Substack is Changing the Game for Newsletter Economy 2024

The Rise of the Newsletter Economy 2024 How Substack is Changing the Game for Writers. Startup Substack, which provides content creators with a platform for paid mailing lists, by 2023 has become a platform. Where influencers are published and referenced by the world’s leading media.

At the same time, the founders announced that the number of their paid subscribers exceeded 2 million. And encouraged their authors to become investors. Forbes tells how the platform works and whether to rush to become a Substack author or investor

At the end of March, the Substack service, which allows you to create content mailings. And which was called “OnlyFans for journalists”, invited the authors of the platform to become investors in a startup. To do this, the platform announced a collection of $2 million on the Wefunder crowdfunding platform, and later increased the amount to $5 million.

At the time of publication, about 6,500 investors announced their readiness to invest more than $7.5 million. One of the investors was Bill Bishop, an expert on US-China relations and the first author of Substack. Who began to work on a paid subscription model – he will invest $ 25,000. Previously, Bishop has already invested $ 100,000 in the platform.

The Substack Funding Saga: Navigating Startup Investment in a Bear Market

Substack, a subscription content platform, has announced a minimum investment threshold of $100, which could increase if it receives more funding than it can handle. The platform will favor creators who charge for their content and paid subscribers. However, investing in Substack is risky, especially considering the startup’s history of declining or not making enough money.

The platform, which is only five years old, has shown a large subscription content market. In 2024, Substack attempted to attract investments but abandoned due to a challenging market situation. With the economic downturn making it harder to secure private funding, more companies are considering public funding rounds. TechCrunch also acknowledges that Substack can develop without venture capital investment.

The Substack Revolution: How a Newsletter Platform is Disrupting the Media Landscape

Substack, an alternative to traditional media outlets, offers creators a fair share of their income. The company takes 10% of the total income from subscribers, while the remaining 4% goes to Stripe, the payment processor. In 2018, Substack reported that creators received over $300 million from subscribers.

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Substack, a platform for sharing content, has over 35 million active subscriptions, with 2 million paid subscribers. The platform earns over 17,000 creators, with the top 10 channels collectively earning over $25 million a year.

Notable authors include Margaret Atwood, Chuck Palahniuk, Patti Smith, Mark Andreessen, and Sam Bankman-Fried. In 2022, Substack expanded its functionality, adding podcasts, videos, and chat for creators to interact with subscribers. The startup also launched an app and introduced recommendations for creators to recommend each other to subscribers.

On the threshold of the media revolution

Substack, founded in July 2017, aims to accelerate the onset of a new golden age of publishing by promoting the subscription model. The founders argue that the golden age of mass media is nearing, with advertising revenue now primarily going to Google and Facebook

. They believe that journalistic content has lost much of its value in the eyes of readers and that in every crisis, there is an opportunity to uphold and defend these ideals.

They believe that in the era of the Internet and information glut, selecting content is valuable to avoid drowning in informational noise. The founders call their mission to help create media that earns on subscription.

They include professional writers, journalists, insurance agents, salesmen, and scientists among potential authors, insisting that anyone can start their own small publication on their platform. The platform’s founders believe that in every crisis, there is an opportunity to uphold and defend these ideals.

Substack: Media Revolution or Reputation Risk? The Platform’s Democratizing Effect Comes Under Scrutiny

The founders of Substack believe that the transition to a democratized media model is a key factor in the industry’s growth, comparing it to the development of the taxi market before and after aggregators.

The platform’s diversity resembles the blogosphere, with professional journalists, bloggers, writers, and specialists in various fields publishing on it. Anna Viner, a New Yorker author, believes that traditional media relies on cooperation between authors, editors, fact checkers, and other specialists.

However, she doubts people want to live in a world where platforms like Substack compete with traditional media. For example, journalist Seymour Hersh was criticized for basing his article on the words of one source, which is considered incorrect in traditional media. The platform’s founders believe that the time to mourn the loss of the old media model is over.

Attracting investments

Substack, a subscription-based text-sharing platform, received its first external investment in January 2018 through the Y Combinator accelerator. The company raised $2 million in a seed round in April, and in mid-2019, it received $15.3 million in a round A led by venture capital fund Andreessen Horowitz.

In March 2021, the startup attracted $65 million in a round B led by Horowitz, and its valuation reached $650 million. The platform’s subscription-based model allows writers to work independently and readers to receive texts tailored to their needs, rather than an interaction algorithm-based economy. The contributor fundraiser, announced in 2023, is a continuation of the 2021 Round B.

Attracting investments

Substack, a platform that allowed content creators to receive money directly from subscribers, experienced a significant boom during the pandemic, alongside other platforms like Medium, Patreon, Pico, and Ghost.

