
Substack has spawned a new class of newsletter entrepreneurs - jsm386
https://digiday.com/media/how-substack-has-spawned-a-new-class-of-newsletter-entrepreneurs/
======
pembrook
Substack has been successful in creating buzz among the media crowd, and
there's definitely a business there riding the trend toward subscriptions in
the media biz, but unfortunately taking on $17M in VC money has set them up
for a disappointing end.

Here's how this plays out. The successful writers on Substack will eventually
leave the platform for more control over their audience and lower fees
(there's a reason Ben Thompson isn't on Substack).

As this happens, and as the honeymoon PR period dies off, the journalists will
turn on Substack, just as they do on every single thing Silicon Valley puts
out (see Lambda School).

Prior to taking on a16z riches, Substack was a cool indie brand. Now they're
officially "big, evil tech." The fickle journalist twitterati just haven't
realized it yet.

Inevitably as more non-influencer writers head to Substack they'll start to
see, like with Patreon, that only a small minority of creators will ever
generate enough income to make a living.

This, combined with competition from Patreon, Podia, Memberful, Ghost, Revue,
the next indie platform darling, etc. will spell doom for a16z's growth goals
for the platform.

My guess is 3-7 years from now, after more funding rounds, they get acquired
by Patreon for roughly the same amount of money investors put in. Employees
will get nothing, founders might get Cush jobs and possibly a minor payout,
VCs would have done better investing in the S&P.

This is the type of business that works better bootstrapped IMO.

~~~
seemslegit
> Here's how this plays out. The successful writers on Substack will
> eventually leave the platform for more control over their audience and lower
> fees (there's a reason Ben Thompson isn't on Substack).

Except the entire model of substack is based on writers not having access even
to their audience's mail addresses.

~~~
sails
Substack writers do have access to their signups and can easily export them.

[https://support.substack.com/hc/en-
us/articles/360037465992-...](https://support.substack.com/hc/en-
us/articles/360037465992-How-do-I-export-my-email-or-subscriber-list-)

~~~
edouard-harris
Yes. This has been the case from the very beginning of their platform, as far
as I'm aware.

------
bawolff
Maybe this varries depending on interest niche, but for me personally, there
is so much quality writing that is available for free, much more than i am
reasonably able to consume, its hard to imagine paying a subscription for
writing.

~~~
luckylion
You might pay for the curation. Finding what's interesting takes time as well,
even if it's just scrolling through HN, and you will miss some things. If
somebody saves you that time, that's probably well worth a few bucks a month,
isn't it?

~~~
twic
If it was a one-stop shop that fed me all the reading i could do, i would
happily pay £10 a month for it. Maybe a bit more.

But if it's narrowly focused, the value is proportionally less. If someone
does really good curation of obscure Soviet aerospace technology, i'm
interested, but that's no more than 5% of my reading.

But then, i am a generalist, and fairly stingy. It seems like a repeat of a
very old story to say that niche curators will have to find either price-
insensitive generalists ("whales"), or focused obsessives.

------
apatters
I think what Substack is doing is really exciting, but it remains to be seen
how large this phenomenon will become. I heard on a CNBC interview that there
are only about 30 writers who make a living income from Substack right now
(don't know if it's true or not).

"Pay money to support the creator" can work - Patreon is doing around $50M in
revenue annually. Bundling can obviously also work with many big and
established examples. But it strikes me that the two models attract a very
different customer, so those who subscribe to a specific Substack newsletter
may or may not be enthusiastic about buying a big bundle of them down the
line.

------
trashburger
I was going to read the article, but if you think covering 1/3 of my screen
with an uncloseable "you've read X articles" overlay is sensible, then I think
not reading your article is sensible.

------
cjbest
One of the founders here. I’d love it if some of the HN crowd applied for our
fellowship: [https://on.substack.com/p/announcing-the-next-substack-
fello...](https://on.substack.com/p/announcing-the-next-substack-fellowship)

~~~
input_sh
Does "anywhere in the world" include countries where Stripe isn't available?

I've toyed around with the idea of creating a Substack, but I can't get paid
over Stripe.

------
seemslegit
In the same sense Uber has spawned a new class of driving entrepreneurs.

The only asset a newsletter author has is his audience - with substack they
won't even have that, in fact their publisher agreement explicitly prohibits
the authors from asking any sort of contact information from their readers.

------
roadbeats
In bigger picture, this is a natural move from quantity to quality. The free
content on internet feel like eating garbage. I follow a few really good
newsletters (e.g Craig Mod's) and every episode feels like a chapter in a good
book.

