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Should media companies be afraid of Substack?
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Should media companies be afraid of Substack?
Whenever you hear people talk about “the media,” they’re usually referring to traditional, hierarchical organizations that range from legacy newspapers to newer upstarts like Vox and BuzzFeed. And though the fortunes of individual outlets vary, the general consensus is that the media as a whole is suffering, with factors like ad blocking, Craigslist, ad fraud, vulture private equity, and the Google/Facebook duopoly converging to decimate newsrooms and shrink coverage.
But there’s a separate realm of media that rarely factors into discussions about the industry’s health. The people who work in this realm are often referred to as “creators,” and they comprise the millions of podcasters, writers, YouTubers, animators, influencers, and musicians who work either by themselves or on small teams. It’s generally agreed upon that this ecosystem is growing like gangbusters, posting huge year-over-year gains in revenue and stature.
And it’s not that this latter group isn’t ever covered or talked about, I just think it’s never considered when we’re discussing the health of the former. In other words, we talk about the media being in dire straits without acknowledging that it may be simply transforming and even growing -- in other words, that the media industry may not be as unhealthy as so many have made it out to be.
There are three recent events I want to use to illustrate this point.
Casey Newton’s defection
While writing for The Verge, Casey Newton received widespread recognition and attention for his aggressive coverage of Facebook and other tech behemoths. Over his seven-year tenure there he built up over 100,000 Twitter followers and is known of by virtually everyone in Silicon Valley. Newton is the kind of journalist a publisher doesn’t want to lose.
And yet lose him The Verge did. And not to a competing publication either. Newton announced this week that he’s decamping to run a paid Substack newsletter. According to an interview he gave, Substack offered a few deal sweeteners like legal protection and health insurance, but his primary reason for the move was so he could monetize his fanbase directly. In doing so, he joins a growing list of prominent writers who left mainstream media to launch Substack newsletters: Matt Taibbi, Jonah Goldberg, Andrew Sullivan, Jesse Singal, Judd Legum, Brian Morrissey. The list goes on.
When these defections first started happening, people joked that Substack posed a serious threat to mainstream media. But now they’re occurring at a high enough frequency that I don’t know it’s really a joke anymore. The landscape is such that a media outlet can pay a journalist’s salary for years, train them, build up their personal brands, allow them to develop sources, and then lose them just as they’ve reached maximum value.
Technically these kinds of defections have been possible since the advent of blogging, but few writers could reach the kind of traffic scale required by programmatic advertising to generate real revenue. The rise of platforms like Patreon and Substack allowed for the monetization of small-but-passionate audiences.
I can only imagine that the trend will accelerate, which means the line between mainstream media outlets and solo content creation will become more porous in the coming years. But just as prominent creators can break off from legacy outlets to hang up their own shingles, I can also see talent flowing in the opposite direction. Which brings me to the next news item.
The Discourse Blog leaves Substack
The Discourse Blog is a Substack newsletter staffed completely by writers who once worked for the company-formerly-known-as-Gawker-Media. After several months spent building up its free email list, it launched a paid version and quickly generated several thousand subscribers. It’s the quintessential Substack success story.
Except The Discourse Blog announced the other day that it’s leaving Substack and migrating its content and subscriptions to a custom-built website. Rather than relying on Substack’s all-in-one platform, it’s utilizing a tech stack that includes services like Pico and Wordpress.
To understand why the publication is doing this, you need to know a little bit about Substack’s limitations. While it’s great at blasting out emails and collecting subscriptions, its customization is severely limited. Oh, and it takes 10% of all revenue you generate through subscriptions.
For a solo writer like me, it’s perfect. I can leave all the technical headaches to Substack and just focus on the content. But put yourself in the shoes of someone who’s seen incredible success on the platform. Suddenly, that 10% is adding up to a lot of money that’s going out the door, and that person now has the resources to hire someone who can build a tech stack that’s customized to their needs. The creator may want to set up drip campaigns or sort their articles with tags. Most important, they might not want to pay a 10% tax into perpetuity and instead capture more of that wealth for themselves.
Because of this dynamic, we’re going to see more and more successful creators begin to form organizations and processes that look a lot like traditional media companies. Some won’t be satisfied with just their thousand true fans; they’ll want to scale their revenue and operations in a way that platforms like Substack and Patreon can’t currently support. They’ll cross back over to the other side that’s populated by organizations like Vox Media and The New York Times.
Quantifying the size of the creator market
This last item allows me to zoom out a bit and look at the entire creator marketplace as a whole. A company called Signal Fire put out a comprehensive report that attempts to quantify the creator economy.
There are lots of interesting stats in the report, but I want to call attention to the one that estimates the total number of full-time creators: 2 million. It breaks that number down accordingly:
YouTube: Of the 31M channels on YouTube, ~1M creators have over 10K subscribers (source)
Instagram: Of the 1bn accounts on Instagram, ~500K have over 100k followers and are considered active influencers (source)
Twitch: Of the 3M streamers on Twitch, ~300K have either Partner or Affiliate status (source)
Others: including musicians, podcasters, writers, illustrators, etc total ~200K
Yes, a lot of those channels are focused entirely on entertainment -- I’m not going to try to argue that a beauty vlog or a celebrity gossip podcast are producing hard hitting journalism. But that 2 million number also comprises local news Substacks, investigative podcast series about the multi-level marketing industry, and mini-documentaries exploring conflicts in the Middle East.
In other words, there’s a whole lot of journalism going on in this sector of the media, and I predict that in another five years or so we’ll stop measuring the health of the industry solely based on the economic fortunes of legacy newspaper chains. By that point, it’ll be beyond dispute that journalism is at its richest point in human history -- what Jack Conte, the CEO of Patreon, recently called the Second Renaissance. I don’t know about you, but I’m excited to get to live through it.
His barbecue site generates $100,000 a month
Joseph Clements did what a lot of people do when they start a new blog: he wrote a few posts, got bored, and largely abandoned it.
But then something happened that pulled him back in. He logged into his analytics dashboard and saw he had received a few thousand hits from Google searches. The blog, Smoked Barbecue Source, served as kind of a beginner’s guide to cooking barbecue, and apparently a lot of people were stumbling upon it while conducting research on Google. What’s more, several of them had clicked on Amazon affiliate links and purchased expensive grills, which meant the site was already producing passive income.
Clements was hooked. Now, a few years later, the site generates millions of pageviews and tens of thousands of dollars a month. I interviewed him about why he chose barbecue as a topic, where he sources his content, and how he diversified his revenue so he’s now a lot less reliant on Amazon.
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A great profile of a social network for cinephiles that has 1 million active users. [link]
All the Hollywood trades are moving under one corporate roof. Both The Hollywood Reporter and Variety produce really good reporting, so it'll be interesting to see how this move impacts their journalism. [link]
I was recently interviewed about my newsletter and how I'm growing it. This interview was somewhat unique because I actually shared some of my spreadsheets and other documents I use to manage my workflow. [link]
An interesting look at Joe Biden's social media influencer strategy. [link]
"[Defector] Editor in Chief Tom Ley told me that the site was expected to hit 30,000 paying subscribers on Monday, which at the base rate would amount to over $2 million a year." [link]
Dotdash is just quietly building a profitable digital media empire while nobody notices. [link]
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