How I Launched My Newsletter Business
Remnant Review
This was posted yesterday.
Newsletter Business Greetings Dr. North, I have read somewhere that you started a newsletter business early in your career and I was wondering how did you manage to do it? How did you find your audience who are willing to buy your newsletter?
My experience in starting Remnant Review in 1974 conforms to this universal rule: things are easier to get into than out of. I am still at it.
Let's begin at the beginning. I was a writer from my high school years. I was a better speaker than I was a writer by my senior year, but my writing skills kept getting better, because, ever since the age of 13, I have always been writing a paper on something. If you do something long enough, you get good at it.
The first money that I earned from writing was from book reviews. I wrote book reviews for the local newspaper, the Riverside Press Enterprise. That began in 1965. I was paid $5. That was $37.50 in today's money. It took me at least 10 hours to read the book and write the review.
I began writing for money on a systematic basis when I began publishing in The Freeman. That helped pay my way through graduate school. I was a regular contributor in the late 1960's through the mid-1970's. I was an occasional contributor through 1993.
At the Foundation for Economic Education, I did not do much writing. I was not paid for my articles, so I did not do much writing. Only after I had come to New York was I told by the head of the organization that any money I made speaking or writing had to be turned over to FEE. I therefore stopped writing. But I was only there from September 1971 until March 1973. I knew there was no future for me there, and I got out as fast as I could. I started looking for a way out on the day that Leonard Read informed me of the arrangement. If he had told me that he would give me a 50-50 split, I might have stayed. It was one of the greatest things in my life that Read was a socialist with respect everything that went on inside FEE. He did not believe in the free market principle of rewarding somebody in terms of his output. It was an easy job, but I knew I would never stay with the organization from the day he told me the terms of my employment. This was why he could never keep first-rate talent for very long. Anybody who had any get up and go, got up and went.
I was attending a conference in New York in 1974. I was giving a lecture at the conference. I was making no money as a speaker, but I was on the board, so I went to the conference, and I gave my speech. I had flown in from California. I think it was at that meeting that they kicked me off the board, and I never went back. If it was not at that meeting, then it was one within the next year.
At the conference, there was a newsletter publisher by the name of René Baxter. He is long forgotten today. He disappeared from public view over 35 years ago. He stopped me as I was walking by, and he asked me this question: "Why don't you publish a newsletter?" I think that was the most important question anyone ever asked me. I had no answer.
I went home from that conference and began thinking about what it would take to publish a newsletter. I decided it should be a four-page letter, sent out every other week. I knew I could do that every two weeks. I began making plans in March of 1974. I scheduled my first print run for May 15. You can read the first issue here.
The newsletter was an extension of both my job and my calling. This was important. The newsletter was not going to be my job; it was going to supplement my job.
STEADY INCOME
I was on the payroll of my father-in-law, R. J. Rushdoony. He paid me $1,000 a month. That was about $5000 in today's money. No benefits, but not bad. But it was a pay cut for me. I wrote a monthly newsletter article on my economic commentary on the Bible. I began that project in May 1973. I also spoke at least once a month to his Sunday morning group. I edited a scholarly journal that came out twice a year. That began in 1974. The money kept me going. I had that job from late 1973 until early 1976.
MARKETING
Because I had been writing for the Chalcedon report for over a year in 1974, I had a ready-made audience. Rushdoony let me put in a promotional letter for my Remnant Review newsletter. I offered a free trial copy. I think I pulled in about 400 requests. I forget. That was an upfront expense. My goal was to convert some percentage of them to paying subscribers after one or two issues. I did.
That worked, but it was clear that there was no future in that. I knew nothing about direct response marketing at that time.
A man I knew had a weekly telephone gold report. He lived in Washington state. His name was John McFalls. He used a device called a Code-a-Phone. It was a plastic machine that had a three-minute tape in it. When somebody called the number, the machine activated the tape, and the tape delivered the message. He gave a weekly update on gold. He had a lot of people calling in. This, despite the fact that he lived in Washington State.
