When we started Substack in mid-2017, the future for writers was frightening. The news industry was rapidly contracting, eliminating countless journalism jobs. The social media giants seemed unstoppable, leaving fewer and fewer scraps for media businesses. Freelance budgets were being obliterated.
None of the many attempts to reverse the damage had succeeded. Spotify for newspapers? Celebrity-driven crowdfunding campaigns? Journalism on the blockchain? Billions of dollars of venture capital proved powerless in the face of what seemed like inevitable doom – and every misstep of the way, writers were hurt.
Journalism itself was as strong as it had ever been, with more great writers serving more eager readers than at any time in history. You could publish a story and in a matter of minutes have a million readers. Getting paid was the hard part. The internet had changed the scope of possibility for journalism, but it had also broken its business model.
From day one, we felt it was important for Substack to have a simple, transparent business model that worked. That might sound like an obvious thing to want, but it was atypical for tech startups, which had been inculcated with the previous generation of Silicon Valley wisdom that aggregating an audience was the primary concern and a business model could come later. That approach, propped up by a venture capital model designed to accommodate a multitude of failures, had given false hope to writers many times over, convincing them that an exciting future was waiting to be unlocked by just the right combination of zeroes and ones, only to ultimately leave them grasping at pixels.
As a Silicon Valley startup, we were hyper-aware of the skepticism that might come our way. We needed to show that the Substack model was trustworthy and reliable. We did this in part by making our success dependent on writers’ success: Substack is free for anyone to use, and we make money only when they do, by taking a 10 percent cut of subscription revenue. Writers retain total independence, with complete ownership of their mailing lists, intellectual property, and content.
After seeing a string of early successes with the first publishers on the platform, we became increasingly excited by the realization that writers could go solo, do important work, and thrive from being paid by their happy readers. We felt like we had discovered a little secret and wanted to spread the good word as fast as possible. By the time we raised money from venture capitalists, we did so in the knowledge that we could use it not to keep afloat while we searched for viability, but to fuel the growth of something that was already working.
We started experimenting with advances, paying a small number of writers sums ranging from $10,000 to $30,000 to cover them for a few months as they got established on Substack. They paid back the money over time through a revenue-sharing agreement. We also introduced a fellowship program, where, over two cohorts, we offered writers coaching, business advice, and more cash advances.
The advances worked well. They helped writers start high-quality and profitable publications beloved by their readers. And they gave us confidence that we could invest even more deeply in writers in a way that would help both them and us.
But the advances also had limitations. On a per-deal basis, we could never really do better than break-even. A Substack advance was effectively an interest-free loan that would never be paid back if a publication failed. At the same time, while the writer would have a good cash cushion for the first few months, they had to get through the payback period before their revenue really started flowing. So we came up with a new structure that allowed us to absorb more risk on the writer’s behalf, ensuring they’d get paid for a year of work no matter how their publication performed. We came to call this program Substack Pro.
With Substack Pro, we pay a writer an upfront sum to cover their first year on the platform. The idea is that the payment can be more attractive to a writer than a salary, so they don’t have to stay in a job (or take one) that’s less interesting to them than being independent. In return for that financial security, a Pro writer agrees to let Substack keep 85% of the subscription revenue in that first year. After that year, the deal flips, so that the writer no longer gets a minimum guarantee but from then on keeps 90% of the subscription revenue – which, if we’ve made our bet well, will be a larger overall dollar amount. We like this structure because, while some who get these deals are already well off, it gives financially constrained writers the ability to start building a sustainable enterprise. We take most of the risk for them. In return, their work contributes to the quality of the Substack ecosystem and they become long-term customers.
It’s also important that the economics of these deals work out for Substack. We don’t have to make money on every one, but we certainly shoot for that. If the program were financially unsustainable, doing these deals would do more harm than good, since not only would it compromise writers’ careers but we’d also be burning their trust.
