How do you build a commercially successful local newsletter business?
South Carolina-headquartered publisher 6AM City appears to have come up with a good, but unconventional, answer to this question.
“What we avoid almost entirely are politics and crime,” co-founder Ryan Heafy tells Press Gazette.
How far does this policy stretch? “Even if it was the mayor or somebody getting charged with some crazy sexual assault thing or murder or whatever, we don’t touch it,” says Heafy.
“I can’t think of the last time we included a crime-related topic in the newsletter at all.”
This mantra is unlikely to sit well with many hardened news journalists, but the 6AM strategy appears to be working.
Founded by Heafy and Ryan Johnston in 2016, 6AM started out with one newsletter, GVL Today, covering Greenville, South Carolina (pictured).
Five years later, 6AM has embedded itself in eight markets and has 450,000 newsletter subscribers overall. And it is growing fast.
The company started its ninth newsletter this week and plans to launch two more in August. It is hiring to expand into 24 cities by Thanksgiving and aims to hit 50 within a year or two.
Heafy expects 6AM’s revenues to surpass $5m this year. He says that, under the 6AM model, a newsletter operates at a 70% profit margin within 36 months of launch.
The 6AM start-up story
Both of 6AM City’s founders – CEO Johnston and COO Heafy – come from entrepreneurial rather than journalistic backgrounds.
Johnston started working in the newspaper business through his parents, who owned Community Journals Publishing Company in South Carolina. As VP of the publisher, he launched the Upstate Business Journal.
Heafy, who is trained as a mechanical engineer, moved to Greenville in 2012 to run an aerospace manufacturing firm.
Together they founded the GVL Today newsletter in July 2016. Originally it was part of Community Journals Publishing, but Johnston and Heafy broke away to form their own company in August 2017.
Ahead of the launch of GVL Today, utilising their existing local contacts, they had already sold around $500,000 of advertising.
Because the company was starting out on a shoe-string budget – Heafy describes the $500,000 of ad revenue as 6AM’s “seed money” – the founders were GVL Today’s original writers.
“Engineers are not known for grammar at all, but I was the one editing the newsletter in the beginning,” says Heafy.
‘We have built a playbook’
Today, 6AM City has just shy of 50 employees and is actively recruiting for more than 20 new positions.
Under its model, each newsletter has two dedicated city editors. Senior editorial staff and sales staff work across multiple titles.
The company’s daily newsletters consist of one original article, between 300 and 500 words, with additional content collated from other sources, including readers, local businesses and non-profit groups.
“I don’t want to call it the David vs Goliath model, but we weren’t creating a massive media company that penetrated local,” says Heafy.
“We had to take our team and teach them and scale them and make them become managers and learn the product and the process.
“And we spent probably the first three years building process and really identifying how can we scale to 50 cities across the United States as efficiently as possible with a very lean staff.
“And we have done that. We have built a playbook. Our IP for the company is our training platform.”
Why 6AM avoids crime and politics
Politics and crime are bread-and-butter topics for most local newsgroups. Why then does 6AM avoid them?
“It allows it to be a better, safer place for both the reader and the advertiser,” says Heafy.
“If Joe Biden came to town, we would not be saying: ‘Go attend Joe Biden’s rally.’ We might say: ‘This is how it’s going to impact traffic.’
“So it’s more about adding value to the consumer on how it impacts your community – not so much engaging in any of the political discourse around it – which leads to much more productive dialogue on our platforms.
“So we can talk about affordable housing in our communities, and it’s usually a positive dialogue in our social channels. Whereas, if you look at how other news outlets cover affordable housing, it’s usually very negative dialogue.
“So we’ve really seen a very interesting opportunity there and really have been able to facilitate some conversations locally where we capture reader feedback.”
Heafy says that 6AM has experimented with allowing some political content to enter its newsletters “to see if tapping into social justice issues, and sharing a little bit more about that, played positively for us... It did not.”
He says the most frequent piece of reader feedback 6AM receives is: “We love you because you don’t cover politics and crime and punishment. Don’t do that.”
He says this approach has helped 6AM keep “both sides of the political spectrum in our audience”.
Instead of crime and politics, 6AM newsletters focus on development, lifestyle, food and drink, events, civic issues and city history – “people love history,” says Heafy.
On Wednesday 28 July, GVL Today – sent out at 6am (hence the company name) to 70,000 subscribers – led on a feature about an app that allows users to learn more about the characteristics of Greenville and their neighbourhood.
Below that was a guide to events in Greenville on that day.
The newsletter also featured a news section reporting on the weather, details of a new plant creating 120 jobs and a new 15-building development in Greenville.
6AM is ‘actively turning down acquisition opportunities’
Not too long ago, the idea of a start-up company making local news pay on a large scale may have seemed far fetched.
But 6AM is not alone in spying it as an opportunity. Last month, Press Gazette reported how Axios is also rapidly expanding its local newsletter business.
How do the economics work for 6AM?
Heafy says that it costs between $250,000 and $300,000 to launch a 6AM newsletter. He says it costs $60,000 in marketing spend to build up 50,000 subscribers in six months. The company has also bought existing local lifestyle sites to increase its foothold in some cities – Heafy calls it “M&A of mom blogs”.
It then takes a newsletter 18 months to become profitable, says Heafy. “And then, within 36 months, we’re operating at 70% profit margin per city.”
This year, Heafy adds, 6AM is on course to “easily” reach $5m in revenues.
After starting out with $500,000 of advertising revenue, 6AM City has since raised $3.8m in seed funding to support its ambitious growth plans.
And, Heafy says, 6AM is “actively turning down acquisition opportunities today because of the growth potential – from significantly large media companies in the United States.
“A lot of media companies, we are learning, really have a strong desire to tap into local or into newsletters. And there seems to be a bit of a race to figure out how to do that effectively. The challenge is a lot of media companies don’t have the infrastructure to really tap into that.”
Heafy says that 6AM wants to use its existing funds to expand to 50 cities. At that stage, the company may look to bring in a “partner” to help it reach 100 cities and more.
“We’ve identified 150 markets in the United States that are attainable to meet our unit economics,” he says. “For us, we know that there are more than 150 cities where we can achieve 50,000 subscribers and a half a million in revenue. Achieving those numbers makes a market viable for us.”
Photo: Kevin Ruck/ Shutterstock