I suppose it was in the summer of 1974 that I started my weekly gold report. It may have been later in the year. I ran a small ad in the Los Angeles Times. It was one inch square. I ran it in the financial section. It announced that people could call in 24 hours a day to get a three-minute report on gold. Gold had just been legalized that year, so it was a hot topic.
I began to get calls as soon as the ad ran. I found out that they would all come in on the first day, and then they would taper off the next day. So, I ran the ad every Monday morning, and I ran it every Friday afternoon. I don't recall what that cost, but I think it was $50 per run. I ran it in the business section. I had to add another Code-a-Phone unit. Traffic was heavy.
I offered a subscription for $45 a year. That got them 24 issues. In today's money, that would have been $216. I always got enough money coming in the door to pay for running the ad, and to pay for the fulfillment of the subscription. So, it was a break-even deal. Anytime you can get a subscriber on a break-even basis, take the deal.
I did not know it then, but Pareto's law generally held. About 20% of the subscribers would renew. So, my money was going to be made in the following year. I grew the list to several hundred names this way.
Remember, I was getting paid a regular salary. So, I rolled back all my profit into advertising. I did not know it at the time, but this is one of the great advantages of subscription-based accounting. I didn't set that up until years later. All of your advertising expenses are deductible in the year that you make the expense, but all of the income can be amortized over the year. So, you do not have to pay income tax on any income that arrives in the next fiscal year for the company. Again, I did not know that at the time, but I learned it by 1980.
Then, one day, I offered them a deal. For one time only, they could get a trial subscription for three months for $15. The floodgates opened. I realized at that point the people wanted to minimize their upfront expense. I got a lot of subscribers that way, and a lot of them renewed. I don't remember how many, but it was worth my time.
My wife and I learned the business together. Initially, we used the very labels to address the envelopes. We would buy long rules of stamps and lick them one at a time. Then I bought a little hand stamping device. You could put a roll of 500 stamps in it, and then by hand, you would plunge little hand-held device. It would affix a stamp to the envelope. A modern version looks like this.
Next, I bought a used hand-stamped Addressograph machine. But we didn't use it long. I found another machine, also used, that was a lot more efficient. You activated it with your foot. You inserted the envelopes by hand, and when you pressed down with your foot, the machine would impress the address on the envelope. This was called a Speed-O-Mat, if I remember correctly. It used metal plates. To make the plates, we bought a device that had been used in World War I for stamping out dog tags. It worked fine. It was incredibly heavy, but it worked. My wife learned how to run these machines. She is very good with machines. She also did the accounting.
A BRICK WALL
My strategy with the weekly gold report was going fairly well. I was breaking even on the expenses, and I was building the mailing list. All this came to a crashing halt sometime around the summer of 1976. At that point, a local California regulatory agency told me I had to register with the agency in order to be allowed to publish my newsletter. This was before the Supreme Court ruled unanimously that this was an infringement on speech. That was my opinion at the time, but there was no law to back me up. I decided to leave California to escape the clutches of that regulatory agency. I left in December of 1975. I went to Washington State, just south of the Canadian border. I lived in the Dutch community of Lynden, Washington. Actually, I lived in a country house a few miles out of town.
That was when I hit the brick wall. Long distance phone rates were still high. So, I could no longer advertise my weekly report and run it in Los Angeles newspapers to break even. I would not get enough phone calls to justify it. I kept doing the weekly report, but that was only to keep existing subscribers happy. At that point, the business came to a screeching halt. From that point on, attrition was going to kill me. I knew I had no future. I had to re-think my strategy.
So, I needed a new future. I was fired by Rushdoony at that time because I left California. He paid me a little to edit the journal. So, I had some money coming in from the newsletter, and I had a little money saved. My wife and I began to cut expenses. We really cut expenses. We only had one tank of fuel oil for the whole winter. The fuel oil guy said he was amazed at how little fuel we used. We did not have a warm house, and winter, while not fierce, was not warm six miles south of the Canadian border.
