Will Substack Bypass Newsletters? A company weighing its future.

There are things that newsletter writer Kirsten Hahn has missed about Substack. It just isn’t enough to overcome the negative aspects.

She didn’t like the way the platform portrayed itself as a haven for freelance writers with fewer resources while offering a six-figure lead to many prominent white men. The content moderation policy, which allows for the use of transphobic and anti-vaccine language, was not compatible with it. She also didn’t like earning $20,000 in subscription revenue, then waiving $2,600 in fees to Substack and its payment processor.

So last year, Ms. Han moved her newsletter, We the Citizens, to a rival service. She now pays $780 a year to post through Ghost, but said she still earns about the same amount in subscriptions.

“It wasn’t very difficult,” she said. “I looked at some of the options people were talking about.”

Not long ago, Substack was stalking major media executives, their writers hunting stars, attracting their readers, intimidating, and threatening their very survival. Filled with venture money, the startup has been said to be the “media future”.

But now, Substack finds itself no longer a wonderland but a company facing a host of challenges. Depending on who you talk to, these challenges are either standard startup growth pains or threats to the company’s future.

Tech giants, news outlets, and other companies have released competing newsletter platforms in the past year. Consumers who carried on to newsletters during the pandemic began to reduce their number. Many famous writers, such as associate English professor Grace Lavery and climate journalists, have left Marie Anais Heglar and Amy WesterfeltShe often complains about the company’s moderation policy or the pressures of constantly delivering.

“Substack is at a pivotal point where he needs to think about what it will be like when he gets older,” said Nikki Usher, associate professor of journalism at the University of Illinois Urbana-Champaign.

The good news for the company, which is five years old this summer, is that it is still growing. Paid subscriptions to hundreds of thousands of newsletters rose to more than a million late last year from 50,000 in mid-2019. (The company won’t reveal how many free subscribers it has.) The hiring wave hopes to attract more than a dozen engineers, product managers and other professionals. Executives hope to eventually make the company — which has raised more than $82 million and is said to be worth $650 million — public.

But to maintain that growth, Substack executives say, the company must deliver more than just newsletters.

In an interview at Substack’s downtown San Francisco office, its founders spoke in sweeping statements about “Substack’s grand theory” and “Master Plan.” Chris Best, CEO, described the desire to “change the way we experience culture online” and bring “art into the world.”

“Substack at its most ambitious is sort of this online alternate universe,” he said.

In practical terms, this means that Substack will not just be a delivery channel for written newsletters but more of a multimedia community. Executives want users to create “personal media empires” using text, video and audio, and communicate with subscribers by expanding comments It can contain images and GIFs for readers. This week, Substack will announce new tools for writers to recommend for other newsletters.

Jairaj Sethi, co-founder and chief technology officer, described the vision of gathering subscribers around the book like fans at a concert.

“If you give them a place to gather and interact with each other, there are some wonderful kinds of bonding,” he said.

In March, Substack introduced an app that consolidates subscriptions in one place rather than breaking them up separately via email. This month, the company announced an expansion of podcasting.

“From the beginning, we intended the company to do more than just provide subscription publishing tools,” Hamish McKenzie, co-founder and chief operating officer, wrote of the app.

But as Substack evolves beyond newsletters, it risks appearing like another social network or news publisher—which could make it less attractive to writers.

Ben Thompson, whose tech-focused strate .

“This is a way for Substack to undo its popularity to build an alternative revenue model that entails paying readers for Substack first, and paying publishers second, rather than the other way around,” wrote Mr. Thompson.

Publishing on Substack is free, but writers who charge for subscriptions pay 10 percent of their revenue to Substack and 3 percent to its payment processor, Stripe. The company is also offering major developments to a small group of writers, whose identities it declines to reveal.

Substack has one major difference from most other media companies: it refuses to chase advertising dollars. “On My Body“The opposite of what Substack wants it to be,” Mr. McKenzie once wrote. Mr. Best said.

“If we, through greed or error, get into this game, we will effectively compete against TikToks, Twitter and Facebooks in the world, which is not the competition we want to be in,” Mr. Best added.

This means that Substack continues to rely on subscription revenue. Subscribers pay over $20 million annually to read Substack’s Top 10 Books. The most successful is history professor Heather Cox Richardson, who has more than 1 million subscribers. Other notable writers include jockey novelist Salman Rushdie, award-winning punk poet Patty Smith and Eisner Award-winning comic book writer James Tynion IV.

Emily Oster, a writer and economics professor at Brown University who has given divisive advice on dealing with the pandemic with children, joined Substack in 2020 after being recruited by Mr. McKenzie. Its ParentData newsletter has over 100,000 subscribers, including over 1,000 paid readers.

“Substack has definitely become a bigger part of the media landscape than I could have ever imagined,” she said.

But Dr. Auster’s primary sources of income remain her teaching and books; Much of her newsletter revenue goes to editorial and support services. Most of the users struggled to support themselves by writing exclusively on the platform and instead using their earnings to supplement their other paychecks.

Elizabeth Spires, a digital strategist and Democratic journalist, said she ditched Substack last year because she didn’t have enough time or pay for readers to justify her long-running weekly articles.

“Also, I started getting more paid assignments elsewhere, and it just didn’t make sense to keep putting things on Substack,” she said.

But Substack’s biggest struggle has been over moderation in content.

Mr. McKenzie, a former journalist, describes Substack as an antidote to the attention economy, “a nicer place” where “writers are rewarded for different things, not throwing tomatoes at their opponents.”

Critics say the platform is recruiting (and thus endorsing) culture war instigators and is a hotbed of hate speech and disinformation. In the past year, many writers abandoned Substack due to its inaction on transphobic content. This year, the Center for Combating Digital Hate said anti-vaccine newsletters on Substack generate at least $2.5 million in annual revenue. Technology writer Charlie Warzel, who quit his job at The New York Times to write a Substack newsletter, described the platform as a place of “internet inner meat.”

Substack has resisted pressure to be more selective about what it allows on its platform. Twitter employees who were concerned that its content modification policies by Elon Musk, the world’s richest man and the platform’s largest contributor, were told, Don’t bother applying for jobs in Substack.

“We don’t aspire to be the arbiter to say, ‘Eat your vegetables,'” said Mr. Best. ‘If we agreed with or liked everything about Substack, it would be less than a healthy intellectual climate would seem.’

Substack makes it easy for writers to break up, and Dissenters have a rapidly growing group of competitors waiting to welcome them.

Last year, newsletter offerings debuted from Twitter, LinkedIn, Facebook, Axios, Forbes and a former Condé Nast editor. The Times made several newsletters available only to subscribers last year. Warzel transferred his brain galaxy from Substack to The Atlantic as part of a newsletter push in November.

Media platform Ghost, billed as the “independent alternative to Substack,” has a concierge service to help Substack users transition their work. Medium has scaled back its editorial releases to follow a more analogous model of “supporting independent voices”. Zestworld, a new subscription-based animation platform, has been called “Substack without transphobia.”

Mr. Best said he would welcome the competition.

“The only thing worse than being copied is not being copied,” he said.

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