Email marketing company ConvertKit is looking to bring the lucrative newsletter business to the music industry having newly acquired FanBridge, a fan relationship management platform geared towards musicians, the company tells Billboard. The terms of the deal were not disclosed.
The move comes at a time when newsletters have never been more popular. Companies like Substack — another newsletter startup that recently raised a $65 million funding round that reportedly valued the company at $650 million — have grown dramatically in recent years as the creator economy continues to expand and writers and journalists have flooded the market offering free and subscription-based products. ConvertKit has already established itself in the market with intellectuals like investor Tim Ferris, authors Gretchen Rubin and James Clear, and Dan Runcie, the author of the hip-hop business newsletter Trapital, operating their popular newsletters on the company’s platform.
The Boise, Idaho-based startup has flown under the radar since it was founded eight years ago, quietly powering email marketing and newsletters for more than 300,000 customers on its free tier, and 35,000 customers on its paid offerings. ConvertKit is free for users with less than 1,000 subscribers, with a sliding fee scale that increases with the size of the email list starting at $29 a month for newsletters with over 1,000 subscribers.
ConvertKit founder and CEO Nathan Barry has largely avoided press and never accepted venture capital funding, but despite the non-traditional methods, ConvertKit has built a massive audience, reaching 105 million engaged subscribers (subscribers that have opened an email in the last 30 days) every month through newsletters hosted on its platform. The company is also profitable — and expects to remain profitable post-acquisition — with $27 million in annual recurring revenue.
The acquisition of FanBridge — a smaller email marketing platform popular with artists including Maggie Rogers, Mandy Moore, Ice Cube and Def Leppard — will bring over 1,000 artists to ConvertKit’s platform and add 25 million engaged subscribers to its ledger, increasing the reach of the newly combined company to over 130 million people every month. FanBridge GM Scott Englund will lead ConvertKit’s music efforts moving forward.
Barry says the music industry is ripe for newsletters to thrive, since many artists already have fan lists that can extend into the millions, and few acts have offered a more compelling product than the occasional email announcing touring schedules or album releases. ConvertKit has already attracted a handful of musicians including Tim McGraw, but Barry realizes he doesn’t have all the answers just yet.
“We’re relatively new to the music space,” Barry says. “We need to build a good foundation and we need to treat artists the right way. If we come in and we’re like, ‘We’re the hottest thing from Silicon Valley, let’s change the way the game is played,’ everyone’s going to look at us like, ‘No, you’re not, we’re the managers, we’re the industry veterans. We know what we’re doing.’ Our approach going forward is going to be to just learn from the managers what tools do you need. We’re really leaning into conversations saying, ‘Okay, as a manager, what do you need built?’”
ConvertKit users have so far earned more than $1 billion through the platform, which allows services like Shopify and subscription networks like Patreon to integrate seamlessly into newsletters. Last year, it launched ConvertKit Commerce, enabling users to setup their own subscription offering for their audiences, allowing for things like paid newsletter subscriptions and classes to be offered directly through the platform, with the company only taking a 3.5% fee to cover payment processing.
Whether ConvertKit will be the company to bring newsletters to the music industry will depend on how the overall newsletter market continues to grow. If it’s proven that newsletters can succeed in industries that aren’t traditionally focused on writing, an artists’ traditionally loyal fanbase could become even more lucrative. “The more authentic, directly connected with the reader you can be, the bigger the pay-off is,” Barry says. “They’ll click through more, which is ultimately what you’re trying to get them to do, whether it’s to merch, or to pre-save the album on Spotify, or whatever else.”
As opposed to many startups, Barry says ConvertKit’s profitability allows the company to take the slow and steady approach as it enters a new market. “In order to build a sustainable company that’s focused on serving creators, profits are one of those things that let you make long-term decisions from a calm place,” Barry says. “We’re profitable now,. FanBridge was a profitable company, and we’ll just continue to be more profitable after acquiring them. That’s just the way that we think business should be done. It’s old school.”