That was when I began to hustle for a job. Fortunately, I told Larry Abraham about my situation. He told his friend, Congressman Larry McDonald, that I was available. McDonald told Ron Paul that I was available. Paul had just been elected in a special election. He hired me. In June 1976, I went on his staff.
This was a tremendous advantage for my newsletter. I could get all of the information I wanted free of charge. On any topic, all I had to do was send a little perforated card to the Library of Congress, and within a couple of days, I had whatever article or book the Library of Congress had in its files. It always had everything. So, all I had to do to keep up with the news was to clip little perforated cards. I wrote Remnant Review at home, but I clipped a lot of perforated cards while I was on the government's payroll.
I LEARNED ADVERTISING
I still had not learned about direct mail marketing. I was still in a holding action with the newsletter. Then I stumbled upon a tremendous marketing technique. I had written a series of articles in Remnant Review on price controls. I assembled them into a paperback book, which was basically reprints of the newsletters glued together. I ran an advertisement in a national magazine for my report, How You Can Profit from the Coming Price Controls. I sold it for $10, plus $1 in postage. I had about 1,000 copies printed up. I took a chunk of my savings, and ran a full-page ad in a magazine.
I knew a guy who brokered the advertisements for a living. I used him. He had worked for the legendary Joe Carbo, who made a fortune with his ad: The Lazy Man's Way to Riches. Carbo said he had this wonderful testimonial from his CPA that said that all of what he said in the ad was true. What the reader didn't know was that his CPA was brokering the ads and getting 15% for each ad. But that's okay. That's business. I used his services.
He taught me about remainder space in magazines. Magazines run ads, but sometimes the person running the ad only wants a particular region of the country. That leaves a page open to be sold to some other advertiser. These blank pages are sold quite cheap. This cut my initial cost of the ad. I was able to test the ad at a low risk.
He also taught me that I always had to request right-hand placement of the ad.
I read Carbo's book. It was kind of a "think and grow rich" book. What I learned from that book was this: if I set up my own ad agency, I could broker my own ads, and get paid 15%. This reduced the cost of my ads by 15%. That saved me a chunk of money over the next two years.
At this point, I had never read a book on direct response marketing. I did not know of the existence of this literature. So, what I did was simple: I copied the style of an ad written by Joe Sugarman. Sugarman was a master of full-page advertising copy. He used three columns. I used three columns. He used a headline and a subhead. I did, too. He used boldface subheads in the ad. So did I. I imitated the form of the ad, but I substituted my own copy. I hit a home run, or at least a stand-up triple, with that initial ad. You can read the ad here.
My ad worked great. I was able to do better than break-even on each of the ads. So, I ramped it up in 1978. I began running the ad in numerous magazines around the country. I always broke even. Usually, I made money. So, I sold about 20,000 books at $10 a piece, plus $1 postage, which grossed $210,000. In today's money, that was $820,000.
I got about 10% of these people to subscribe to Remnant Review. By that time, I was charging $60 for the newsletter. In today's money, I pulled in about $450,000. That was over a period of two years. So, the books made money, but mainly they were an advertising technique for Remnant Review. All of the money generated from Remnant Review was profit, except for postage and printing. It didn't cost me anything to generate those sales. People would read my ad in the back of my book, and they would subscribe. Anytime you can get somebody to send you money on a back-end deal, take it and run with it.
After I left Ron Paul, when he lost the 1976 election by 268 votes out of 180,000, I was almost immediately hired by Howard Ruff. I had to give advice to people over the phone every day. That took about four hours a day. So, I made a good salary, and only took me a third of a day's work. I therefore could roll over more of my profit into more advertising.
