- The newsletter platform Substack allows writers to monetize their content by placing it behind a paywall.
- Three months into the pandemic, Substack reported that its revenue had increased by 60%. It now reports more than 250,000 paid subscribers.
- In recent months, several prominent writers have left publications to launch independent Substacks, and some have turned into six-figure success stories almost overnight.
- However, for writers without large followings, this kind of success is the exception rather than the rule. Media analysts like Thomas Baekdal and Josh Sternberg have pointed out the improbability of smaller newsletters becoming lucrative enough to support their creators.
- Substack declined to comment but offered a list of resources that it presents to writers considering monetization.
- Visit Business Insider's homepage for more stories.
In recent months, several prominent writers have left major publications to launch independent newsletters on Substack, a platform that allows writers to monetize their content by placing it behind a paywall.
The tech journalist Casey Newton announced in September that he was leaving The Verge, following in the footsteps of writers like Anne Helen Petersen, Andrew Sullivan, and Matt Taibbi, who left BuzzFeed News, New York magazine, and Rolling Stone, respectively, to launch ventures on Substack.
These writers, who all boast massive personal followings, have made headlines for how lucrative their new Substacks are. By effectively importing their audiences into the Substack paid model, megawatt journalists have reported earning well above six figures almost overnight.
In a media landscape defined by declining advertising revenue and budget-cutting, the success these Substack superstars have experienced is a welcome anomaly. Stories like theirs, coupled with the economic desperation prompted by the pandemic, helped Substack double its user base earlier this year, Business Insider previously reported.
However, some critics have suggested that Substack's financial model seems to make more sense for monetizing an existing audience rather than a growing one. Hunter Walk, a venture capitalist at Homebrew, recently explained in a Medium post why he thinks that only a handful of writers will be able to live full-time off of their Substacks.
"It's my belief that very few 'Substack writers' will make 100% of their income from their newsletter, and this won't be a failure of the platforms but instead related to the nature of creation itself," wrote Walk.
Making money on Substack is easier when you already have a large following.
As the media critic Thomas Baekdal recently pointed out, Substack's model is not as universally lucrative as many might have hoped. Substack's cofounder told Axios last week that the top 10 publishers on Substack made $7 million collectively, and there are 250,000 paying subscribers on the platform.
With a little napkin math, it becomes apparent that the top names on the platform earn the lion's share of its total revenue. "The fact that the Top 10 makes up 40% of their total subscriber base is not impressive," Baekdal said on Twitter.
Others who have monetized their readerships — known as premium writers — are left splitting the 150,000 paying subscribers among themselves, Baekdal said. This means they're making a fraction of the revenue that their big-league colleagues are enjoying.
The media reporter Josh Sternberg started his newsletter, Media Nut, in late April, after he was laid off from AdWeek. Since then, his newsletter has accumulated 3,300 subscribers, according to documents reviewed by Business Insider.
It takes years to build a sizable enough newsletter following to substantially monetize it, which is why he has kept Media Nut free, Sternberg said.
In a recent newsletter, though, Sternberg ran through the financial improbabilities of ever making a living off Substack.
If 1,000 subscribers pay $5 a month for a Substack newsletter, the writer makes $60,000 per year. "That's considered a success," Sternberg wrote.
"Of that $60,000, you have bills to pay, mouths to feed, clothes to wear, and that little thing called health insurance. After the IRS takes its 30% cut, you're left with $42,000 to pay your $1,000/month health insurance, your $2,500/month rent or mortgage, your $100/phone bill, etc."
Though the expected income-tax rate is closer to 25%, the numbers quickly become intimidating. "The fact is: Not everyone will become self-sufficient as a newsletter writer," Sternberg said.
Still, an aspiring Substacker may instead choose to play ostrich, focusing on outlier stories of amateur success rather than the scores of labor-intensive newsletters that fail to turn a profit.
