Nieman Foundation at Harvard
Substack offers its latest paid-subscriber numbers as evidence that there’s a market out there for valuable information in email newsletter form — a market that can support many more indie news operations than just everyone’s go-to example, Ben Thompson’s Stratechery.
“Call it, say, 10ish medium-sized publications making up the bulk of that. It’s not all one publication, or even just two or three,” Best said. “We wouldn’t be celebrating if there was a false distribution. We’re happy with the spread,” McKenzie said.
Substack, founded last year as a multi-purpose service for individuals to spin up subscription news operations, is now made up of Best, McKenzie, their third cofounder Jairaj Sethi (formerly of Kik, where Best was CTO and cofounder), and Nathan Bashaw, briefly head of product at Gimlet and one of the original builders of Product Hunt.
“Hundreds” of people are using Substack to send email newsletters on the free tier, according to McKenzie, and several dozens of those are charging their readers. Roughly 40 or so indie publishers could be counted as “making meaningful money.” Substack, still in beta and free to use, currently takes a 10 percent cut of a newsletter’s revenue only at the paid subscriptions tier. (The company was part of the winter 2018 YCombinator class and announced it raised $2 million in seed funding from a mix of investors back in May.) At the top end, open rates for free newsletters on its platform cluster around 60 percent, with “nothing really below 20 percent on the lowest end.” (The cofounders wouldn’t share with me any absolute subscriber numbers for the newsletters it hosts, deferring to individual publishers for what they might want to share and when.)
Its points of pride have been publications like Bill Bishop’s Sinocism China newsletter (the first official publication on Substack; Bishop is also an early investor), which charges $168 a year; Daniel Ortberg’s humor newsletter The Shatner Chatner, which is $50 a year or $5 month-to-month for exclusive issues; and Helena Fitzgerald’s Griefbacon, essays around love and relationships, also for $50 a year or $5 each month. And what would a newsletter platform be without a cryptocurrency offering? Substack also hosts Anthony Pompliano‘s Off the Chain, $100 a year or $10 month-to-month. It also works with the magazine Outside on a newsletter focused on women’s outdoor gear, called Dawn Patrol, for $60 a year.
Recently, Substack has been mostly focused on making platform improvements — “we’ve done a lot of work on the basics,” Best said — adding a discussion feature for paying subscribers of its newsletters. It’s also beefing up the analytics end to let authors see critical metrics, such as how visitors to their sites are converting to newsletter subscribers, how frequently a subscriber is opening an email, which links subscribers are clicking on, growth charts for all the individuals on an email list, and paying subscriber growth over time.
“We’re going to get to a level of sophistication where we’re inventing new statistics, but right now we’re focusing on the basics: what sort of content works, what sort of frequency works, and so forth,” McKenzie said. So what does their data say about what send frequency and what formats of content encourage more subscribers? It varies from publication to publication (sigh).
Substack doesn’t push individual users of its platform to turn on subscriptions — some authors do ask for Substack’s advice on that front — after they reach certain thresholds of subscribers or open rates, but high open rates and higher proportions of subscribers who open regularly are obvious data points of encouragement in that direction.
“We have people publishing everywhere from five times a week down to once every two to three weeks, all being successful. The most important thing is knowing who your audience is and what they need and what they want; it’s them feeling like they have a connection with the author that gets people to pay,” Best said. “When you’re orienting towards paying subscribers, you do start to see some metrics that don’t necessarily matter — just getting a huge number of clicks, in an advertising-driven world that is an end unto itself. But it doesn’t matter from a subscription perspective. On the other hand, you still have to get people to show up and see what you’re doing; you also have to show them the value of what you’re sending them.”
Best said he’s also working on a discovery element of Substack for down the line — “getting to a scale where it’s us maybe also helping people who are subscribed to one Substack publication looking to discover other great stuff.” But, he emphasized, the fundamental value of Substack is nurturing that “relationship readers have with the writer” and “helping individual publications become their own self-sustaining, growing units.”