Then, in early 1979, I hit pay dirt. I wrote an 8-page ad. This was during the panic phase of the silver and gold markets. Silver was shooting upward, and so was gold. On the basis of renting mailing lists and mailing out my ad, I got 22,000 subscribers at $60 a year. If you do the calculation, that is about $1.3 million, and in terms of today's money, that was almost $4 million. That was the most profitable ad that I ever wrote.
The problem came over the next years, because there was a recession under Carter in 1980, and there was a two-year recession under Reagan. Gold fell rapidly in January 1980, and silver did, too. They began a 21-year decline in price. So, the hard money newsletter business basically went belly-up, beginning in 1980. From that point on, I had to struggle. It was not fat city anymore. But this is normal in any business: feast and famine alternate. The only debt that I had at the time was on my house in North Carolina. I bought another house in Texas, so I had two mortgages, but I was able to rent out the house in North Carolina cover the cost of the mortgage. It was a great house. I later sold it to the renter.
I also taught two courses at Campbell College. I had them pay the ICE. I did not need the money.
I started with nothing except an idea in the spring of 1974. By December 1979, I was rich.
LESSONS
What are the lessons? First, start a side business that is an extension of what you already do. I was a writer. Second, don't quit your day job. Use the day job to pay for your basic expenses, and then roll over all the profits in the business that you start on the side. These expenses are tax-deductible. You can keep advertising until you build up the business to such an extent that you are willing to take a salary from the business. The business then will begin to replace the income that you are steadily receiving from your day job.
When you have steady income from your existing job, quit your day job. You must devote full time to your business. I had a tremendous advantage. From 1974 until late 1975, my day job required very little work. I had to give a speech a month, but I have never spent over two hours to prepare a speech, normally I don't spend an hour. I can write an article in a couple of hours. I had to spend a few hours week on editing the journal, but most of that work was done by the writers who wanted to get published in the journal. So, from the point of view of my day job, I did very little work. It was a very good job at the time. It was the ideal job for what I wanted to do with the rest of my life.
When I worked for Ron Paul, it was much the same. I had to write one newsletter every Friday afternoon, but I knew how to do this at the time I joined the staff in 1976. I had to answer an occasional letter from a constituent, but that was pretty minimal. Most of my time was spent in researching, and then I spent the rest of the time, which wasn't really much, in writing my weekly newsletter that was sent out under Dr. Paul's name. It was an ideal job for me. Most of my time could be used in reading, and whatever interested me, I wrote about, either in Remnant Review or in Dr. Paul's newsletter. I got paid to read. That was the job I always wanted.
MY CALLING
I started the Institute for Christian Economics in 1975. I began writing a monthly cover letter and monthly newsletters for ICE, beginning systematically in 1976. That was another outlet for my writing.
I was able to fund ICE in 1979 by giving a deal to subscribers. They could renew by making a donation to ICE. Then ICE paid my company enough money to fulfill subscription costs. That was a way to move my money out of my job and into my calling. I didn't do this very often, but I did it when it really counted. On this basis, I made ICE a self-sustaining organization. But I never took any money out of it. I never took a salary, and I never took book royalties.
So, my job funded my calling in the initial phases. After 1982, the ICE was self-sustaining. I didn't pour any more money of my own into it. In fact, I really only did that in 1979. But that was enough to get it rolling. I shut it down in December 2001. It enabled me to publish lots of books, back when you had to pay money to publish books, because you thought you had to put the book into a printed form. There was no print on demand in those days.
CONCLUSION
At this stage of my career, I would not be able to use any of the technologies that I used over 40 years ago. But that is normal in any business. Technologies improve, but advertising copy stays pretty much the same. I learned how to write advertising copy in 1977. I kept improving my skills from that point on. I still write ads, but they are Google ads. They are short and to the point. I will be writing these ads until I die in all likelihood. I am writing them for the Ron Paul Curriculum. I have not yet hit a home run with a Google ad, but I'm doing okay with the ads mailed out to his in-house mailing list. The curriculum is profitable. It went into the black on the day it started.