The food and culture writer Alicia Kennedy launched her Substack newsletter, From the Desk of Alicia Kennedy, in March and has enjoyed dizzying reader growth. Her newsletter has accrued 10,000 total subscribers, at least 1,200 of whom are paying readers, according to documents reviewed by Business Insider.
Though Kennedy declined to share her exact revenue, her pricing tiers and number of subscribers would mean she is earning at least $3,030 to $6,060 a month from her newsletter before Substack's 10% cut.
Substack helps writers help themselves.
Substack declined to comment for this article, but a representative emphasized many of the points that the company has long stood by. It has never obscured the fact that turning a newsletter into a full-time position would take time, talent, and a bit of luck.
Substack offers comprehensive documentation designed to walk prospective writers through the process of monetization. It also works closely with its high-profile writers, using bespoke arrangements to lure in top talent, as was the case with Newton, the former Verge writer.
Newton said in an interview with OneZero's Sarah Jeong that he was receiving health insurance and a degree of legal protection from Substack, an incentive to join that Petersen echoed in her announcement.
In addition, Substack has also awarded several grants to rising authors on the platform. In late July, Substack announced its winners and honorable mentions, one of whom was Kennedy. These writers received, to different degrees, legal help, mentoring, access to a Getty Images library, and other perks designed to help them flourish.
This kind of platform-writer intimacy is the exception rather than the norm, but it demonstrates that Substack is invested in the success of its premier figures. For everyone else, the implication is clear: Show Substack that you're doing something special, and it might offer to help.
Kennedy credited part of her success to her understanding of this reality: She had realistic expectations for her efforts on the platform and had been pleasantly surprised with her organic success.
"I'm happy and grateful for what Substack has provided me so far, but I have no illusions that this will be the thing that keeps me afloat forever," Kennedy said. "If I get proven wrong, that'd be dope. But I'm not depending on that."
Here's how 4 Substackers with smaller followings found outsized success with their newsletters.
Kennedy's success proves that, while the odds are longer for smaller writers, talented newsletter creators can find success on the platform and turn that momentum into revenue.
According to Kennedy, she owes much of her publication's popularity to the fact that her writing occupies a relatively uncontested niche in the newsletter space: the intersection of food, agriculture, and cultural commentary.
"There is no other space in food media where someone does what I do," said Kennedy. "It's a unique angle in terms of being social-justice oriented, explicitly left-leaning in its political perspective, and concerned with colonialism and climate change."
Delia Cai, who runs the popular, short-form newsletter Deez Links, says that audience-borrowing is the single quickest way to expand your readership. Cai writes three newsletters a week, one of which is an interview. She then encourages her interviewee to share the newsletter with their audience, thereby introducing Deez Links to thousands of new readers.
Likewise, being featured on someone else's newsletter puts your product in front of new eyeballs. When the popular business publication Morning Brew featured Deez Links, Cai saw her readership explode overnight.
"When I was recommended by Morning Brew, I got something like 3,000 new followers in one day," Cai said. "Their readership is so loyal that when Morning Brew says jump, they jump."
Dan Shipper, who is one-half of the duo behind the Everything Substack bundle, employs a similar strategy, though with an important tweak. By bundling newsletters, i.e. offering multiple newsletters for one price, Everything cross-pollinates its audience and offers subscribers more value for their money.
"You get a built-in growth mechanism," said Shipper, whose newsletter bundle boasts more than 2,300 subscribers paying $20 a month, according to financial documents reviewed by Business Insider. "Every week you're introduced to new people, some of whom are going to subscribe."
Finally Packy McCormick, whose Not Boring newsletter explores business from a lighthearted, pop-culture angle, says that writing about a subject matter with a passionate audience almost guarantees a big readership. While converting a big readership to a big subscriber base relies on quality writing, it at least gets your publication in front of new readers.
"When I write about a company, like Slack or Snap Inc., employees at those companies will share the newsletter with each other, and some will subscribe," said McCormick. "The writing still has to be good, of course, but at least you'll have new people reading it every week."
Source: Read Full Article