Substack Rhymes With Medium

Now, there’s a good chance that Substack creates a good enough experience for writers that they stick with the 10%. And a big part of “good enough” could be the social standing that comes with writing on Substack. The more quality writing that lives on Substack, the better the brand becomes.

This is a true paragraph. But it wasn’t actually written about Substack. It was originally written in a 2013 article about Medium, a then brand-new blogging platform.

In order to achieve a venture-scale outcome, they would need a $1 billion valuation. If we assume a 10x revenue multiple, they need $100 million in revenue. $2.64 million is a good start, but far from reaching their expectations.

From the outside, Substack's strategy has seemed to be the following: 1) Create a beautiful, simple blogging platform, which Substack most certainly is. 2) Very slowly release control of who can use Substack to create cachet. 3) Pay some people to post to the site, but not most of them. (Sub-strategy: Don't disclose who's working for Substack and w... See more

However, the big question is their cost structure. For each publication, they take 10% of the subscription revenue. At the beginning of a publication's life, this is reasonable. Maybe even a steal. But once a writer builds a business that makes hundreds of thousands of dollars a year, what’s stopping them from moving to another platform like Ghost ... See more

Substack also seems to understand something that few other technology platforms have understood: that the atomic unit of media isn’t an article, nor a media brand, but instead is the creator themselves.

They have 250k subscribers, but there are likely some people who subscribe to multiple publications. Let’s say there are 275k active subscriptions from those 250k subscribers. At $8 per month, that’s $2.2 million in monthly gross revenue. Substack takes 10% of that as their fee, so that would leave about $220k in monthly revenue for Substack. Multi... See more

The idea that we want to consume content without knowing the creator isn’t quite right. Rather, the content is just a proxy for access to a person, brand or emotion.

Both platforms try to convince writers and independent media brands to join them. Both platforms have lots of funding and receive lots of press. Neither platform can decide if they are a content management system or a media brand.