What I don't enjoy about newsletters is the e-mail clients themselves. They're
bulky, filled with features I never use. I wish there was a way to hook my
newsletters subscriptions up with Kindle. I can customize the fonts, sizes,
spacing for my best reading experience, and the writer can forget about
styling and just can focus on the writing.

Which makes me fantasize myself creating a subscription based reading platform
with its own device :)

~~~
e_carra
It is very easy to convert HTML to ePub, you could create simple script that
converts every newsletter into ePub and adds it to your library. I don't know
if it would work for Kindle devices, but you could always install custom
firmware that has support for Dropbox synchronisation.

~~~
input_sh
ePub in general doesn't work on a Kindle (you have to convert them to mobi),
but you can create your own "Kindle magazines" (don't know their exact name)
using calibre.

One use case of that is that you can feed RSS feeds to your calibre's news
feature and schedule them to be sent to your @kindle.com email address at a
specified day / time of the week. Essentially DYI magazine filled with
whatever blogs you want.

~~~
e_carra
That sounds nice! I have a Kobo e-reader, and I use their beta browser or
pocket to read this kind of things, but especially the browser is not very
convenient.

~~~
input_sh
I've switched from a Kindle to Kobo a few months ago, and it's one of the rare
features that I miss. Pocket integration gets me close enough, but Kindle
really nailed the magazine approach in my opinion.

On the bright side, Kobo at least makes a distinction between a book and an
article, while Kindle just treats everything as a book.

------
jackcosgrove
I am happy to pay for quality writing I can't find elsewhere, and in fact I
subscribe to a Substack.

I don't necessarily see the nascent bundling as a problem. Newspapers, which
were the workhorses of writing, were bundled geographically which makes less
sense now. Bundling by interest makes a lot more sense.

Hopefully the writing supported by this paid model can be as creative as cable
TV used to be, compared to network TV.

------
fxtentacle
Can those people actually make a living wage from it, or are they
"entrepreneurs" like all those Instagram "influenzas"?

~~~
patio11
Some people are (book) authors professionally, some people are authors
recreationally, some people are authors professionally _exclusively_ , and
some people are authors professionally but their primary monetization engine
is elsewhere. If one believes that writing books generally isn't a sustainable
occupation, I think that belief is likely under-nuanced.

(Ditto e-books or similar information products, by the way.)

Turning to the question of paid newsletters: I'm socially constrained from
pointing at examples, both because in some cases I have non-public information
and in some cases I would be perceived as having non-public information, and
because there are heady professional considerations, but: there are
definitely, definitely some people who sell information professionally who
break the top end of the pay scale for people who are generally described as
writers in more traditional media jobs.

Another way to put it is "I'm pretty sure I could sell 1,000 subscriptions at
$20 a month within 6 weeks if I wanted that to be my job", which is not
competitive with other things to do with my time but probably clears most
reasonable bars for stable professional options. I think I'm very far from
having the largest collection of people who'd pay to read my writing, the best
writing, the most engaged userbase, the most lucrative decision points that
users routinely apply my advice against, etc.

A big open question for the business model is whether one thinks there are
hundreds, thousands, tens of thousands, or hundreds of thousands of people who
could hit that bar (and, I suppose, whether one could tempt them from other
options). Hundreds feels clearly wrong to me as an upper bound.

~~~
mikro2nd
Thanks for a more nuanced take on the model. The question in my mind is: How
much time/energy gets eaten up in marketing a newsletter (or other paid
subscription information product)?

I suspect that lack of interest or skill in marketing is much more the
limiting factor that sets an upper bound on how many people can pull it off to
derive a realistic income this way.

~~~
patio11
I'd imagine it is different for authors in different phases of the business,
starting at very substantial while one does not have a lot of a personal
platform and decreasing markedly when one does.

Someone, and I'm forgetting who it was, suggested that paid subscriptions is
the natural monetization strategy for people who are a) public intellectuals
and b) do a lot of their work on Twitter, and in that sense you're doing
marketing with a sort of cycles which might not read as "intentionally doing
marketing work." (I think as the community distributes the technology of
running these businesses, like the technology of running e-book businesses has
been distributed, this will get easier, too. One thing all newsletter authors
should be doing ~constantly is hitting up podcasts in adjacent spaces, because
it gets juices flowing for writing and because every time you talk to 10,000
people you'll sell N new subscriptions.)

------
langitbiru
It's nice to see a different business model of writing. Medium uses
subscription model for a whole while Substack uses subscription model for each
author.

Time will tell which one will work better.

I already subscribed to writers on Substack (all of them write about
blockchain/DeFi).

------
captn3m0
Still no custom domains, so you don’t really own your audience or your content
on Substack.

