Since its launch 2017, Substack has gathered momentum and attention across the media – both from independent journalists building their own newsletters, but also from big publishing brands seeking out new audiences. Several successful startup publications have developed on the platform, not least Hollywood b2b outlet The Ankler, and Bari Weiss’s The Free Press. Pre-existing mainstream publishers now use it to distribute email newsletters. Notable among these is Reach, which publishes the likes of The Mirror and The Express in the UK, and the Daily Mail.
Substack is easy to use and has developed its own network. Authors and publications recommend one another, which helps drive audience growth. And, importantly, subscriber data, notably email addresses, can be exported, for free, at any time. However, there are concerns that all Substack newsletters look the same, which may dampen brand affinity. And, more significantly, some worry that publishers are being dragged into yet another dead-end platform relationship.
An effective email tool with revenue benefits
Dominic Ponsford, editor of Press Gazette, moved his outlet’s daily newsletter onto Substack. He says there are various benefits to doing so: “Number one, it’s free. If you’re not selling subscriptions through it and just using it as an email delivery platform, it’s free.”
However, if you do sell subscriptions, Substack takes 10%, with payments processor Stripe taking an additional cut.
Ponsford adds that Substack is “extremely good at sending emails,” by which he means his content generally gets whitelisted, arriving in inboxes as it should. This is not necessarily the case with other email distribution systems.
The daily email is free “because it’s sort of top of the funnel, especially since we started charging for the website,” explains Ponsford. The fact that it doesn’t rely on newsletter subscriptions does not prevent Press Gazette from monetizing its emails on Substack though. The publication sells newsletter advertising directly, from which they keep all the revenue.
Doomberg is one of Substack’s success stories, regularly appearing in the top 10 finance newsletter leaderboard. The writers are anonymous, appearing publicly only as a wide-eyed green chicken. The voice behind the avatar tellsDCN that “we saw early on, through our consulting in this space, that that Substack had a winning product.” (Indeed, the Doomberg team have such confidence in the product that they invested in the company during an author-led funding round.)
They charge a high subscription fee: $300 a year for the standard tier, $1,200 for the pro tier. This means they turn a significant amount of money over to Substack. However, the team are not looking to leave. They feel a sense of personal loyalty to the company through which they have built “life-changing wealth,” and still have “have an 85% operating margin business,” when all the subscriptions are processed.
Audience growth from the network effect
One key feature that both Ponsford and Doomberg highlight is the network effect within Substack. Writers can recommend other newsletters, meaning that when someone signs up to one, they can easily subscribe to those that are recommended too, fuelling growth.
Ponsford says that while most Press Gazette sign-ups come from its website, a meaningful amount also come via Substack. Doomberg says that even as that publication launched, Substack was “winning the network effect for Internet writing, and they were offering good discoverability tools”. This can be of huge benefit both to startups and traditional publishers losing traffic as a result of Google changes.
This may explain why Reach has chosen to publish a number of newsletters using Substack. The company, which runs both national and local outlets, has around 450 newsletters, both paid and free on Substack. Some are by named expert writers, others cover specific topics.
In June, Jenna Thompson, audience and content director for secure audiences at Reach, told The Publisher Newsletter Summit that the free newsletters help build a relationship with readers. “We’re demonstrating to the readers who are signing up for that, that actually we are providing all of the best information that there is to know about this topic,” she said.
The Royalist newsletter from The Daily Beast is now on Substack, as is some content from the Daily Mail.
Substack alternatives vie for market share
Not everyone is as keen to embrace Substack though. When he left CNN to start his own newsletter, media reporter Oliver Darcy chose to use rival service Beehiiv. He explains that he chose Beehiiv “because I wanted Status to have its own unique individual identity, and Beehiiv’s tools allow you to create an entirely custom website, an entirely custom newsletter that has its own unique identity and feel… every Substack looks the same.”
This is not something that concerns Ponsford from Press Gazette . “You’ve got the Press Gazette masthead on there… people are probably overthinking an email… if it’s got headlines and words and photographs in it… that’s all good” he says.
Access to advertising might be another key factor for a publisher debating how to do newsletters. Substack currently has no advertising network, although “I suspect we’ll see ads on Substack,” Darcy tells DCN.
Other platforms, including Beehiiv and Kit, already have such functionality. Programmatic advertising and sponsorship opportunities are extremely helpful for independent writers (like me), though, probably less so for a major publishing seeking a newsletter platform.
Substack: Just another platform?
Over time, Substack has gone from being an email, podcast and subscription management tool to something far broader. Substack has long offered the ability to publish podcasts as well as words, but it now has video tools too. On the back of a $100 million funding round last month, it is reportedly looking into launching its own advertising network too, making this an important moment for media companies of all kinds to assess its value to them.
Substack also offers chat functionality, and a Notes tool akin to Twitter. When combined with its app, it’s all starting to feel rather like a social network.
According to Ponsford, who keeps a close eye on such things: “The big brands, I think they just see it as another platform to be on, to spread their bets, like Twitter, Facebook… I think it’s sudden it’s got big enough now that they feel it’s something they need.”
Substack undoubtedly has a lot to offer publishers of all sizes, whether they use all its functionality or just send emails. While publishers can access crucial user data, they must be wary of launching any products built on a third-party platform, given the ever-gr owing importance of having a direct relationship with your audience. Media companies need to understand how best to leverage platforms to reach new audiences alongside building brand loyalty, and not risk diluting it at the hands of another platform promising to solve all their problems.