“Is that your final answer?” – Regis Philbin
It’s hard to believe Doomberg is already six months old! What started as a fun experiment has truly turned into the work of our lives. Rather unexpectedly, we now find ourselves in the content creation business.
October was a transformative month. We crashed through the 10,000-email subscriber milestone on October 12th and finished with 60% more free subscribers than we had at the end of September. We increased our participation on Twitter and grew our follower count past 15,000. Amazingly, the 12 pieces we published in October have already averaged 25,000 views each and we grew our total view count by 63%! Here are the cumulative numbers as of October 31st:
Articles published: 61
Total views: 876,745 (+63%)
Email subscribers: 11,761 (+60%)
Twitter followers: 15,425 (+39%)
As described in the August edition of The Work of My Life and further elaborated on during my appearance on The Grant Williams Podcast, the Doomberg team runs a bespoke and discreet consulting business. We specialize in simplifying complex problems, climbing learning curves quickly, and generating novel solutions to otherwise difficult challenges. When it became clear that writing this Substack had the potential to grow into something significant, we did for ourselves what we would normally do for our clients – we performed a thorough analysis of content creation as a business in search of the best way to proceed with this franchise.
As part of our process, we sought out and spoke with as many content creators as we could reach. Most were more than happy to chat, and some even shared their private data with us. These conversations were an invaluable supplement to our research. We also spoke with the Substack team and shared our conclusions, many of which contradict the advice Substack has been giving authors for years. Consistent with our commitment to full transparency with our readers as we embark on this journey together, we now share the somewhat surprising outcome of that work with all of you.
Our conclusions fall into four categories:
Content creation is a high-growth profession
It is best to stay free for as long as possible
Once the paywall is turned on, turn off all free material
Price is an expression of value, not cost
Successful content creators approach their work with a high degree of rigor and professionalism. One should not confuse barrier to entry with barrier to success. While it is free to start a Substack, YouTube channel, or podcast, it takes significant time, money, and sweat equity to stand out from the crowd and create a sustainable business. Like all businesses, production, branding, marketing, customer service, and pricing are critical, and the best content creators focus on all five.
But they struggle the most with pricing.
When should a content creator turn on the paywall? How much content should remain free? How much should they charge? The Substack team is great and makes clear that these decisions are solely in the hands of their authors, but they routinely advise creators to turn on the paywall within months of gaining an audience. To ensure a healthy growth profile post-paywall, they recommend keeping a decent mix of free and paywalled material. Perusing the Substack leaderboards, we find that many (although not all) price their product on the low side, somewhere between $5-15 a month.
We have a different view. We start with a simple question: what is the addressable market for Doomberg? It is clearly higher than 10,000 email subscribers, but is it 20,000? 50,000? 100,000? We honestly don’t know, but there’s one great way to find out – let the market tell us!
When you are a completely free newsletter, your growth is unfettered by the questions of price and how you partition content between free and paid. It simply boils down to the quality of your content and the effectiveness of your marketing strategy, both of which are firmly within your control. If you can afford to wait, holding back on the paywall until your free growth slows down substantially – a sign that your addressable market has been defined – generates the highest return.
Consider this example. A fair assumption is that 10% of your free subscribers will follow you behind the paywall, no matter the size of your base. Some creators do better, others a little worse – but 10% is a decent assumption. The net present value difference between going behind the paywall at 10,000 subscribers or waiting a year and doing so at 20,000 is huge – nearly double, as you might expect. You give up one year of revenue for twice as much going forward, which makes the lost revenue of the first year de minimis. Now do the math on 50,000…
By turning on the paywall too early, both the quantity and quality of future growth deteriorates. That’s because the value of a free email subscriber drops significantly post-paywall – these readers have already made a conscience decision not to pay you!
This is further exacerbated by the need to keep producing enough free content to attract new readers. And therein lies the critical conundrum! Producing lots of free content makes your paid offering less compelling, while not producing enough free content crimps growth. In essence, you are growing a list of expired leads.
There are four categories of content consumers. Those that will never pay you because they never pay for content, those that will not pay you specifically because they think you aren’t worth paying for, those that would pay you but can’t afford to because of economic circumstances, and those that are willing and able to pay you because they appreciate your work and understand that good content is worth paying for. Our focus is on the last two categories (we’ll make generous accommodations for our loyal readers who truly can’t afford to pay), and we intend to find as many of them as possible before flipping the switch.
That’s why we are going to do this sequentially: grow like crazy until growth stops, and then put it all behind the paywall. How will we know when growth stops? We’ll measure it! We just experienced 60% growth for the month of October – turning on the paywall now would be a catastrophic blunder. After considering expected conversion rates, organic growth rates post-paywall, and the time value of money, we’ve settled on the following metric:
We will turn on the paywall after we experience three consecutive months of sub-5% email subscriber growth.
Suffice it to say, we’ve got at least three months to go. Thankfully!
Finally, there’s the question of price. Many content creators start with a low price, assuming this leads to more volume. They also assume they can raise price later. Our view is price should reflect the value delivered to the consumer. If your work is worth $25 a month, charge that. $50? Even better. The category of people who value your work are less price sensitive than you think – go for it! Charge what your content is worth from the start and keep it simple. Price is value, not cost.
THANK YOU so much for being a reader of Doomberg. We look forward to creating value for years to come. If you think this article could help other content creators, feel free to forward it along! Meanwhile, it’s back to the Chicken Coop™ for us – these pieces aren’t going to write themselves!
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