6 ms·

Surprised something like a simple platform for paid email newsletters would be something that catches the eye of VCs hoping to find the next unicorn. The best c

Surprised something like a simple platform for paid email newsletters would be something that catches the eye of VCs hoping to find the next unicorn. The best case scenario feels like Medium, which to my knowledge has changed course dozens of times and doesn't seem to be going particularly well. The current subscriber figure I've seen is around 50k paid subscribers across all newsletters. I think even in a best case scenario of having 1m subscribers pay $10/month, that is 1m x $10/mo x 12mo x 10% = $12m in revenue/year (at 20x the current subscriber rate). Unclear how that translates to a VC-sized unicorn biz.

tonystubblebine 7y ago
FWIW, Medium launched their subscriber program two years ago and hasn't changed course since. I think Medium's move is a winner and as a result, I started three profitable publications there. But... I'm worried about getting squeezed down the road. Right now Medium passes all their subscriber revenue on to the authors & publishers. But eventually they'll have to take a cut and the size of that cut will be balanced out by what other opportunities authors and publishers have. So I think it's great that the ecosystem for paid writing is growing (Substack & Patreon). And I think paid is a great model now that we've seen what the mature version of free looks like (IMO, very bad). As an occasional writer, it's refreshing to just write the best piece I know how without trying to hack in virality and upsells.
- dmix 7y ago
  Does medium provide you with free traffic? Would it be worth it for them to take a cut?
  - tonystubblebine 7y ago
    They do a lot of work, not just traffic, so yeah, there's a lot of room for them to take a cut and for it still to be a good business. Just at the surface level, they're probably bringing about 50% of the traffic to a new article. Then, Medium is also a network of authors. And so those authors tend to submit articles to the most visible publications and Medium handles paying those authors. They've really created a nice situation where people like me who are interested in the content side of publishing can run a publishing business without having to do the business side of publishing. It might not last forever (nothing does), but they're on the upswing. We were their first external partnership and then did two publications a few months ago. I think they're about to announce deals with about 20 publications from the community. That's good since there's been a lot of noise about pubs leaving. The ones that are staying are pretty happy.
    - dmix 7y ago
      This is interesting I didn't know this was how their business model works. Is this something you could make a living off being an "editor" of popular publications?
      - tonystubblebine 7y ago
        I think so. I'm most excited about more subject matter experts turning into publishers. The last two pubs I started (programming and marketing) are run by half time editors so that they still have time to be practicioners. The first one I started (Better Humans) has much more ambitious (and expensive) goals for quality but I think it's a bit early for where Medium's economic incentives are.
andrew_null 7y ago
hey! This is andrew from a16z -- substack is still relatively new (~2 years) and the product is solving a real problem for writers. The numbers are already strong, but think about where it might be over the next 5-10 years. I think your calculation focuses too much on where it is now versus where it might go in the future
- simonebrunozzi 7y ago
  I agree, Andrew. I think that the current model is only the tip of the iceberg for what Substack can achieve once it reaches critical mass.
- filmgirlcw 7y ago
  I mentioned in my other comment (https://news.ycombinator.com/item?id=20453558 https://news.ycombinator.com/item?id=20453558) that I think the potential for writers here — of being a Blogger/WordPrss.com for newsletters, is the opportunity. It’s about being a platform.
- neotokio 7y ago
  Profits scaling were already discussed in a comment above, ofc, this assumes linear growth where substack is charging (as it is now) only on subscription without going in for revenue from promotional activities (internal promotion of content), advertisements (external sponsors), reader/creator data (google model) or digital/print publishing (leverage of user base substack reach out) in form of a (e)book. Yes, this can make profit multiplier really big (12M/yr subscription + 50x from else) But what about integrity of service over time then? All of this means losing initial flavor of 'doing-things-differently', a lot of other companies can provide boilerplate '-stack' for publishing newsletter (ie, recent yc news -https://github.com/knadh/listmonk https://github.com/knadh/listmonk - self hosted). So, in the end, the only edge of content hosting platform is how well it delivers it's content (UX, rec systems, internal ads), the bigger substack gets, the less of an edge for its creator base it will have - same as medium.com. I risk a statement that substack is happening only because medium.com is ending. Yes, as an author I would be interested in hassle free publishing, but after that, i am interested only in how service is helping me grow an audience, nothing else.
tonystubblebine 7y ago
Also, I want to +1 doing the math on their business. I see so much surprise/outrage when companies pivot. But all of us here are savvy enough to see this pivot coming from miles away. If they are venture backed, then you're right, $12M ARR is not high enough. So that implies they will make a significant pivot down the road. So don't get too attached to this version of Substack--it's temporary. And IMO, that's totally fine. It just means you need to be ready to pivot along with them (and/or have a plan B business).
npollock 7y ago
If they can help podcasters monetize more effectively they'll unlock a big market
filmgirlcw 7y ago
For a number of years, a lot of people have said that “newsletters are the new blogs” — and to a certain extent that’s true. During TinyLetter’s heyday, it was often easier for someone to create a newsletter and send it to people that wanted to read it than it is to setup a website and deal with what the entails (which sadly, in 2019 is more complicated than it was in 2006). But setting up a newsletter isn’t without its own costs and considerations. What platform do you use, how much does it cost to send emails (something that’s hard to ascertain if you don’t know how many subscribers you have), checking formatting for various mail clients and services, avoiding being marked as a spammer, etc. And that’s before you get into the aspect of creating the newsletter — which again, TinyLetter aside, is often difficult because most newsletter services are geared towards marketing/customer acquisition, rather than something akin to a blog. And if you want to charge for your newsletter, that’s another challenge. You have to figure out a payment processor, a membership signup system, deal with account issues, etc. For the Ben Thompsons’s of the world who were early/pioneered the game of paid subscription newsletters, the investment costs of infrastructure and technology is probably worth it. But for many others, it’s not. So Substack has the potential to be that defacto place/platform. I see it as trying to be the Blogger or WordPress.com for content-based newsletters, subscription or not. I’ve almost started a newsletter about 18 times and I even signed up with Substack a few years ago (but haven’t set it up yet because I had a few concerns about how to migrate away from Substack), because of all the options — it’s the one that seems to have the least-amount of friction. Now, in a perfect world, there would be an open-source way to do all of this with the option for both hosted and self-hosted options. Owen Williams’ newsletter/website Char.gd [1] has a great setup (he showed it to me at XOXO last year) and I know Ernie Smith from Tedium [2] has a really cool custom setup as well. I’ve been wanting to convince either or both of them to go in on a platform for this concept with me, because although I think Substack is definitely the easier way to do things for lots of users — there’s also a market (albeit smaller) for people who might want to have more control over the platform/ecosystem, but don’t want to have to cobble the whole thing together. [1]: https://char.gd/ https://char.gd/ [2]: https://tedium.co/ https://tedium.co/
FailMore 7y ago
VC here: why? the market is fucking G I N U N G O (potentially). Email is a ubiquitous technology. Any platform that could potentially lead the monetisation of it is worth serious consideration. Substack is probably the company with the best traction today. Given that, I think there will be a land grab now with lots of copycats charging the same or less - limited moat. Doesn't mean the company can't grow to be a monster - see Shopify.
- jonny_eh 7y ago
  > G I N U N G O Is that an acronym?
  - jqgatsby 7y ago
    I'm guessing it is a portmanteau of 'ginormous' (itself a portmanteau that has legitimately replaced 'enormous' for my kids' generation, much to my chagrin) and 'humongous'? Maybe with some relation to 'mundo' as well.
  - FailMore 7y ago
    No, just me enjoying making up words.
- lanrh1836 7y ago
  Right, there’s no moat. And per other comments the terms feel very anti-creator e.g. you grant substack an indefinite license to any work you’ve ever made and shared publicly even if you delete your account. You also don’t have access to any of the email addresses of your subscribers so you can’t easily move to another platform. Those policies feel like a bad PR battle waiting to happen (see Taylor Swift).

tonystubblebine 7y ago

FWIW, Medium launched their subscriber program two years ago and hasn't changed course since. I think Medium's move is a winner and as a result, I started three profitable publications there. But... I'm worried about getting squeezed down the road. Right now Medium passes all their subscriber revenue on to the authors & publishers. But eventually they'll have to take a cut and the size of that cut will be balanced out by what other opportunities authors and publishers have. So I think it's great that the ecosystem for paid writing is growing (Substack & Patreon). And I think paid is a great model now that we've seen what the mature version of free looks like (IMO, very bad). As an occasional writer, it's refreshing to just write the best piece I know how without trying to hack in virality and upsells.

dmix 7y ago
Does medium provide you with free traffic? Would it be worth it for them to take a cut?
- tonystubblebine 7y ago
  They do a lot of work, not just traffic, so yeah, there's a lot of room for them to take a cut and for it still to be a good business. Just at the surface level, they're probably bringing about 50% of the traffic to a new article. Then, Medium is also a network of authors. And so those authors tend to submit articles to the most visible publications and Medium handles paying those authors. They've really created a nice situation where people like me who are interested in the content side of publishing can run a publishing business without having to do the business side of publishing. It might not last forever (nothing does), but they're on the upswing. We were their first external partnership and then did two publications a few months ago. I think they're about to announce deals with about 20 publications from the community. That's good since there's been a lot of noise about pubs leaving. The ones that are staying are pretty happy.
  - dmix 7y ago
    This is interesting I didn't know this was how their business model works. Is this something you could make a living off being an "editor" of popular publications?
    - tonystubblebine 7y ago
      I think so. I'm most excited about more subject matter experts turning into publishers. The last two pubs I started (programming and marketing) are run by half time editors so that they still have time to be practicioners. The first one I started (Better Humans) has much more ambitious (and expensive) goals for quality but I think it's a bit early for where Medium's economic incentives are.

andrew_null 7y ago

hey! This is andrew from a16z -- substack is still relatively new (~2 years) and the product is solving a real problem for writers. The numbers are already strong, but think about where it might be over the next 5-10 years. I think your calculation focuses too much on where it is now versus where it might go in the future

simonebrunozzi 7y ago
I agree, Andrew. I think that the current model is only the tip of the iceberg for what Substack can achieve once it reaches critical mass.
filmgirlcw 7y ago
I mentioned in my other comment (https://news.ycombinator.com/item?id=20453558 https://news.ycombinator.com/item?id=20453558) that I think the potential for writers here — of being a Blogger/WordPrss.com for newsletters, is the opportunity. It’s about being a platform.
neotokio 7y ago
Profits scaling were already discussed in a comment above, ofc, this assumes linear growth where substack is charging (as it is now) only on subscription without going in for revenue from promotional activities (internal promotion of content), advertisements (external sponsors), reader/creator data (google model) or digital/print publishing (leverage of user base substack reach out) in form of a (e)book. Yes, this can make profit multiplier really big (12M/yr subscription + 50x from else) But what about integrity of service over time then? All of this means losing initial flavor of 'doing-things-differently', a lot of other companies can provide boilerplate '-stack' for publishing newsletter (ie, recent yc news -https://github.com/knadh/listmonk https://github.com/knadh/listmonk - self hosted). So, in the end, the only edge of content hosting platform is how well it delivers it's content (UX, rec systems, internal ads), the bigger substack gets, the less of an edge for its creator base it will have - same as medium.com. I risk a statement that substack is happening only because medium.com is ending. Yes, as an author I would be interested in hassle free publishing, but after that, i am interested only in how service is helping me grow an audience, nothing else.

tonystubblebine 7y ago

Also, I want to +1 doing the math on their business. I see so much surprise/outrage when companies pivot. But all of us here are savvy enough to see this pivot coming from miles away. If they are venture backed, then you're right, $12M ARR is not high enough. So that implies they will make a significant pivot down the road. So don't get too attached to this version of Substack--it's temporary. And IMO, that's totally fine. It just means you need to be ready to pivot along with them (and/or have a plan B business).

npollock 7y ago

If they can help podcasters monetize more effectively they'll unlock a big market

filmgirlcw 7y ago

For a number of years, a lot of people have said that “newsletters are the new blogs” — and to a certain extent that’s true. During TinyLetter’s heyday, it was often easier for someone to create a newsletter and send it to people that wanted to read it than it is to setup a website and deal with what the entails (which sadly, in 2019 is more complicated than it was in 2006). But setting up a newsletter isn’t without its own costs and considerations. What platform do you use, how much does it cost to send emails (something that’s hard to ascertain if you don’t know how many subscribers you have), checking formatting for various mail clients and services, avoiding being marked as a spammer, etc. And that’s before you get into the aspect of creating the newsletter — which again, TinyLetter aside, is often difficult because most newsletter services are geared towards marketing/customer acquisition, rather than something akin to a blog. And if you want to charge for your newsletter, that’s another challenge. You have to figure out a payment processor, a membership signup system, deal with account issues, etc. For the Ben Thompsons’s of the world who were early/pioneered the game of paid subscription newsletters, the investment costs of infrastructure and technology is probably worth it. But for many others, it’s not. So Substack has the potential to be that defacto place/platform. I see it as trying to be the Blogger or WordPress.com for content-based newsletters, subscription or not. I’ve almost started a newsletter about 18 times and I even signed up with Substack a few years ago (but haven’t set it up yet because I had a few concerns about how to migrate away from Substack), because of all the options — it’s the one that seems to have the least-amount of friction. Now, in a perfect world, there would be an open-source way to do all of this with the option for both hosted and self-hosted options. Owen Williams’ newsletter/website Char.gd [1] has a great setup (he showed it to me at XOXO last year) and I know Ernie Smith from Tedium [2] has a really cool custom setup as well. I’ve been wanting to convince either or both of them to go in on a platform for this concept with me, because although I think Substack is definitely the easier way to do things for lots of users — there’s also a market (albeit smaller) for people who might want to have more control over the platform/ecosystem, but don’t want to have to cobble the whole thing together. [1]: https://char.gd/ https://char.gd/ [2]: https://tedium.co/ https://tedium.co/

FailMore 7y ago

VC here: why? the market is fucking G I N U N G O (potentially). Email is a ubiquitous technology. Any platform that could potentially lead the monetisation of it is worth serious consideration. Substack is probably the company with the best traction today. Given that, I think there will be a land grab now with lots of copycats charging the same or less - limited moat. Doesn't mean the company can't grow to be a monster - see Shopify.

jonny_eh 7y ago
> G I N U N G O Is that an acronym?
- jqgatsby 7y ago
  I'm guessing it is a portmanteau of 'ginormous' (itself a portmanteau that has legitimately replaced 'enormous' for my kids' generation, much to my chagrin) and 'humongous'? Maybe with some relation to 'mundo' as well.
- FailMore 7y ago
  No, just me enjoying making up words.
lanrh1836 7y ago
Right, there’s no moat. And per other comments the terms feel very anti-creator e.g. you grant substack an indefinite license to any work you’ve ever made and shared publicly even if you delete your account. You also don’t have access to any of the email addresses of your subscribers so you can’t easily move to another platform. Those policies feel like a bad PR battle waiting to happen (see Taylor Swift).