Market Mix - 💰 Valuing Newsletters & Domains

Hey there 👋,

In this week’s newsletter, I discuss:

Cheers!

Richard Patey - @richardpatey

CONTENT SITES

🤖 Programmatic SEO to AI Products

Ian Nuttall had a great thread on the need to leverage search traffic into real assets you own and control:

He states that ‘Google is replacing the SERPs with AI, didn't you know?’ and so talks about the importance of capturing and nurturing emails (what my The Newsletter Is The Business product is about).

He goes on to say how you need to cull subscribers who are not engaging (I wrote about this over at Creator Funnel) and then work to remove dependence on an ad sponsorship model through creating digital products using ChatGPT, or his tool Cuppa:

Ian is actually considering selling his Cuppa AI tool for anyone interested:

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Thanks to eBusiness Institute for sponsoring this issue 🙏

NEWSLETTERS

🤖 Valuing Newsletters

The leading newsletter marketplace Duuce listed an AI newsletter (a hot vertical) over the last week with a $27K asking price:

I’ve been going deep into newsletter valuations recently and have been forming a framework for sponsorship based letters, or non-monetized newsletters that I’m looking to acquire.

Using Duuce’s own valuation tool and plugging in the basic metrics above, we can see that it comes up with a valuation that is indeed close to the asking price:

If you look at this in terms of monthly revenue multiple, it’s 47x which would be near the top end for content site listings you’d see on Empire Flippers marketplace.

However, newsletter businesses are not passive businesses like content sites, requiring constant new content creation, editing and publishing, which all has a cost. As such the profit margins are nowhere near the 90%+ we see from websites.

If you were to base valuation purely on (non-recurring) annual revenue then it would likely be closer to a 1x multiple than the 4x above. [Recurring revenue in the form of paid subscribers is more like a SaaS and in fact should get higher multiples than content sites].

However newsletter businesses have very engaged subscribers which is an asset in and of itself, and a range of $2-4 per subscriber is typically used for valuations, as it’s around what you would need to spend to acquire a subscriber in the first place.

As such the business above has ~ 7000 active subscribers which comes to $21K if we go with $3 per sub (some niches will be a lot higher).

Add on one year’s average revenue of $7700 and we get to the listing price.

DOMAINS

🌐 Valuing Domains

Over the last week I had the pleasure of speaking with Chris Zuiker from the domain brokerage Media Options. I’m in on a deal to acquire a premium domain which, if it can be obtained, will likely be high five to low six figures.

Chris recently released a video on how to value and acquire domains, which is great learning as a buyer, but also to help educate sellers on what real value is:

CLASSIFIEDS

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Disclaimer: Nothing in this email is financial advice and I am not a professional investment adviser. I send weekly updates on digital asset news and what I'm doing personally - consider it informational and for entertainment purposes only. This newsletter is monetized through sponsorship, affiliate revenue and my own products.