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Substack

a16z.com

106 pointssethbannon51 comments

I don't immediately understand what this solves over say patreon, which has a lot lower fees (10% + 2.5% for CC fees... holy crap). Whats the value add here? And for publishing text? Is there DRM involved?

It feels like you're just charging for a paywall and a mailchimp list... maybe thats enough, but given the amount of failures in the space, it feels like just another to go on top of the pile. Maybe its the right mix, and they have some big plans?

One issue from the Terms - if you post something publicly, they can keep it published and licensed to them forever, even after you delete your account. I'd think for such a high price, and a high emphasis on content creator control, you'd not take away the legal rights to delete public posts.

Also pretty disappointed at the arbitration agreement and unilateral terms of use updates (they can update them at any time, and if you don't agree you will be kicked off the platform).

[edit: its certainly easy to see the value of something like this existing - just trying to understand why this is different than the others]

Is there any site that doesn't allow for unilateral terms of use updates? I'm not being snarky; I genuinely haven't seen one, and I'm not sure what the alternative would be. "We're changing our terms of use, but if you don't agree with our changes, you can keep following the old rules you originally agreed to" sounds like it'd be a nightmare to keep track of in practice.

I think its more important when you're putting something on a platform that is publishing your work. Having control of your work is paramount - this is what they're saying is one of the benefits of the platform. That they can effectively change the "license" to creators work at any time and kick them off the platform if they disagree seems like a large amount of rights to give away.

They could for instance have a generalized terms of service that does NOT cover works licensing, and works licensing be its own agreement which is not subject to change except with more proper controls than an auto-agree if you use the platform any time after they unilaterally update.

Who owns the audience and content at the end of the day? Legally, its still the content creators copyright, but with an unlimited irrevocable license Substack de-facto is co-owner. The audience is entirely built on their platform - the email list looks like it'll be owned entirely by Substack since its through their platform - no mention of this in the ToS. I doubt there'll be an export feature. They may legally protect their rights to "your" subscribers.

Network effect? They could promote your newsletter to people who are already paying for something related.

If people are already registered on Substack and have payment method in place then onboarding is smooth.

It’s an integrated solution. Patreon does bring a blog but this one is much better IMHO. It’s very well done.

I find the UI good but not worth that much of a cut. Maybe this is for people who can't roll their own solution.

> It feels like you're just charging for a paywall and a mailchimp list... maybe thats enough, but given the amount of failures in the space, it feels like just another to go on top of the pile.

What are the other paid-email failures from the pile?

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.

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.

Does medium provide you with free traffic? Would it be worth it for them to take a cut?

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.

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?

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.

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).

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

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 - 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.

I mentioned in my other comment (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.

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.

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/ [2]: https://tedium.co/

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

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.

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).

> G I N U N G O

Is that an acronym?

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.

No, just me enjoying making up words.

Long, nice (and a bit too verbose) article about the media space, and why A16Z has invested in the series A for Substack.

I am personally very excited to see how Substack will evolve. I think that they are trying to solve a very compelling problem, and I also think the founders have managed to build a straightforward, polished product.

Side note / rant: I wish the large majority of the "crypto" crowd would take note of how "solving a problem" should trump any "cool tech stuff" when you want to build a company. (and no, I don't want to name any names here, you can find plenty of examples, even specific to the media industry, just by googling for a few minutes).

The model of cryptocurrency is nothing like a traditional business. In one sense, it is arguably the most fair way to pay developers for their work - the more useful a coin / token, the more it's worth, and the majority of overhead goes straight to developers for their work on the software.

This conversation is extremely complex and I'm not sure why you related investment in substack to crypto.

I owe you some clarification, as I probably bridged the two in my mind, but clearly not in my comment :)

I think that Substack focused very nicely on product effectiveness, and as a result its business is now doing so well that A16Z decided to invest.

Most crypto projects in the media space tried to offer similar features, but instead of focusing on a great user experience, they mostly focused on "cool technical stuff" that had nothing to do with adding value for the user.

Perhaps it is more clear now? I hope so.

You also say: "[crypto] it is arguably the most fair way to pay developers for their work".

I think that we don't need a cryptocurrency to pay for a media subscription.

