WhatsApp to Add Newsletters
Will Substack's model be under threat?
Welcome Back,
This is a future of Media edition.
So there’s Substack, beehiiv and Ghost for Newsletters, Subtext for text message, but what about comms apps? It’s low hanging fruit, but it only took Facebook ten years to realize the two keys to monetizing paid subs in WhatsApp are Newsletters and Generative A.I. chatbots.
Facebook decided to make a dedicated Generative A.I. team to augment product only recently. While it shut down Facebook Bulletin, it didn’t quite forget the power of Newsletters to create a paid subs empire. After all, Meta recently announced paid verified subscriptions.
With all of media going behind paid subscriptions, will WhatsApp be able to pull it off?
Apps like WhatsApp are that sweet point between very annoying Email inboxes, and personal and exclusive access to us via text messages. Email overload is real, and most people don’t want to get promotional messages on text, so WhatsApp is one of the biggest channels of that kind and in some countries, it’s a major app. Facebook historically has had trouble monetizing it.
This is then a real threat to the future business model of Substack and its peers. Even as the Creators of Instagram are making Artifact now the TikTok of Text to replace Twitter, I too wouldn’t mind reaching a WhatsApp audience via my Newsletters. Along with LinkedIn and other “legacy” channels.
This is because the future audience of Newsletters are more in developing countries with lots of young people like India, Nigeria, Indonesia, Brazil and so forth. The American audience while easier to monetize, is rather limited - if you think of things globally.
Unfortunately Substack is tethered to a U.S. and European audience more so than I would like. Even though I’ve gone to great pains to appeal to Indian readers in my own suite of Newsletters.
My Indian audience however is easily comparable to the states of California, Texas, Florida or New York - the big four. My A.I. Supremacy Newsletter is my largest on Sustack:
As much as I want to reach readers who might be able to pay me for my work, I want the mass exposure that countries like India provide. That’s where WhatsApp could come in.
If you don’t believe me, here are some stats and facts. India has the most WhatsApp users at 487 million (Statista). The number is rising at a rate of 16.6% every year. The second contender, Brazil, is much behind at 118.5 million users in the race. The future of readership isn’t American or Europeans, it’s international.
TechCrunch and others have spotted this trend this week. WaBetaInfo, which has a stellar record of spotting forthcoming changes, says this newsletter feature “will be a one-to-many tool for broadcasting information.” (Separately, it appears Meta is looking to introduce a broadcast channels feature in Messenger as well, according to Matt Navarra.)
The company is working on changing the Status tab by adding two sections — status and newsletter, reports WABetaInfo.
WhatsApp is now working on a new feature called Newsletter. To be honest, we cannot say for sure that it is really called “Newsletter” as it seems a codename at the moment, but we can temporarily call it that way.
LinkedIn Newsletters recently had a beta test of a feature that stopped an Email at 500 words, redirecting it back to the rather poor Newsletter long-form article on LinkedIn itself. (I was not pleased!). I already don’t own my own Email list on Microsoft’s cringe based LinkedIn.
Recently, Twitter banned my personal account (with no reason given, and no reply to my appeal). It likely flagged my account as spam, but I have no idea really why that might be even as I combed through the Twitter rules. Social media’s hold on us is fading - and Newsletters are one of the tactics that’s the future of paid subscriptions, that can be the start of a better diversified model.
With Meta’s Advertising duopoly with Google under threat by Amazon, Apple, ByteDance, Alibaba and others - paid subscriptions become even more primary in the 2020s, even as dozens of Creator economy centric platforms are on the rise, including social commerce, that is, video that syncs with E-commence sales.
WhatsApp may inevitably have an AI chatbot en route, but a feature we're actually more interested in has just popped up in the beta version of its Android app – a newsletter tool. According to Mark Wilson of TechRadar. This is all rather intuitive and WhatsApp has an incredible number of users that might be interested in Newsletters, while Facebook’s actual poor engagement meant Bulletin was sort of doomed for failure.
Is this a Threat to Substack?
Think about it, WhatsApp has 2 billion daily active users. Even if a tiny fraction of this user base shows interests in newsletters — a category that the vast majority of them don’t know exists yet — WhatsApp can become the biggest newsletter player in a month.
Facebook doesn’t need to have a Newsletter with Substack or beehiiv type in-depth features, they just need a way for Creators to be able to monetize their work. And by this I don’t mean taking more than 20% of revenue. Knowing Mark Zuckerberg he will want to take even more than that sadly!
WhatsApp will be Meta’s “last product standing” as even Instagram has been out-classed by TikTok (provided they don’t get banned) in recent years. Most young people don’t use the legacy blue Facebook platform on a regular basis so that’s out the window for Newsletters.
I cannot believe it took Facebook’s team literally 9 years to figure this out (they acquired WhatsApp in 2014).
