The thriving Creator Economy company you've never heard of

PLUS: How Substack justifies its 10% fee

Welcome! I'm Simon Owens and this is my media industry newsletter. If you've received it, then you either subscribed or someone forwarded it to you.

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The thriving Creator Economy company you've never heard of

This is an incredible breakdown of how a group of YouTube creators banded together to launch a streaming platform that now has hundreds of thousands of paid subscribers:

I had heard of Nebula before — mostly from seeing it mentioned by YouTubers — but the company hasn’t really received much industry press coverage, likely because it never raised gobs of VC money. I think what’s most fascinating about the story was how its owners figured out the right set of incentives that would get famous YouTubers to promote the service to their own fans.

I think one of the main reasons that so many VC-backed media companies fail is that they’re not incentivized to find a product-market fit early on — mostly because they have so much cash to burn on money-losing ventures. The founders of Nebula were never afforded enough rope to hang themselves.

YouTube is a television behemoth

YouTube is still mostly thought of as a platform that you consume on your desktop computer or phone, and so it’s easy to forget that it’s arguably the most successful TV destination in the medium’s history:

According to Nielsen, in March and April of this year, 8.1% of all television viewing in the US — streaming, broadcast, satellite, all of it together — was happening on YouTube. That’s significantly higher than even second-place finisher Netflix, which grabbed around 7% of all US TV viewing. And once you get past those two, there’s a precipitous drop-off. Hulu got around 3.3% of TV viewing, Amazon came in with 2.8%, Disney+ took just 1.8%, and so on.

ICYMI: This YouTuber built a massive following with pop music guitar lessons

Youtuber David Potsiadlo capitalized on the fact that a lot of people actively seek out instructions on how to play their favorite songs.

Are paid subscription podcasts about to go mainstream?

Earlier this year, The Economist took its incredibly successful podcast network and locked it behind a paywall. Digital Content Next published a deep dive into how this move fits into the magazine’s larger subscription strategy:

The podcast subscription is being used by The Economist as a value-add for current subscribers, but also as a separate product offering. This is an unusual move; The Economist hasn’t had a separate product available to subscribe to since launching Espresso, an app which gives five short articles and a global news briefing each day. The decision to create a separate podcast offering – Economist Podcasts+ – is because of the millions of listeners the publisher has accumulated across its 18 different shows.

“There’s a whole audience there that for whatever reason enjoy our journalism but don’t want to pay the full $20 a month to subscribe,” said [Claire Overstall, SVP, Global Head of Customer]. “But in keeping with our belief that subscription should be the way that we fund our journalism, and making everything strategically match, we’ve decided that you can buy a podcast-only subscription in the hope that that might entice some of those millions of listeners who don’t want to pay for the full-fat product to support our journalism through paying for podcasts.”

A lot of publishers have been wary of investing in paywalled podcasts, mostly because it wasn't easy to get them on to subscribers' podcast players. But now that Apple and Spotify have launched subscription integrations, we'll probably see more and more publishers experiment with them.

Why news publishers should expand their lifestyle coverage

If there’s anything we’ve learned from The New York Times’s success, it’s that hard news coverage produces diminishing returns, especially in non-election years. While outlets like WashPo were doubling down on their politics coverage, the NYT was expanding into verticals like recipes, product reviews, games, and sports.

Some media outlets are starting to capitalize on this lesson. Newsday, for instance, has seen significant success from expanding its restaurant coverage:

In 2022, restaurant coverage was the most efficient driver of new digital subscriptions in the newsroom, generating 8% of conversions despite being only 2% of all the newsroom’s content …

… "The quarterly FeedMe magazine, Newsday’s most popular opt-in product exclusively for home delivery subscribers, has also helped retention: 39% of readers surveyed said receiving it makes them “more likely” to keep their subscription.

Do you sell a product targeted toward marketers, media executives, or professional creators?

What a coincidence! That’s exactly who reads my newsletter. You can find out how to advertise to them over here.

The Great Podcast Correction comes for public radio

WNYC set the gold standard for how a local public radio station could embrace podcasting, but now it's shifting focus back toward its traditional broadcast programming. Basically, if a show can't perform well as a syndicated radio program, WNYC doesn't want to run it:

“The shows that are continuing each have a different revenue mix, but serving broadcast and on-demand audiences is a continuation of what they are already doing. Putting a focus on these multiplatform shows is where we see a competitive advantage in a very crowded, competitive, and disruptive podcast environment,” [WNYC’s vice president of communications, Jennifer Houlihan Roussel] wrote.

It’s worth mentioning that WNYC shows have extremely high production values, which means their cost-per-episode is probably well above industry average. With the podcast advertising landscape experiencing a sizable market correction, I can see why the organization is struggling to justify programming that only has a single line of revenue.

How Substack justifies its 10% fee

One of the most consistent criticisms lodged against Substack’s business model is that it can’t justify its 10% fee when there are other platforms out there that take a much smaller cut of subscriber revenue. According to this line of thinking, every talented writer, once their audience reaches a sufficient size, will eventually succumb to economics and migrate their email list and Stripe account to another platform that charges something closer to a fixed fee.

I don’t think this criticism holds much water for multiple reasons, but this piece from a newsletter that recently hit 100,000 subscribers does a good job of capturing the biggest differentiator between Substack and all other publishing platforms:

The single best decision The Generalist made this year was returning to Substack. The sharp uptick you see in the graph above is a direct result of returning to the platform and benefitting from the network it has built. Though we saw our steepest growth in the wake of our immediate return, the months since have affirmed our choice and made me wonder why we left in the first place.

I know the “real” reasons, of course. We wanted to create a more customized brand. We wanted to control the user experience. We didn’t want to give up 10% of our revenue. All of these are true, but are they the true base-layer rationale?

The more I’ve considered the matter, the more I attribute our choice to leave Substack as an example of loss aversion. The notion of “losing” 10% of subscription revenue felt more painful than the pleasure of the potential gains we might have logged by staying aboard. I overstated the importance of holding onto as close to 100% of our subscription revenue and underweighted the incremental value Substack could deliver. (I also fundamentally misunderstood their network ambitions.) Today, I never think about what we “lose” by being on Substack, only the extraordinary amount we gain.

The analogy I like to use is that Substack is a point-and-shoot-camera, whereas more customizable platforms like Convertkit are the equivalent of a DSLR. The vast majority of creators would get by just fine with the former and would likely underutilize the features of the latter. Often times, the simpler product is the better one, especially when that product is free-to-use from the get-go.

I’m looking for more media entrepreneurs to feature on my newsletter and podcast

One of the things I really pride myself on is that I don’t just focus this newsletter on covering the handful of mainstream media companies that every other industry outlet features. Instead, I go the extra mile to find and interview media entrepreneurs who have been quietly killing it behind the scenes. In most cases, the operators I feature have completely bootstrapped their outlets.

In that vein, I’m looking for even more entrepreneurs to feature. Specifically, I’m looking for people succeeding in these areas:

• Niche news sites

• Video channels like YouTube, TikTok, and Instagram Reels

• Podcasts

• Newsletters

• Affiliate/ecommerce

Interested in speaking to me? You can find my contact info over here. (please don’t simply hit reply to this newsletter because that’ll go to a different email address. )

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