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Ben Thompson (Stratechery) β€” Substack

Jan 2021 β€’ Link to Stratechery post (paywall) β€’ Notes in black/commentary in purple

Despite media hype, Substack seems to be generating $1-2 million in annual revenue.

  • Substack has more than 250,000 paid subscribers and its top 10 publishers collectively earn more than $10 million a year. Link to Axios report.
  • Substack takes 10% β€” 10% of $10 million = $1m annual revenue (only top 10 publishers).

Substack lets individual stars capture the value they historically created for larger publications.

Platforms like Substack let star creators β€” traditionally been underpaid at large publications relative to their contributions β€” better realize the economic value they bring to viewers.

  • Take Malcom Gladwell and The New Yorker as an example. He was selling subscriptions on behalf of many other unknown writers for years [at the New Yorker], before he started spending more time monetizing himself directly via books and now podcasts.

Substack is a continuation of the larger trend of decentralization.

Old old media β†’

Newspapers Writers get salary; no skin in the game

Old media β†’

Books Writers get 10-15% of revenue

New media β†’

Substack Writers get ~85% of revenue

Future of media

Decentralized platforms? Writers get 99% of revenue?

Users are the clear winners: no matter where you live, you have access to every journalist in the world.

  • Ben was never a traditional journalist. Reaching people on a global or national scale was likely the only way he could have an audience large enough to sustain a living.
  • He applied to traditional journalistic institutions β€” they rejected him.
  • Ben is long on platforms open to anyone, anywhere in the world, who succeed or fail purely based on their merits.

Substack's challenge: its largest publishers are incentivized to walk away

  • As a publisher's revenue increases, the math to go independent makes more and more sense. If one Substack publisher is earning $1 million in revenue each year, they are paying $100,000 to Substack... for what?
  • Credit card info and emails are stored on Stripe.
  • Substack’s entire problem from a business perspective is that it failed to implement the exact sort of platform lock-in that folks are worried about.

This post, and Substack as a platform more broadly, remind me of Chris Dixon's Why Decentralization Matters post.

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