The Internet has turned the newsletter business on its head. What used to be a sober, non-commercial specialized communications medium dominated by academic and financial institutions has become one of the most flexible marketing tools in the Web publisher’s toolbox. From the bizarre to the brilliant, anything goes.

Publishing online newsletters is the Internet’s activity of choice to develop credibility and deliver information with laser-sharp precision. What’s the appeal to corporate and sales execs? The ability to deliver cost-effective messages directly to a target market e-mail address regularly and automatically. But some e-mail newsletters are more about e-mail than news.

This rapidly evolving medium has even caught industry professionals by surprise. Patricia Wysocki, executive director of the Washington, D.C.-based Newsletter and Electronic Publishing Association (NEPA) ruefully quotes the association’s motto, "Newsletters, the purest form of journalism." The turn of events on the Internet "is all very new to us. Most of our members trying to make money on the Internet don’t have the manpower or skill set to get advertising and sponsorships."

The sprawling, rowdy world of online newsletters embraces saints and charlatans, corporate icons, and mom and pop Web sites. As in the past, newsletters are designed to inform and promote, to share experiences and make money. Only now they take a variety of forms–discussion groups that depend on subscribers with shared interests for content; online versions of newsstand products; vehicles to acquire (and sell) e-mail lists; special interest e-zines; and fully edited professional and trade publications.

There are, however, some features common to e-generation newsletters. They’re short, usually a digest of squibs. And they fit right into the click, grab and run culture of the Internet–TV’s sound bite has been compressed to a mini-byte. And the most significant feature: They’re delivered right to a subscriber’s e-mail box, as close as a tap on the shoulder.

To come up with the winning and losing strategies that are emerging, we ran a small, unscientific research survey and talked to some of the most successful professional newsletter publishers.

The survey

Our survey of online newsletter publishers probed five aspects of newsletter production: content, circulation, revenue, subscription fulfillment and production.

The research sample was based on a random selection of the first 40 newsletters in my e-mail inbox and trash folder, and 20 newsletters that were chosen at random from a Google search on "Newsletter, Online," which turned up over 1,000,000 listings. We e-mailed publishers, asking for responses to our online survey, conducted by Zoomerang.com, a division of MarketTools that helps individuals and businesses conduct research.

Results

From this limited, skewed universe, we ended up with a sample of 22 responses. Some key findings: Three respondents (14%) were in it for the money. And 50% (11) produced an online newsletter to promote another business.

The biggest issue? Content. Overall, 45% of all respondents (10) ranked content as number one area of concern. The next biggest issue is circulation (23%), which is closely related to and dependent upon content. Of the 11 respondents who were using newsletters to promote another business, six ranked subscription fulfillment as their second greatest concern.

Even though these results could scarcely be less statistically valid, field interviews bear them out.

The 50,000 club

While there are endless variations of newsletters, there are two dominant formats. In one, the content comes from outside sources like a discussion group, a digest of publications or a summary of publications in a field. In the other format, an editor–who may or may not have a staff or contributors–produces the content.

The advantages of the first format are very low production cost and generally high reader interest based on peer participation. The second format yields a more tightly controlled and consistent product at a higher cost. The bulk of corporate product and customer support newsletters as well as standalone e-zines designed to bring in advertising dollars usually fall into the second category. The two top-tier stand-alone newsletter sites we looked at represent each of these different models.

John Audette runs a series of Internet discussion groups that are aggregated into weekly or biweekly newsletters under the Adventive brand. Michael Tchong publishes Iconocast, a newsletter that combines rumor and gossip with sharply focused reporting on unfolding Internet trends.

Both have about 50,000 subscribers, are growing rapidly, and look to sponsorships and text ads to generate revenue. Iconocast combines its newsletter with other revenue streams, such as conferences and events. Audette supports other newsletter publishers–with a combined circulation of well over 300,000–to bolster income.

In 1995, Audette set up I-Sales to establish a forum for Internet business activities. "If I saw someone I respected with knowledge and experience, I’d write, saying ‘I’d love to have you subscribe and contribute,’" Audette says. "On discussion lists, you need content to get subscribers and subscribers to get content."

Adventive newsletters are produced in plain text, which limits advertisements to text sponsorships. A six-line ad in I-Sales–there are three in each issue–typically costs $1,000. Things are changing, though. Based on a subscriber survey, Audette is moving the newsletter toward HTML.

Tchong’s Iconocast has a strong position as an insider newsletter covering Internet business. Tchong, an ex-Apple Computer executive, is also the founder of MacWeek and the CyberAtlas newsletter, both of which were sold to Internet.com.

Iconocast is an HTML newsletter, crammed with news, rumors, commentary, research reports, stock analysis, events and people. It represents the potential for an online newsletter with a highly targeted market. Iconocast’s success–50,000 subscribers in less than four years–is due to hard work and a steady stream of rumors and news bites from the Internet community.

Would Tchong do anything differently if he could start from scratch? "Yeah. I wouldn’t make it a weekly," he says. "It’s a grind."

The newsletter entrepreneurs

Another class of newsletters is designed to acquire large numbers of subscribers. Some follow traditional publishing goals, while some are in it for the e-mail subscriber lists.

Alan Meckler designed internet.com to be the Internet portal for companies doing business on the Net. His mechanism is to attract e-commerce firms through a wall-to-wall carpet of hundreds of newsletters in 14 e-commerce Internet information channels.

internet.com has about 130 staffers and more than 200 freelancers worldwide. Operating results are impressive: The site reports 2.5 million unique visitors daily, 35% from outside the United States, and "over 150 million page views a month plus 60 million e-mail views," says Meckler.

He expects growth of 20% to 30% per year "because of the power of our network of sites. This model only works when it’s all for one and one for all. If you don’t have it, you lose the power of viral growth."

Kevin Lee, CEO of Briefme.com, is in the e-mail marketing business and makes no bones about it. "We’re newsletter publishers only because you need high-quality content to get people to receive the content," he says. Since its inception last year, Briefme.com, with a staff of three, has grown to 80 newsletters with 1,100 contributing editors and more than 2 million subscribers.

The format is simple–reviews and abstracts or briefs on topics prepared by unpaid editors. "Our editors are passionate about their fields. They look at this stuff anyhow and when they find something interesting they review it," says Lee.

More than 80% of Briefme.com revenues are derived from the rental of e-mail lists based on delivering specific demographics. It built its subscriber base through an aggressive affiliate program, signing up companies that link to Briefme.com on their Web sites in return for fees averaging about 30 cents per referral.

Whether you’re considering a new income-producing venture or simply want to beef up your product or service promotion, chances are e-mail newsletters have a role in your Web strategy. To succeed you need to provide useful, meaningful content on a regular basis to a carefully defined target market. Once launched, your newsletter can serve as a mobile Web site, linking back to your site while carrying your message, virally, into areas your Web site doesn’t travel. P

Zhenya Gene Senyak is a marketing communications consultant who has published articles in OMNI and Business 2.0.

Editor’s note: Senyak is a columnist for the ClickZ Network, which was recently purchased by Internet.com.