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Substack has spawned a new class of newsletter entrepreneurs (digiday.com)
101 points by jsm386 38 days ago | hide | past | favorite | 52 comments



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.


I think what Ghost (as you mention) is trying to do here with v 3.0 is interesting - seems to have most or all of the features of Substack - easy to set up on their hosted option plus full ownership of the email list and open source / potentially self hosted.

Interesting that "The Browser" is on Substack (one of the top 5 newsletters) but the affiliated and more recent "The Viewer" is on Ghost.

Of course Ghost still has a relatively small ecosystem compared to Wordpress which I think is why Ben Thompson still expressed a preference for a Wordpress based setup.

[1] https://thebrowser.com/

[2] https://theviewer.is/


Hey! John from Ghost here - yes, TheListener and TheViewer are already on Ghost, and TheBrowser is the next that will be migrating :)

We're still in relatively early stages with our memberships and subscriptions features (they're officially still 'beta') but we're shipping updates and new versions every single week, and working toward making the product easier to get started with and less technical to setup.

We'll have a larger release later this year, but Ghost is already powering many thousands of paid memberships in the wild.


> 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).

This doesn’t really seem true. Journalists “turn on” every single thing SV puts out? Do you think the reporting on Lambda school is dishonest? Or do you think that journalists reporting on a SV company is in and of itself somehow wrong?


Every single thing in Tech that becomes buzzy and popular begins with uncritical journalists fawning over the hot new thing, and ends with those same uncritical journalists thinking said thing is now evil and dystopian.

Nothing is ever as good or as bad as journalists on twitter think it is.

You can watch this pattern in literally every piece of consumer technology of the past 100 years. For some recent examples:

1999: The internet is going to change everything!

2001: The internet was a scam

2008: Smartphones are our savior!

2018: Smartphones and screen time are ruining everything

2010: Social media is going to connect the world!

2016: Social media is evil

2006: Google is the greatest, most innovative company in the history of the world!

2020: Google is an evil monopolist bent on world domination

2018: Zoom is the best video conferencing tool ever!

2020: Zoom is a massive Chinese conspiracy

2018: Lambda school is going to fix education!

2020: Lambda school is a giant scam

Etc.

Etc.

Etc.


> 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.


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

https://support.substack.com/hc/en-us/articles/360037465992-...


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


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

Is that correct as of today?

https://support.substack.com/hc/en-us/articles/360037465992-...


I'm not sure, their Publisher Agreement seems to also have been very recently revised to remove some very strong prohibitions against trying to gather your subscribers data on your own so maybe they realized it's a bad idea - do you know what information is included in the csv ?


well, you may not have their address, but you have their inbox.

“References and supplemental video content available on my website at ...”


Great, so now you have a website to maintain and pay for and your customers with their associated revenue are still owned by substack.

Getting paying subscribers to change their subscription method is huge friction and risk of churn, the more revenue you already have established on substack the bigger the risk cost of trying to move away, aka the boiled frog business model.


> Prior to taking on a16z riches, Substack was a cool indie brand.

The name "Substack" was co-opted from James "Substack" Halliday [1][2], a well-known hacker in the Node.js community. It wasn't an indie-brand-turned-corporate; it's a person.

The way substack.com has used VC money to take over someone's identity and feed off their reputation is incredibly scummy.

[1]: https://github.com/substack

[2]: https://twitter.com/substack


Do you really think they intentionally chose to collide with someone’s GitHub username???


Sure do.

Substack the company was founded in 2017 [1]. At that point Substack the person was already a household name in open source — with 76.000 GitHub stars to his name his projects' popularity were on par with the likes of Mozilla [2].

Naming an upstart company after a household name that isn't protected by copyright is incredibly clever. You get to use an established and trusted name, but can't get sued for using it.

[1]: https://www.crunchbase.com/organization/substack#section-ove...

[2]: https://web.archive.org/web/20170115065014/http://git-awards... — GitHub stars aren't a perfect metric, but it's the best I can come up with to convey the degree of name recognition back in 2017


Anecdotally, I’ve never heard of this person until today (despite having heard of the company). I’d guess I’m not alone.


Do you have any evidence that Halliday's reputation has benefitted Substack (the company) in any way or that this was intentional?

I view it simply as a catchy name and nothing more.


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.


In my experience, it's even worse: those people who spend time and effort into becoming famous on the internet tend to have less interesting content than those who just silently post to their own blog and then move on to their next adventure.

That's why I like HackerNews, because users can recommend someone unrelated to the community purely for their content.

Substack kind of reverses the incentive here, because there's no money to be made in sending visitors off their platform. So either, it'll be a little echo chamber where Substack users only link to other Substack users, or even worse it creates an incentive for Substack's "creators" to copy content from people who didn't join.


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?


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.


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.


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.


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...


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.


If you offered crypto as payment (BTC, ETH, XMR, etc.) I would subscribe to some newsletters. I don't want to pay stripe any vig.


I wish it were acceptable to ask founders real questions about their company culture and values without being labelled a party pooper or buzzkill


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.


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 :)


> I wish there was a way to hook my newsletters subscriptions up with Kindle.

There used to be services a bit like this. Instapaper used to be able to send a digest of saved web articles to your Kindle, like your own magazine. eg [1]. It sometimes did badly due to web page formatting, but with newsletters you'd have more control layout.

I think you can still deliver the .mobi files to a @free.kindle.com address and the reader won't be charged for WiFi-only delivery. They have to whitelist your email address in their online Kindle account, which might be a usability issue. It's a while since I looked at .mobi, but I don't think it's much different from a single HTML file.

It's not a service I would use, because I love email, and I worry about market size... but it's an interesting idea.

[1] https://www.guidingtech.com/29107/instapaper-kindle-merits/


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.


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.


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.


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.


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.


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


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.


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.


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.)


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).


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


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.


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?


Even if you had your own domain, their ToS would prohibit you from collecting email addresses of "your" audience. Because in their lawyer's opinion, it's not yours.


Substack’s docs show an option to export email addresses—I would presume that would mean you could move your subscriber list to another email platform if you wanted to?


Followup here: I double-checked with some others who publish with Substack, and [you can export your Substack subscribers](https://capiche.com/q/what-did-you-use-to-start-a-paid-newsl...). At least that keeps the lockdown a bit lower (though of course you would have to get subscribers to pay again at a new site, which would likely lead to high levels of churn).


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


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/

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.


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.


Newsletter fatigue is definitely setting in with me. I was pretty excited about them through 2019 and subscribed to a bunch. They are filtered to a folder in my mail and these days I rarely open any of them. My mail client also blocks remote content (no images) so even if I do read one, I probably will not register on their analytics.

I'm actually using an RSS newsreader more (NetNewsWire on my iPad). For me, it's a much better experience.


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?


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.




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