Newsletters
[ ]Old things are making a fashionable comeback. Drive-in restaurants, vinyl records, old hats (?!), jigsaw puzzles, baking/cooking and email. Yep, email newsletters are the new “in” thing and are you even successful if you don’t have over 1k Medium followers or 1k paying subscribers on Substack? (Clearly, it was rhetorical and this post is desperate attempt to get there). Why would email and email marketing ever make a comeback, you ask? Especially in a world where you get tons of promotional and social emails, or where Google even tries showing you ads in your inbox, a heap of subscription emails from the past that you’re now too lazy to get rid of, confirmation emails from all offline + online commerce that you ever did etc etc.? Good question. I am not too sure either. I think there are a couple of reasons for this comeback trend that we have been seeing:
1. Tired of social – We’re all a little exhausted with social media and their tireless algorithms churning out a predictable mix of content and ads like all the Masterchef series. Our minds have already accepted social as just a medium to ‘keep in touch’ with the world outside
2. Writers and publishers needed a new medium – With the internet making distribution effectively free and the internet changing the advertising industry forever with its hyper-personalization, traditional media companies have had to reinvent their business models online, effectively be at the whims of Facebook and Google’s algorithm changes and essentially be treated as a commodity (Writing is creative and you couldn’t really imagine it being commoditized). They have been looking to get in touch with their readers without having to pay their fees to Facebook and Google
3. Our search for value – Good content is hard to find. Good content without ads is harder. In a world with abundant information and redundancy in ideas at an all-time high, we’re ready to pay for access to a piece of the best minds through their words delivered personally to us
4. There is something comforting about reading ONE thing at a time instead of 100 open Chrome tabs (just me?) or aggregator reading apps (Pocket, Feedly etc)
Writing beautiful newsletters (do check out reallygoodemails.com in any case), managing email list and distribution and monetizing is definitely not an easy job. If you’re a team of publishers (like the NYT) and can afford a designer and a frontend engineer, all’s well but if you’re a lone rider who believes in the craft of writing and has an audience, you need these services. This segment has become immensely popular in the last few years – Medium, Substack, Revue, Buttondown, Ghost.org are all trying to service this need in various shapes and forms. I’m particularly fascinated by the growing interest and appreciation for Substack (backed by Andreessen Horowitz, Y Combinator and the likes) vs the scale of Medium. My goal is to try and dissect Substack in terms of its supply (writers/publishers) and demand (users/paying subscribers) and understand what its future could look like.
Substack - Built in 2017, it is an email newsletter platform that helps you make money from your craft while taking care of all the other heavy lifting like managing a CMS, distributing the newsletter, payments and a website that can host all your content. The newsletters look great and it has been appreciated for its sleek UI and a hassle free payment experience (through Stripe).
Substack has focused on quality supply from the start – it has managed to recruit or attract great writers on its platform (along with all their audiences). The early traction on the platform has been really good because of the fact that most of these writers have a large loyal audience already. This loyalty has paid off, especially for the writers, who charge anywhere between $5 - $15 per month for their newsletters. Substack claims to have 50,000 paying subscribers and its top writers make north of $150k a year out of this job. That’s definitely a good, sustainable income and for some, a secondary source of income along with their day jobs.
Substack relies on the writer’s audience list and does not specifically help in increased readership (they do have a very raw version of discoverability now – which they might work on later). This could be a conscious choice for Substack – acquiring customers is hard, acquiring loyal customers harder and paying rent to Google, Facebook and the likes is expensive. The choice of letting supply build and service its demand thus makes a lot of sense. The economics of writing on Substack might attract other great writers, each with their loyal base of customers. With the proverbial ‘network effect’ on the platform, you’d expect it to scale and grow. The issue though, in my head, is that I am ready to pay $8/month for really good writing – I’d almost call them experts (Unless I just want to attract my favourite writer’s attention by regularly posting smart-sounding comments? NO). I’m paying this to read consistently good writing AND expert voices on a niche that I am passionate about. This is already a small set of regularly reading customers. I’ve subscribed to two newsletters currently, effectively paying $16/month or $160/annual. If I want to read 5 writers a month, that’s already $40/month. An average customer (and our average customer definition is at this point, rich) will probably limit their consumption to 1-2 subscriptions a month (maybe a couple more free subscriptions) and might switch between various writers for fresh writing.
Another issue is that of consistent good writing - writers who are fully invested in growing and maintaining a good subscriber base, enough to replace a traditional job, may be able to churn out enough content in a month. But good writing is hard and churning out content too regularly is not that easy (especially if you have a day job). The two newsletters I’ve subscribed to send me 2 posts a month each. That’s definitely not going to be enough to keep me ‘hooked’ to their subscription every month. One possible hypothesis is that maybe Substack is not too focused on scaling or growing rapidly - they genuinely want to attract a small set of good writers and their equally loyal base of paying customers. Substack charges writers 10% of their revenue. For someone starting out, this is definitely not a lot of money but for someone making north of $150k, $1500 + payment processing fees do become significant.
I think the simplest solution to discovery and customer loyalty could lie in bundling. Writers could offer a bundle themselves or Substack could design a bundling feature that allows readers to select upto X publications for a month for a certain fee. This will open up monetization opportunities to all writers, ensure that they don’t have to churn out content every other day and also reduce overall churn. Substack could definitely dig into at their data too (what is data if not AI/ML) and figure out bundles, price points etc. Sure, bundling will distribute writer earnings but I’d guess the network effects would jump in here and take care of reduced earnings.
You can now ask me - Isn’t that Medium’s partner program then? Yes and no. Medium has really struggled with monetization and is now seen to be settling with their $5/mo subscription and a 3 article paywall. Medium’s focus is on scale and not so much as niche. It invites all kinds of writers on its platform and gives them an opportunity to make some money and build an audience. The range of quality in writing is quite high and their partner program tries to compensate them based on this perceived quality. Medium also relies on Google to a certain extent (organic traffic does contribute to discoverabilty) and I don’t know how to think about that. I’d say Substack and Medium are servicing different customers but solving similar a problem.
Another opportunity that Substack could potentially introduce is a pay-per-read model. You could get access to 10 articles in a month and pay a certain fee for it. However this feature would focus a lot more on discoverabilty and potentially lead to readership churn for a lot of writers. Writers would definitely not be pleased if they lose access to their hard-earned customer base.
I’m excited about the future of Susbtack, the future of writing and the cost of opinions in the future. Here’s two cool newsletters you can subscribe to: