletter, people are more likely to click that than the spam report because they’ll make you know that they can get off the list for good. So I recommend doing that now.
James: I heard one shady character put a link in the top of their email and it says “Click here to report spam” and they linked it to their standard unsubscribe link .
Matt: That’s not a bad idea.
James: Pretty shady. So anyway, right. So getting the emails through is pretty important. Do you get them, is there any other way they can get it, the information other than just via email? Do you see things like RSS or SMS or social media feeds or a website portal as a possibility?
Other Ways To Share Information Aside From Email
Matt: Yup, there’s a few different ways that people can get the information. So if you’re a paid member, technically it if you’re subscribed to the premium newsletter, you can get SMS or through email or through the stocks that you follow a specifically. So you got a text whenever say, I was following Apple and I got downgraded or whatever.
So I added that in the last few months and people seem to like it. The information is on the Analyst Ratings Network website everyday. So some people like it that way and they just get it, which is fine with me because eventually they’ll click on an ad or sign up or something, I’m hoping. There is a Twitter account I do, but I haven’t gotten a lot of traction with that yet.
And then I was syndicating into StockTwits, but they didn’t like that I was doing it in an automated fashion so they kicked me out. So that’s kind of the other options right now. Maybe one thing we could talk about quick is subject lines that do really well. I’ve gotten a couple that have…
James: Yeah, tell me about subject lines that do really well.
Matt: The two that I’ve had the best luck with in kind of everything I do. The first, I stole from Dane Maxwell who does The Foundation is just have a kind of a strange question, and then a question mark. And that seems to do pretty well. And if you do an email from a woman’s name, so I use my assistant’s name sometimes. That helps open rates.
And the other one that I’ve used and I think it’s a Dan Kennedy one is “Bad News.” And then there’s one that I did that pissed a lot of people off but worked pretty well. It was from my assistant’s name, and it was “I’m sorry I have to tell you this…” So it was kind of another play on the bad news theme, and that worked surprisingly well, but I had some people that were not happy about that subject line.
James: Well, i think there’s a lot of information about tying your subject lines to tricking people into opening. You’ve got to follow through with something useful or else you can build a little bit of a trust wedge. You know, you’re sending out 50-something, 55,000 emails on these broadcasts. Are you happy with the open rates and the click-throughs?
Open Rates and Click-Throughs
Matt: Yup. So my open rates are, I think, around 15% but it’s hard to say how accurate those numbers are because it relies on the person clicking “Display Images” for that to work. So those metrics are…You know, MailChimp and Aweber and all those people do it all in the same way but just because it says 15% open rate it may actually be 20 or 25.
I never spend all that much attention on it because it’s hard to measure and you can…You know, really what you want to measure is the results that you’re getting from those emails and how many people actually sign up because of them. And that’s kind of the metrics I pay more attention to than the open rates and click-through rates.
James: Yeah. Well, ultimately profit’s where it comes, right?
Matt: Yup. Because I can tie for every marketing email I send out I can track how many conversions come from that email specifically. So I can see if somebody clicked through to the landing page, bought, and it was from that email. So that’s the big metric I pay attention to.
James: Well, Matt, this has been very interesting. Again, you’ve got plenty of exciting business models in play. I like this one because it’s more advanced than just the AdSense model. The AdSense model is really building on someone else’s publishing platform, and someone’s getting more value than the person hosting the site, generally, if someone’s prepared to pay for that.
This business, I think, gives you infinitely more control, options to scale, monetization, things. You can see what other people out there are doing, like Sovereign Man and Timothy Sykes, and get lots of clues on what could be next. So thank you for so generously sharing your stats and figures, and how it works.
And I think listeners could certainly turn their email subscription into a paid newsletter, because that is a recurring subscription model and I’m a huge fan of that. And you own the customers’ details, so there you go. Have you got any final words of wisdom for our listener, Matt?
Words of Wisdom
Matt: Yeah. I think the key is, if you’re going to succeed in the Internet business in the next five years, you really have to do something that is a) something where you own the customers, and b) something where there’s a barrier to entry and your unique skills can get you beyond that barrier. Not everyone is going to know how to do email marketing in the way that I do it, but anybody can stick up an AdSense site.
So you really have to think about how you can move up the value chain and not be just another Internet marketer with an AdSense website. If you’re going to do well in the next couple of years you have to do something unique and something that not everybody just could do if they had some time. You’ve really got to think about what your skill set is and how you can apply that to your business model that only you can do.
James: Fantastic. Well there you go folks, that’s Matt Paulson from MattPaulson.com. And Matt, if listeners have questions about this newsletter model and they ask a question right below this podcast on SuperFastBusiness.com, would you be able to pop by and answer a couple?
James: Fantastic. Thank you so much for sharing.
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Leave a comment below:
Angelo Castiglione says
Hi Matt, why did Stripe increase your sales compared to using PayPal?
Matthew Paulson says
Some people don’t want to register for a PayPal account. Almost everyone has a credit card, not everyone has PayPal.
Angelo Castiglione says
Hi everyone, thanks so much for this podcast. How did you get the aggregation of all those websites automated? Did you use proprietary software that you created yourself, or is there a software that will do that for any niche? Also, how did you then automate those website updates into a newsletter? Thanks so much for any info you can give. I didn’t realize the entire thing was automated until about halfway through, and then I went back and listened again. Thank you for this inspiration!
Matthew Paulson says
It’s all proprietary software I created using C# and ASP.NET. It’s very custom to what I’m doing.
Kerwin McKenzie says
Matt and James thanks for the podcast; very good information as I’m working on different monetization methods as well.
How do I sign up for the newsletter?
James Schramko says
go here http://www.americanbankingnews.com
Kerwin McKenzie says
Mya Passmore says
Any suggestions for building your email list if you’re not in the financial market?
James Schramko says
do what I teach in http://www.OwnTheRacecourse.com (Free)
Mya Passmore says
Any suggestions for building your email list if you’re not in the financial market?
James Schramko says
do what I teach in http://www.OwnTheRacecourse.com (Free)