(Also posted to Substack, but don’t read it there.)
Substack, I come to bury thee.
As a lover of written word, this is hard. But as a member of society, I feel the destruction of Substack is an absolute necessity. If society is to survive, Substack must die. I realize it’s not enough to merely destroy Substack, but I need to start somewhere. Substack today, Facebook tomorrow. Amazon the day after, then Google.
O Substack!
Despite your claims of being a home for writers, you’re a home for the exploited, and you’re doing the exploiting. If you really cared about writing, you’d find another model.
Let’s take your most basic claim, that writers can make money writing on Substack. While some can, especially celebrity writers you’re paying under the table, most can’t. At least not as even a side hustle (sexifying the need for a second job), let alone a living.
Going Clear
On your “going paid” page, you have a handy calculator. “Estimate what you could make on Substack.” If someone has 800 subscribers paying $5 a month, the writer could earn $3,172.00 a month. Which is $38,064.00 a year—the gross is $48,000 per year, minus charges. If all 800 subscribers paid $50/year rather than $5/month, the writer would be down a good bit from there. First, down to $40,000 for the yearly discount. Then, down to $36,000 because Substack takes 10%, and then another $2,200 because Stripe takes 2.9% plus $0.30 per transaction, so down to $33,800.
Basically, for every $5 monthly payment, Substack takes $0.50, and Stripe takes another $0.34855. the writer is down to $4.15145. They’re worse off with $50 yearly subscriptions, as they’re losing $10 in revenue over 12 months, but at least the money is certain.
Wages of Poverty
Poverty level for a family of four is around $26,500 in most of the US. To stay ahead of that, a writer would probably need 600 subscribers paying $5 a month.
The national median income for a family of four is $79,900. To get there a writer would probably need to have close to 2,000 paying subscribers a month, as according to Substack, 2,000 $5 monthly subscribers gets you $7,929 a month or $95,148 per year.
Not terribly helpful.
Notice that I use “probably.” Substack’s calculator is not all that handy. You only want prospective writers to be able to ballpark the numbers. That’s why when you try to figure out subscribers and subscription fee, you only have pull-down menus. The subscriber numbers are 50, 100, 200, 400, 800, 2,000, 5,000, 10,000, and 50,000. And monthly subscription fees they cite are $5, $7, $10, $15, $30, $75. $75!
O Substack! If you’re to grow your base of unpaid workers, telling them how easy it is to get rich is probably a savvy strategy. A sucker is born every minute, and lots of people spend lots of time feeling pretty damn smart on social media already.
If we assume every paying subscriber is paying monthly, then we can make our own calculator. Take the established numbers for poverty and median incomes, and then divide them by $4.15145 and come up with the number of total transactions. And then divide that number by the months in the year, 12. Which means, the numbers are more likely a writer needs 532 paying subscribers to just barely escape a poverty-level income and 1604 paying subscribers to be at the national median household income.
But wait, there’s more (and less)
But it’s much harder than that. Substack offers another ballpark conversion number for potential writers. “If you’re able to convert 5-10% of your email list to paid subscribers, you’re well on your way,” you report. First, it’s unclear where they derive this ballpark estimate from. Is it from past performance of all the Substack newsletters, or is it wishful thinking? Still, let’s just take the seeming worst-case scenario. If 532 is 5% of a newsletter’s subscribers, then the newsletter has 10,640 total subscribers. If 1604 is 5% of your subscribers, you’ve got 32,080 subscribers.
Can someone in a year of writing on Substack, net 10,640 subscribers? (so you can end up with 532 paying subscribers and rise to the top of poverty wages)
That would be just over 29 subscribers signing up per day. And no one dropping off. Making it even harder is that you, o Substack, recommends writers give away their writing for the first several months until they build up a subscriber base, which according to you, o Substack, they should do by leaning on their friends, contacts, basically everyone they know. Kind of like selling Girl Scout Cookies by monthly subscription, only without thin mints as an enticement. And writing consistently, at least once weekly. But probably much more. Need that chum, need to keep people coming back.
Here’s a gem from your recommendations:
“Think about your free content as the writing that draws new people into your orbit. While it seems counterintuitive, your free content should be your best work, effectively serving as an advertisement for your paid work.”
Substack, indeed.
Let’s assume a writer can somehow acquire 29 subscribers a day, which seems like an incredibly high number without a paid marketing and/or publicity campaign; it’s hard to find things like a new blog on the web. That’s 870 in a month. After three months, she has 2610 subscribers. She starts charging then. Working with the five percent are willing to pay guess means she’ll have 130.5 paid subscribers then. Her fourth month, she can earn $541.76. Assuming she has no drop offs, keeps adding subscribers at a constant rate, and the 5% paid subscriber rate remains consistent, she adds 43.5 paid subscribers per month and thus she adds $180.59 to her total income every month.
It’s not a living, not yet.
So, all told, after a year of writing one post a week and adding 29 subscribers per day (I don’t see people signing up to the tune of 29 a day on one post a week, do you?) and starting to monetize her newsletter four months in, this writer will have earned $11,468.48, which is below the poverty rate for a single person. Breaking that down, it means the writer will have made $220.55 per post, which might not seem terrible, but the time spent researching, writing, editing each piece would almost certainly be nothing compared to the marketing and publicity efforts needed to gain all the subscribers–getting word out and signing people up would be where the long, grueling, uncertain, and creative work happens.
It is only in the thirteenth month of writing that this writer, assuming she continues to gain 29 subscribers per day, makes $2,166.47 in a month, finally above the federal poverty level for a family of four. But unless she keeps increasing her subscribers, she’ll have trouble getting out of poverty to make up for the shortfall of spending a year writing for almost nothing.
You, Substack, are getting eyeballs for free and writers sweating for nothing more than the cost of cloud storage space. And because those writers aren’t paid, they don’t have the luxury that Substack’s pro writers get, which is up front money. They don’t have the time to do the same crafting, the same researching, the same editing work, or even hire assistants (as Charlie Warzel did with the money you’re giving him). Effectively, these non-celebrity writers are advertising for Substack and working for those Substack Pro writers. Nifty trick you did there.
Doesn’t seem like you care about writing, either.
Substack allegedly has 500,000 paid subscribers, as of February 2021. At $5/per subscription per month, that’s $30,000,000 per year, of which Substack keeps 10% or three million. And you claim the top ten authors make, as a group, over $15,000,000 a year. Half of your revenue comes from ten newsletters; going to need either more blockbusters or figure out a way for the small fries to start earning considerable cheddar.
The Substack revenue is based on 12,000,000 visitors per month. Or 144 million visitors per year resulting in 500,000 paying subscribers. That could mean Substack’s yield of visitors to paying subscribers is somewhere between 0.35% and 4.17% of your total visitors, neither of which as good as what you’re dangling to writers.
Can we take a look at your business plan?
The long-term viability of Substack doesn’t look so rosy to me, either. Your possibly three million dollars of revenue in 2020 is dwarfed by the $82.4 million you’ve raised thusfar. You’re only employing about 20 people, so three million can probably cover salaries and space and tech, but three million dollars of revenue is not a number that keeps Silicon Valley investors happy; these are people who don’t get out of bed unless there’s real money involved. What keeps them happy is the valuation of the company is at $650 million. Valuation is certainly a dark art that’s getting darker and more baroque these days. To justify that valuation, you’re going to have to make more revenue or keep pulling rabbits out of a hat or both. Maybe take a lesson from Uber and lose more money faster.
But this isn’t even the half of it.
When I find more “free” time, I’ll continue this rant.
Stay tuned for PART TWO.