Will Substack Go Beyond Newsletters? A Company Weighs Its Future. - The New York Times
Not long ago, Substack haunted mainstream media executives, poaching their star writers, luring their readers and, they feared, threatening their viability. Flush with venture money, the start-up was said to be “the media future.”
But now, Substack finds itself no longer a wunderkind but a company facing a host of challenges. Depending on whom you talk to, those challenges are either standard start-up growing pains or threats to the company’s future.
Tech giants, news outlets and other companies have released competing newsletter platforms in the past year. Consumers who loaded up on newsletters during the pandemic began to scale back. And many popular writers left, such as the associate English professor Grace Lavery and the climate journalists Mary Annaïse Heglar and Amy Westervelt, often complaining about the company’s moderation policy or the pressure to constantly deliver.
“Substack is at a pivot point where it needs to think about what it’s going to be when it grows up,” said Nikki Usher, an associate journalism professor at the University of Illinois Urbana-Champaign.
The good news for the company, five years old this summer, is that it is still growing. Paid subscriptions to its hundreds of thousands of newsletters exploded to more than one million late last year from 50,000 in mid-2019. (The company won’t disclose the number of free subscribers.) A hiring spree hopes to net more than a dozen engineers, product managers and other specialists. Executives hope to eventually take the company — which has raised more than $82 million and is said to be valued at $650 million — public.
But to maintain that growth, Substack executives say, the company must offer more than newsletters.
In practice, that means Substack will be not just a delivery channel for written newsletters but more of a multimedia community. Executives want users to create “personal media empires” using text, video and audio, and communicate with subscribers through expanded comments that could feature GIF images and profiles for readers. This week, Substack announced new tools for writers to recommend other newsletters.
But as Substack evolves beyond newsletters, it risks looking like another social network or news publisher — which could make it less appealing for writers.
Ben Thompson, whose tech-focused Stratechery newsletter inspired Substack, wrote last month that Substack has gone from being a “Faceless Publisher” behind the scenes to trying to put “the Substack brand front-and-center,” building up its app as a destination on the backs of writers.
“This is a way for Substack to draft off of their popularity to build an alternative revenue model that entails readers paying for Substack first, and publishers second, instead of the other way around,” Mr. Thompson wrote.
Publishing on Substack is free, but writers who charge for subscriptions pay 10 percent of their revenue to Substack and 3 percent to its payment processor, Stripe. The company also offers hefty advances to a small group of writers, whose identities it refuses to divulge.
Substack has one key difference from most other media companies: It refuses to chase advertising dollars. “Over my dead body,” Mr. McKenzie once wrote. “The antithesis of what Substack wants to be,” Mr. Best said.
But Substack’s biggest conflict has been over content moderation.
Mr. McKenzie, a former journalist, describes Substack as an antidote to the attention economy, a “nicer place” where writers are “rewarded for different things, not throwing tomatoes at their opponents.”
Critics say the platform recruits (and therefore endorses) culture war provocateurs and is a hotbed for hate speech and misinformation. Last year, many writers abandoned Substack over its inaction on transphobic content. This year, The Center for Countering Digital Hate said anti-vaccine newsletters on Substack generate at least $2.5 million in annual revenue. The technology writer Charlie Warzel, who left a job at The New York Times to write a Substack newsletter, described the platform as a place for “internecine internet beefs.”
Substack has resisted pressure to be more selective about what it allows on its platform. Employees of Twitter who worried that its content moderation policies would be relaxed by Elon Musk, the world’s richest man and the platform’s largest shareholder, were told to not bother applying for jobs at Substack.
“We don’t aspire to be the arbiter of saying, ‘Eat your vegetables,’” Mr. Best said. “If we agree with or like everything on Substack, that would be falling short of what a healthy intellectual climate looks like.”
Substack makes it easy for writers to break away, and defectors have a fast-growing collection of competitors waiting to welcome them.