How Substack Has Spawned a New Class of Newsletter Entrepreneurs

Author: Digiday URL: https://digiday.com/media/how-substack-has-spawned-a-new-class-of-newsletter-entrepreneurs/ One-line: As the COVID-era media ecosystem contracts, Substack is cast as a reluctant “savior” — betting that after 20-30 years of ad-supported innovation, the next wave innovates around the subscription model and that readers are finally willing to pay for internet writing.

Highlights #Substack

• Kennedy is part of a growing class of newsletter entrepreneurs on Substack. Founded in 2017, the company allows writers to build their own paid subscription businesses, taking a 10% cut of revenue (in addition to Stripe’s transaction fee for payments).
• As the media ecosystem contracts amid coronavirus, Substack has been thrust into an uncomfortable role — that of a savior. And as more writers go solo, the question has emerged as to whether Substack can become the kind of monetization system that never materialized during the last major internet writer-driven movement, the halcyon days of the early blogging era of the 2000s.
• “We’re coming in with an opportunity-focused mindset,” said co-founder Hamish McKenzie. “During the first 20-30 years of the internet, in terms of information distribution and media, the innovation has mostly come around an ad-supported model. There’s a whole 20-30 years of innovation to come that more fully innovates around a subscription model.” #ad-driven model
• Substack enjoys a growing profile in the media industry, but it’s not a consumer brand. The company is fine with that. Substack wants to be behind the scenes, taking its cut as writers interact with their devoted readers. More than 100,000 subscribers pay writers on Substack, according to the company. #Shopify for Creators
• As more writers join the platform, he doesn’t think there is necessarily a subscription bubble for newsletters. “You pay $10 a month for Spotify and you get every band that’s ever existed. That’s good for the consumer. #bundle economics
• The new structure has granted the bloggers more editorial freedom, though for now it’s basically a labor of love. “If we were still at Splinter, we would have to be listening to everything that Trump says at all times, because that’s where the mandate of having a news website in a corporate context drives you. [Now, we have] the ability to try to make a new model, to try to figure out a totally different relationship to the audience, and a totally different relationship to the day-to-day mechanics of putting out a website,” Mirkinson said. “I don’t think anyone could look at the media landscape right now and not just beg for a different route out of the chaos and misery.”
• Legum said that writers are more entrepreneurial with their newsletters than they were with their blogs. He, for instance, has turned down freelance work, which might pay between $500 and $1,000 an article, because it makes more sense to self publish.
• Substack has an eye toward the blogging era, too, betting this time that there has been a shift in the culture. Readers today, they hope, are willing to pay for internet writing. “From a business standpoint, there was this land grab for everyone’s attention,” said Substack co-founder Chris Best. “The people who ended up winning that game weren’t bloggers, unfortunately. It was Facebook.”
• Chris Best said Substack’s main focus is the connection between an individual and that person’s audience. Its pitch to writers is that they have complete control over everything — from their content to their distribution lists (there are some limits, like a minimum fee structure of $5 per month if you want to switch to a paid model).
• One thing that Substack does promise: no ads, ever. “Any time you’re doing ads, it’s all about the lowest common denominator of engagement: clicks,” Best said.

Connections

• Substack — the platform and its 10%-of-revenue, subscription-first, no-ads model.
• Subscription / ad-driven model — McKenzie’s bet that the next wave of internet media innovates around subscriptions rather than ads.
• Shopify for Creators — Substack as behind-the-scenes infrastructure for individual creators.
• bundle economics — Best’s Spotify analogy ties directly to Bundle Magic and the bundle-vs-standalone question.