Facebook also had a similar platform for authors of texts and podcasts, but the Bulletin project was closed this year.

Substack’s Funding Struggles: Navigating the Venture Capital Chill as a Media Startup

Substack, a tech giant, reported a $9 million revenue in 2021 and was in talks with investors to raise between $75 and $100 million in May 2022. However, the company’s financial results were higher than expected, leading to a postponement of round C. The New York Times cited the cooled venture capital market as a reason for this decision.

Substack continued to hire employees despite other companies laying off employees. In June, it announced the reduction of 14% of its staff. The company aims to reduce its reliance on constantly raising money through layoffs due to increasing uncertainty in macroeconomic prospects.

Platform claims and six-figure advances to wealthy white men

In 2023, some authors complained about Substack, citing its non-interference policy and the distribution of anti-vaccine statements. The company was also accused of paying six-figure advances predominantly to “famous white men.

” In 2021, Substack announced the launch of the Substack Pro Creator Support Program, offering $10,000 to $30,000 in advances to cover expenses for several months while developing their media on the platform.

Authors return advances due to increased popularity and income under a separate agreement. The Substack advance was an interest-free loan that would not be repaid if the media failed. However, the writer would have to go through a payback period before they began to earn income. The new structure ensures that authors receive payment for a year of work, regardless of the quality of their product.

Substack’s Content Gamble: The Pros and Cons of the Platform’s Controversial Writer Advance Program

The Substack program pays an author an advance to cover their first year on the platform, aiming to make their income more attractive than their salary. In exchange, the author agrees to let Substack keep 85% of the first year’s subscription revenue. If a year later, the author no longer receives the minimum income, they retain 90% of the subscription income.

Substack takes most of the risk for authors, ensuring they do not interfere with editorial policy or contact subscribers without permission. The only requirement is a minimum posting frequency. The main factors considered when determining an author’s inclusion in the program include the author’s audience size, subscriber activity, reader and colleague status, and track record.

The platform also wants confirmation of its ability to post multiple articles a week for an extended period.

The Substack Advance Backlash: Are Lucrative Upfront Deals Worth Sacrificing Long-Term Earnings?

The New York Times (NYT) has criticized Vox for its lack of transparency in author selection for its Pro program. Former Vox employee Matt Iglesias agreed to pay $250,000 and 15% of his revenue from subscriptions, with a 10% increase in income in a year. However, he will not receive any additional payments.

Toast humor blogger Danny Lavery signed a two-year, $430,000 contract, while his wife, Grace, signed a $125,000 contract. The NYT claims many authors now regret signing up with the platform, as they would have earned more with the usual scheme.

Iglesias estimated that after receiving the advance, he paid the platform nearly $400,000 in subscription revenue. Roxanne Gay paid back her advance within two months of launching her Audacity blog.

How you can earn on Substack

To register, create a profile and media design, including color scheme, font, and logo. Use clear lines and minimal detail for a logo. Learn more about media design. On the About page, explain the author’s biography, media topics, style, and benefits for paid subscribers.

Explain why you chose to subscribe and provide a welcome letter for subscribers

How you can earn on Substack

To attract subscribers, include a link to your media in your email signature, personal website, and social networks. Include a “Subscribe” button in the first messages and encourage readers to comment and share.

Connect your Substack account to your Twitter profile to notify subscribers about your publication. To simplify the search, use three tags that can be changed at any time. This will help subscribers find your content on Substack.

Growing Your Readership on Substack Tips for Building an Engaged Audience and Converting to Paid Subscriptions

To grow your media, it’s advisable to share your publications with friends and on social networks and build a network of contacts by sending private messages to authors of interest.

Collaborating with them and publishing regularly can help develop your media. It’s best to write weekly, with a variety of formats, such as long text, audio, or short posts for discussion.

To convert free subscribers to paid ones, it’s crucial to understand your audience and evaluate why they might want to pay for a subscription. Substack authors can explain the need for a paid subscription in various ways, such as solving more crimes, sharing more educational content, or saving money for child education or treatment. For more detailed recommendations on working with paid subscriptions, refer to this resource.

Newsletters outlived their peak?

The New York Times reports on the potential of paid email to transform the media industry, with signs of the bubble potentially bursting. Newsletter Economy 2024 have been used by media startups like Politico and Axios to connect with readers, especially during the pandemic.

However, this format has now been replaced by platforms like Meta and Twitter, which announced the closure of their projects similar to Substack.

Substack reduced advances offered to authors to lure them to the platform, leaving some media that distributed content through Substack to develop independently. The Dispatch, a widely read political publication on the platform, has announced its desire to create its own independent media company. The New York Times does not expect this format to disappear soon, as some have achieved success in it.

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