~~~
michaelbrooks
If you want your own custom domain with membership features, then Ghost is
probably your best bet. It has built-in member features, open-source and can
also be hosted on their Pro platform. They also don't take a cut from your
memberships.

~~~
captn3m0
Lots of different solutions to this (I use Mailgun and/or Migadu for various
usecases). Just surprised that such a hyped product gets to be this popular
without support custom domains.

Haven't we learned anything from Medium?

------
vaibhavthevedi
I believe that platform works the best if you have a niche based newsletter.
And that's what makes it best.

------
CaptArmchair
I tend to think that Substack isn't that new or different from other platforms
that tried to reinvent publishing. They basically took an existing mode of
publishing - newsletters - and have build a centralized platform that allows
individual writers to share their content with their audience.

The difference is the offering towards the audience. What are readers willing
to pay for? Content published on a blog or in a newsletter isn't inherently
different: it's short pieces conveying thought, opinions, observations,... So,
why would anyone be more willing pay for newsletter content rather then
content posted on the Web?

There's the simple convenience of having content you subscribed to delivered
to your inbox, rather then having to invest time and effort scouring/curating
it yourself from the Web (bookmarks, closed platforms where you need to
register, etc.). Content just lands at regular intervals in your mailbox, end
of story.

There could be a perception that your Inbox is your own personal space as
opposed to the Web as this foreign place with inherent dangers to which you
have to expose yourself just to get to the good bits. Authors to newsletters
become your guests, whereas you are their guest when you visit their websites.
So, I think a sense of agency and being in control are big drivers here.

The sense of exclusivity of being part of a fledgling tribe of readers to a
small publisher who knows how to appeal to that sense. Receiving an e-mail in
your Inbox is as different from visiting a website, as is receiving a
personally addressed snail mail is from going out and reading newspapers in
the library.

I'm also curious as to how the e-mail / newsletter model impacts Substack's
operations. Unlike 'traditional' social media, millions of visitors don't
flock a central platform 24/7/356 which comes with hard infrastructure
problems. I'm well aware that there will be different challenges that need to
be met, but pushing content to individual mailboxes is, in essence, a hybrid
form of decentralization and distributed publishing combined with a
centralized platform for curation and subscription.

Another assumption I'm going to make is that revenue isn't spread evenly
across all publishers on the platform. I suppose it's more of a long tail with
a typical Pareto kind of distribution. 20% of the writers account for 80% of
the revenue and then there's a sharp drop off. Thing is, I suspect inactive
publishers don't consume much if any resources: e-mails in an Inbox have a
rather short half-life as opposed to the (perceived) need of keeping content
available over HTTP which brings additional running costs with little to no
added value.

It's interesting to note that Substack isn't the only offering in this space.
A direct competitor came to my mind:
[https://www.getrevue.co/](https://www.getrevue.co/)

Personally, given the pre-dominant promotional nature of newsletters, I'm
pleasantly surprised how this mode of writing/authoring has been adopted, once
again, by budding writers and publishers. After all, journalling via mail has
a long historical pedigree. It's great to see how the analogue concept finds
traction in the digital age as well.

------
mvellandi
Newsletters are the easiest way to retain readers since it just pops in their
inbox -- if the writing is good and/or specialized. Good design also really
helps. When I managed the newsletters for a New York urban planning nonprofit,
we averaged 23% open rates. Another good hook is when issues don't have a
public web archive, or it's paywalled.

I saw the bundling mentioned in the Digiday article with the "Everything"
brand, and I unsubscribed since I just wanted the business analysis and not
other topics (like productivity advice) mixed in. Maybe bundling is okay for
other readers.

I have to check out what Substack offers in terms of analytics and email
design templates. Personally, I'm interested in series-based newsletters for
storytelling that's pubdate agnostic (everyone gets the same first issue). I'm
going to look closer at ConvertKit and BareMetrics.

~~~
strogonoff
I'm curious, how do you measure open rates for a newsletter? Many email
clients prevent external content from loading as a security measure, thus
precluding any tracking. Do you adjust the final figure to account for
resulting underreporting? Or do you reckon more clients load external content
than I think?

~~~
mvellandi
Open rates were measured (probably) from either track-pixels as well as any
normal images hosted by the email provider. When an email is variably
considered 'trusted'/not-spam by the client, it'll show images. But even if no
images are shown, a link clickthrough in the email (to the email host and
redirected to source) would then also be added to the open rate.

