Update: see below this post for an update that Jason sent out on October 30, 2013

In the early days of the Internet newsletters were quite common, but a few years ago they went out of fashion. But at least based on my own usage of them, they seem to be making a comeback, especially ones that curate news. There are a couple of them that I read daily, for example those of some newspapers (The New York Times), one about China (Bill Bishop’s Sinocism) and since a few weeks Jason Calacanis’ latest venture the Launch Ticker.

Even though I enjoy reading them I did not think I would ever be willing to pay for them. Well, in a way I pay for the NY Times one, because it incentivized me to take a subscription to the iPad version of the paper. Several of the others I subscribe to are actively trying to get people to pay, but I wasn’t sure how successful they were to get people to open their wallets. Some are regularly whining about the number of hours it takes to prepare a daily newsletter, others just have a daily ad in there trying to convince you to sign up for a paid subscription.

The threshold of paying is quite high for me, most information I get from newsletters I can also get from my RSS feeds, so why pay for it? I thought about this a lot, because I actually would not mind paying in order to get better content. And as an investor I always look for new or better ways to monetize content.

My conclusion was that I might be willing to pay for newsletters that would save me time (e.g. not having to go through all my RSS feeds) or would show me content that I would normally not see (e.g. translations from Chinese websites or newspapers). However, to stay with the above examples, I did not pay for either the Sinocism newsletter nor for the Launch Ticker, because they are both also available for free. Why spend money if you can get it for free, when there is no real benefit for paying?

But would I start paying if one of the newsletters suddenly would switch to a paid version only? Probably not, I was just not hooked enough to really miss them if they would not end up in my email box anymore. That’s of course a dilemma for content publishers: do you want a small number of subscribers who all pay or more subscribers who don’t pay?

Or is there a middle way? Today I realized there might be, because Jason convinced me to pay a monthly fee to get his twice-daily newsletters. How? Simply by still sending me 12 newsletters a week, but 3 of them with only the title and instead of the content a picture of a sad animal. That’s just genius, you see the headline (that’s normally inviting enough to open the mail) but then don’t get the content 25% of the time. Even though I probably would not pay if I would not receive any newsletters anymore, this method convinced me to put in my credit card details right away. As an added benefit I can now also comment on the Launch.co site, not a major feature but it feels good.

Too bad that the system did not work well yet: after signing up this afternoon I received a sad looking cat when I opened tonight’s email. I assume it’s just a technical glitch and that from now on the Launch Ticker will have only real content.

Great idea Jason, get them hooked and then slowly take the goodies away. I think this might be a good strategy for other newsletters as well and I hope you will share some of the results.

—

On October 30, Jason sent out the following update & strategy, probably interesting as a follow-up:

Quick update on our #sadpaycat strategy:

1. Every time we replace an email with the #sadpaycat about 25-100 of you become members. When we asked folks to become members in the past without replacing the content of the email we got 1-5. So, it’s at least 10-25x more effective to send a sad cat then ask you to subscribe. 

2. We are now at $2,500 a month in subscribers, or 30% of the budget of this research service. If we get 25 folks to subscribe each time it will take another 60 or so #sadpaycats to hit break even. That’s a lot of sad cats. 

http://launch.co/support

Possible strategy going forward:

a. 100% paid in email, free on the web: We’re thinking of making the email service only available to paid subscribers. 

b. 100% paid in email & web: we’re considering making this service only available to folks who pay. 

c. $10 a month / $99 a year price point: We’re considering making the product $10 a month / $99 a year. If you’re a professional $100 a year is nothing for the value this provides. If you’re broke any amount of money is a bummer. 

At the end of the day the LAUNCH Ticker is a year-long experiment that many important people tell me they love. The mass audience likes the product, the insiders love the product. 

As such we’re going to optimize for the insiders. This means we might run the service down from 20,000 folks a week consuming it to 2,000 paid folks paying $100 a year so we can have two or three full-time researchers.