1/ Thread: The value of a newsletter
For a long time, I thought the value proposition of a newsletter is great. Only recently I have understood my framework for assigning value to a newsletter was perhaps flawed.
For a long time, I thought the value proposition of a newsletter is great. Only recently I have understood my framework for assigning value to a newsletter was perhaps flawed.
2/ My initial framework was based on my own opportunity cost. I thought since the opportunity cost is $200-300k but I am willing to sell my intellectual capital for $100/year, that must be a great deal for subscribers.
3/ That thesis isn’t entirely wrong at first glance since I did end up getting 1k subscribers in less than a year. But this thesis is very much “author-centric” view.
A more “subscriber-centric” view is likely to reveal the value proposition (or lack thereof) better.
A more “subscriber-centric” view is likely to reveal the value proposition (or lack thereof) better.
4/ So, what is the value of reading any newsletter?
Quite frankly, it is a mystery. This mystery is nothing unique to newsletter industry and equally applies to a huge section of the knowledge industry.
Quite frankly, it is a mystery. This mystery is nothing unique to newsletter industry and equally applies to a huge section of the knowledge industry.
5/ When you call a plumber to fix something in your home, you get immediate and obvious value from the plumber’s service.
But value in knowledge economy is abstract, vague, and difficult to ascertain.
The total cost of a newsletter consists of implicit and explicit costs.
But value in knowledge economy is abstract, vague, and difficult to ascertain.
The total cost of a newsletter consists of implicit and explicit costs.
6/ Explicit costs show up on your credit card bills (or don’t if newsletter is free).
The implicit cost is what makes things difficult. A big part of implicit costs is time. We all have million things to read, and we are all behind on our readings.
The implicit cost is what makes things difficult. A big part of implicit costs is time. We all have million things to read, and we are all behind on our readings.
7/ So when you give time to a newsletter and it doesn’t meet your standard, it has cost.
The other cost is perhaps the most pernicious.
The other cost is perhaps the most pernicious.
8/ A writer can and does influence readers. If you allow garbage content to influence your worldview and your opinion on a stock, you will directly or indirectly lose money.
9/ I hardly doubt that I myself will publish a lot of deep dives that will have lot of bad opinions despite my best efforts to avoid it.
The bad news for readers is that they still have the ultimate burden to rummage through the content to derive value from it.
The bad news for readers is that they still have the ultimate burden to rummage through the content to derive value from it.
10/ Lazy readers looking for buy/sell decisions may end up paying a lot of money without realizing it.
The good news? Explicit costs are lot less for newsletters. The total cost, however, remains mystery and can only be known in hindsight.
The good news? Explicit costs are lot less for newsletters. The total cost, however, remains mystery and can only be known in hindsight.
11/ As already indicated, this is nothing unique to newsletters and parallels exist in many other industries all around us.
What is the value of investing with a particular hedge fund? Of course, that’s a mystery too despite the historical under/outperformance.
What is the value of investing with a particular hedge fund? Of course, that’s a mystery too despite the historical under/outperformance.
End/ Because of this inherent mystery, a lot of knowledge economy has a tendency to just become a marketing contest.
The burden to figure out the gold from the garbage may always be on customers/subscribers.
The burden to figure out the gold from the garbage may always be on customers/subscribers.
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