Also, we don't need crypto for micro-payments - you can simply handle it with a credit system (e.g. you pay 1$ and you can then use $0.01 to pay media content 100 times using your credit).

I was meaning something more along the lines of 0x (https://0x.org/) where the token powers a decentralized exchange protocol, and the more the protocol is used the more the protocol token is worth. It's more akin to the creator of SMTP making money for every email ever sent. Instead of selling data or being advertising powered, you charge access inherently every time the protocol is used. It is simply a different business model and time will tell if it pays off.

Verbose = fitting for announcing news about a newsletter startup, no? :)

One of the Substack founders here. Thanks! We definitely aim to “build something people want”

Great job! Happy to provide specific feedback or suggestions if interested. simone dot brunozzi at google's famous email service.

If you want to understand the appeal of Substack to journalists/writers, there's a great interview on the BOC podcast with one of the more successful authors on the platform, Robert Cottrell (formerly of The Economist)

https://podcasts.apple.com/us/podcast/this-indie-newsletter-...

I don't have any strong opinions on the product being built by Substack Inc, but I do feel weird that they swiped the name "substack", which is a handle that's been used by open source hacker James Halliday for at least a decade. [0]

It's been his handle on GitHub, Twitter, Hacker News, YouTube, Reddit, etc., and it makes me uncomfortable to see a startup try to turn his name into a corporate brand.

[0]: https://web.archive.org/web/20091113043728/http://substack.n...

>they swiped the name "substack", which is a handle that's been used by open source hacker James Halliday

Did they use the "substack" name because JH made it famous? I've heard of the word "substack" before but I've never heard of James Halliday.

"substack" was in use for several decades before 2006:

https://books.google.com/ngrams/graph?content=substack&year_...

I don't mean that they used Substack because JH was using it, but a quick web search of the company name would make it obvious that there was a naming conflict.

This was my immediate association as well. I've followed the open-source work of substack for many years, and continue to use many of the modules he published.

https://github.com/substack?tab=repositories

I doubt it was an intentional move by the company, since these kinds of name clashes are inevitable in the global scope..

Same feelings here. This implies that.

1. The founders of the corporation were not aware of the established personal brand James Halliday had built under the handle, or didn't preform a google search to find out.

2. The founders were aware and just didn't care or lacked the creativity to construct a unique brand.

Both make me disinterested in whatever they're shilling.

https://substack.net

Even worse than having Golang replace your Go language!

Am I the only one who saw the name and thought this would be about the Node.js prolific module author?

Substack seems like a not-horrible acq target for Medium, if Medium has the funds to buy it. Many content creators appear to trust Substack and trust the potential to earn money on it. The acquisition would be worth it for the trust alone.

The model for paying content creators seems interesting, but I'm really curious what the market opportunity here is. My guess is that it's not that high... so it seems likely that Substack would consider inserting ads into the free newsletters.

However, if they pivoted to other mediums like video, then maybe there's something here. People will pay really little for a blog post emailed to them each week, but they'll pay a ton more for great video content.

> People will pay really little for a blog post emailed to them each week

You'd be surprised.

Compared to Netflix tho? Individually there may be outliers, but I'm wondering about the market as a whole

Substack is cool - but it's kinda expensive.

I wrote a short blog a few months ago about how to get most of the benefits it offers with way less cost (and without being tied to a single platform) - plugging together Mailchimp and Trolley with a static website and a l'il bit of Zapier.

https://trolley.link/2019/03/03/paid-email-newsletter.html

(Disclosure: https://trolley.link , which I've used for the payment elements in this example, is my product)

People are willing to pay for educational content, most of the content on Substack is news. It's hard to get people to pay for news. Interesting to see another play in this space though, hope someone gets it right.

Isn't News the current big winner in paywalls for articles? The NYT digital service grosses $700M.

It’s also interesting that the NYT is the only online news site to almost always have at least one article on the front page of HN.

WSJ is on the front page a lot too.

This needs an editor badly. You have to make it through 4 long paragraphs of grandiose posturing before learning what the post is even about.

I can't wait to see the flood of posts in 12 months about "why I'm leaving substack"

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