We see these deals as business decisions, not editorial ones. We don’t commission or edit stories. We don’t hire writers, or manage them. The writers, not Substack, are the owners. No-one writes for Substack – they write for their own publications. We cannot contact their readers without explicit permission, and we make no attempt to influence their content, other than requiring that they adhere to the content guidelines that apply to all writers on Substack (read our stance on content moderation for more). The only thing we ask for in return is a commitment to a minimum publishing frequency so we know they’re giving it an honest shot.
Today, our Pro deals result from a combination of writers coming to us, writers referring their friends, us identifying writers already on Substack with growth potential, and proactive outreach. While we are starting with a focus on well established writers who feel like “good bets,” this program is very much in its infancy. We will also continue to build on our fellowships, mentorship programs, educational resources, and grants to help writers at all different stages in their careers.
When considering a Pro deal, the main thing we take into account is the writer’s likelihood of success with the Substack model. We look at the writer’s audience size, how engaged their following is on social media, and the respect they engender among their readers and peers. As an indicator of a publication’s market opportunity, we look at what they cover and assess how well that subject is covered elsewhere. We consider their track record and look for evidence of an ability to publish multiple pieces a week for an extended period of time. We do not approach this process from the perspective of a publisher, looking to gather a particular type of content under our brand, but with the eye of an investor, looking to stimulate a new generation of profitable media businesses. We want to help writers flourish.
With Substack Pro, as with the platform in general, we aim to host a broad array of voices because we believe a diversity of thought is essential to healthy discourse. Inevitably, a small subset of writers we have done deals with are controversial in some quarters, attracting praise and scorn in equal measure. While these deals may invite sharp criticism – even denunciation – from those writers’ opponents, we think it would be a mistake to shy away from making these calls. No writer who says anything important is universally loved; and in fact, sometimes those who engender the fiercest opposition are the ones most deserving of support. This is why the free press is important. A hero can be thought a villain, and a villain a hero. History makes this clear, even if the conditions of the present show only fog.
Other writers, seeing the success of their contemporaries, have come to Substack on their own, taking no money from us. For many writers, that’s the smarter financial decision, since the guaranteed payments we are willing to offer are often dwarfed by the amount of money they can make if they just stick with the standard terms, keeping 90% of the subscription revenue for themselves. This is by far the largest group and it includes many of the biggest names on the platform. (We don’t disclose the names of the writers with whom we’ve done deals because it is their private information and up to them whether or not they want it publicly known.)
We haven’t said anything about Substack Pro in public until now because we have been in a “figuring it out” phase, seeing what resonates with writers and how the deals perform over time. We’re still only a few months into this, but we are now confident it’s working. A good number of writers who have accepted Pro deals are well on track to make multiples of what they earned from their previous salaries. Their success has helped bring other writers to Substack, and many of their readers go on to discover and support other people on the platform.
We expect Substack’s competition to grow and other platforms will no doubt incentivize writers in similar ways. That’s a good thing. Our goal is to build a media ecosystem that provides a genuine alternative to the attention economy and puts writers and readers in charge. If the work we are doing today results in writers getting the autonomy and pay they deserve, even if it comes from other places, then we will consider that a big win.
But of course, we think we can do much better than that and intend to invest accordingly. We believe that this movement towards subscriptions and writer autonomy represents an economic reordering for media on a scale not seen since the invention of the penny paper 200 years ago. It has long been clear that writers hold immense cultural value because they influence how almost everyone on the planet thinks, but we’re increasingly convinced that they also represent tremendous economic value. We are betting our company on the idea that writers have been the victims of a massive market failure. Three years ago, you’d have been crazy to believe that one of the next great internet businesses could be built by supporting writers. But now, to us at least, it seems obvious.
We are going to accelerate and expand the Substack Pro program to make that future happen faster. All of those problems from 2017 are still with us. The media ecosystem is in crisis. We can’t afford to sit around and wait.