This is similar to the "Amazon problem," where manufacturers can earn a higher margin by selling direct.
>The question about any feature they add is “what does it do about that situation?”
The answer is the same in the cases of Amazon & Substack: generating sales isn't free, and in all likelihood the platform can do it cheaper than you can. Take the $200k writer who pays $20k to Substack annually. Either Substack can generate 166 subscriptions ($10/mo) annually so it's worth the money, or you move. (That's almost correct: if you are a writer, it may be worth it to you to let Substack continue to own this piece so that you don't have to run a business. There's a lot of value in being able to focus on thinking and writing and not SEO and ad placement.)
I've seen people trying to compare Amazon to Substack, but it doesn't add up for me.
One Substack "generates" the sale, transferring the relationship to your own site feels cheap.
It's like if Amazon stopped selling New Yorker subscriptions. If I actually gave a crap about the NYer subscription I was paying for, I'd find some other way to pay for it. Amazon [Substack] is a commodity in this vertical.
Of course, the people who didn't care about your subscription because they never read it would disappear. But, they were going to churn eventually. I imagine if you amortize over a year, this marginal loss is less than the diff between Substack's take rate and operating your own blog + newsletter.
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Acting rationally from an economic point of view, the only reason you'd want to stick around on Substack is that you think this equation holds true:
(Future subscriber base on Substack * (monthly rate - Substack fee)) > (Future subscriber base as an independent * (monthly rate - cc transaction fees)).
For "young" writers who don't yet have an audience, Substack helps a lot. But if you have a well-developed audience, IDK, I imagine Substack must view them as big flight risks (hence the advance payments).
Some substantial things Substack can do to make this equation more favorable:
- Give you free (or low-fee) marketing on substack properties (note this is a zero sum game over ad inventory, choosing to give you ad space means choosing to not give it to others. this is a hard game to solve, but they can probably do it).
- Reduce their take rate for mature audiences.
IMO, their current model doesn't make a lot of sense if you're somebody with a large audience. Especially now that we're out of ZIRP and they can't afford to sweeten the deal as much anymore.
So far the superstars of Substack (say Matt Taibbi) were superstars before Substack and promote Substack as opposed to the other way around.
Substack competes with traditional journalism, which delivers more journalism per dollar than the typical Substack but is based around the strength of the brand of The Guardian or The Economist as opposed to that of the individual journalist. From the viewpoint of the journalist the newspaper is an aggregator that is doing their marketing work for them.
Substack also competes with Medium which plausibly claims to be doing promotional work for its authors, but despite claiming to be a place which is a little bit better than the rest of the web it's actually a place that is a little worse than the rest of the web and isn't making significant amounts of money for anyone.
>The question about any feature they add is “what does it do about that situation?”
The answer is the same in the cases of Amazon & Substack: generating sales isn't free, and in all likelihood the platform can do it cheaper than you can. Take the $200k writer who pays $20k to Substack annually. Either Substack can generate 166 subscriptions ($10/mo) annually so it's worth the money, or you move. (That's almost correct: if you are a writer, it may be worth it to you to let Substack continue to own this piece so that you don't have to run a business. There's a lot of value in being able to focus on thinking and writing and not SEO and ad placement.)