The advent of the Newsletter economy coincides with the failure of social media to be either really social or personalized to us or to moderate content properly. Today, plenty of people already use WhatsApp’s distribution channel to promote their newsletters as TechCrunch notes. As more people start reading newsletters, the market of newsletters will likely grow, too. So it’s not necessarily the worst thing for incumbents such as Substack — though it’s probably bad. Who knows though Bulletin was such an epic failure it seems Meta’s product chops are really fairly poor when it comes to anything innovative.
More likely, behiiv is the true competitor to Substack as I have witnessed even some major Creators leaving Substack to join beehiiv (even after getting a spike in paid subs from Substack Boost, I might add). But time will tell. WhatsApp could be the beginning of Meta’s own Newsletter economy and the reason is its strength in those developing countries and the Global South.
Keep in mind those are markets that barely know what Substack is, or where Stripe integration isn’t seamless or as easy. In fact, India, Brazil and Indonesia all have more WhatsApp users than the U.S. And that to me is the key point.
A decent WhatsApp Newsletter product would immediately be more global and cultural and not simply around American politics that the bulk of Substack’s real revenue actually comes from. I don’t always want to be reading about Covid-19 vaccine conspiracy stories, if you know what I mean? I have no personal interest in the antics of Donald Trump or in America’s basically corrupt democracy.
On LinkedIn I grew a Newsletter to 200,000 fairly fast, on Substack it’s quite an achievement just to build a list from zero to 10,000. I’m not a rookie in marketing, but the conversion of paid subs in subjects outside of Politics or Investing, isn’t great. The entire point is to make Newsletter a higher quality and I despise the affiliate marketing (links) model I see being used in beehiiv. Many of those Newsletters are saying the same thing, without any original essays or good reading, so what to do?
Competition in the Newsletter economy will be good for the space and eventually promote a better experience for Creators. WhatsApp is not likely to understand this or cater their platform for real Creators, but who knows, they might have to. The people they chose for their Bulletin beta program was a bit bizarre. Creator Funds are mostly scams and rarely are truly generous to Creators for their true value. While Snap’s GenZ audience is golden, I don’t see them having a Newsletter product, but they might consider it if WhatsApp does a decent job. It’s all to promote the advent and pivot into paid subscriptions.
Of course Microsoft’s entire business is built on diversified paid subscriptions and it now has a great future. LinkedIn Newsletters have barely any features even over 10 years after their acquisition of Pulse. As good in product as Substack and beehiiv are, their audience reach is not good. Therefore people like me are always trying to see what the next thing, because our very future and ability to pay the rent depends on it.
Advantages and Moats
The advantage of Newsletter integration into Comms and chat apps, keep in mind Snap is basically a comms app is obvious the integration with Stories and the drastically improved open-rates you’ll be seeing. If this remains true, expect TikTok to do the same thing (if it can survive Congress in 2023 and 2024).
WhatsApp could provide a superior newsletter experience by offering users the ability to read all the newsletters within the instant messaging app. The open rate will go off the roof and WhatsApp can offer more sophisticated analytics to those writing those newsletters.
I also do expect Artifact to hit Newsletters hard, as that’s the key in attracting good writers and Creators. Nobody really considers Artifact or WhatsApp a threat to Subsack today, but these are obvious use cases. A16z is investing in a variety of Creator Economy and NFT platforms, Substack is just one among them. Substack will require more funding soon to keep up with the times and to diversify better outside of politics and the American audience (Twitter) to improve its reputation.
The new investing reality means Substack will need to degree its internal valuation to be able to get more funding and each time it does this it will mean changes to its ownership structure. Stripe has had a hell of a time just to get down to an internal valuation of $50 billion which is still far too high.
WhatsApp is an epic potential competitor of Substack. This is far bigger challenge than a Facebook Bulletin beta.
If WhatsApp can deliver Meta AI’s BlenderBot and other technologies, it has a chance of becoming the Super App of the West. In newsletters, WhatsApp can also find a way to get its users to spend even more time on the app. As WhatsApp gears up its business offerings, in newsletters it can also find a way to better serve brands. It could even become a direct competitor to LinkedIn as it begins to serve businesses better with customer service and promotions.
This is all rather a big deal for startups like Substack and behiiv. Product isn’t everything, you actually need to increase the total number of readers and creators on your platform. Substack recently said there are 20 million monthly active subscribers and 2 million paid subscriptions to writers on Substack. That it did not mention how many Creators it has is worrisome. I can tell in you apps, 20 million isn’t a lot. If a few of those Creators have become millionaires it means the skew of paid subs goes to the top one percent by and large the most. This means there’s likely a general lack of high quality Creators in terms of depth per category. Substack seems to have more or less let things grow organically, which has led to a lot of political and cultural clickbait. You don’t want to be known for just one or two categories mate.
What will WhatsApp Newsletter be known for do you suppose? What are beehiiv Newsletters known for? Product engineering is not enough, how to compete with the big guys in the end. You need to grow faster and get more funding.
References and further reading: