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The growth of Substack has got people talking, not least, the financial media, always in search of the next startup to go viral:

  • Is Substack the media future we want? (FT, January 4, 2021)
  • How newsletters are making big bucks from your inbox (FT, December 15, 2020)
  • Substack now has more than half a million subscribers (FT, March 31, 2021)

Is this the new face of publishing? In case you don’t know, Substack (founded 2017) is a website with a very simple business model: it is a paid, collective blog (although they don’t use that term; they call it a newsletter). Its stated goal is “Make it simple to start a publication that makes money from subscriptions.” Anyone can publish content on Substack, without payment if the content is free. If you charge people to read your content, then Substack takes 10% of the revenue (as well as payment processing fees). Stories of writers earning tens of thousands of dollars per month have created a herd instinct, which means that people are falling over themselves to start writing for the platform in the hope of untold riches – most tantalizingly for some, the prospect of earning more than they could as a salaried journalist on a national newspaper.

What is perhaps less usual is that Substack carries no adverts, and is owned by a prominent VC company.

There is an interesting historical appraisal of subject blogs on the Substack site itself, although that piece is perhaps not so much a neutral history of journalism as a spirited defence of the Substack model: “We believe that what you read matters. And we believe that there has never been a better time to bolster and protect those ideals. Now, more than ever, publishers of news and similar content can be profitable through direct payments from readers.” It’s not surprising there is big investment behind the company: an internet startup that is earning revenue from the start!

Yet there is a paradox at the heart of Substack, which becomes clear as you envisage its next stage in its growth. The initial business model for blogs is very simple. You build a simple website, write some content, and people read it. If your content is valuable, you can sell it.

The problem is that there are thousands of blog sites, and no way of communicating with the public about what is available on each individual’s blog. Google will index your site, but it’s very unlikely you will be found unless you have some very specific terms and discussion on your site.

So it was reasonable to think of some sites pulling together individual writers’ contributions. Medium is one well-known example of a collective blog, which specialises in subject collections; I read it for its technology coverage. It was founded by Evan William in 2012, and from the start allowed anyone to create content (as does Substack). Williams had already created Blogger, and sold it to Google in 2003, so he had a track record in the web publishing area. Initially, the content on Medium was provided free, but from 2017 users had to pay a subscription to access it. What is its business model? An interesting site, ProductMint, provides details here.  Medium is subscription-based, but you pay for Medium as a whole, not for individual contributors, unlike Substack. You get a curated inbox with stories relevant to the topics you have shown an interest in. Published content is appraised for quality. In other words, you read Medium because of Medium; you typically don’t head straight for individual named contributors, and it’s quite revealing that I don’t remember ever trying to search for content on a theme in Medium; I just want to read what is new. Medium gives me a nicely curated collection of a few articles every few days. Substack’s goals are in harmony with the individual contributors: both want to earn money from the site. However, the focus on individual contributors means that, unlike a newspaper, there is nobody to tell you where a story has been dealt with elsewhere; Substack authors care little about what else is on the site. Substack is essentially thousands of private newspapers working independently of each other. The whole is not greater than the sum of the parts: the only benefit of Substack is an easy-to-remember URL and an efficient publishing and delivery system. Here is the paradox: as Substack grows, it becomes more and more difficult to find content. There is no recommendation engine. There is no curation. You might as well be on an independent site, so why should journalists stay on Substack once they have made their reputation? Substack hopes it becomes a vast brand like YouTube, but ultimately that denigrates the content. What Substack really needs is an editorial desk linking, providing navigation, filling in the gaps (if Substack is to provide the alternative to a newspaper, you don’t want to miss major events just because nobody has covered them). In other words, Substack needs to become a digital newspaper. Hang on, isn’t that what the successful journalists on Substack were trying to get away from?