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Is Substack Collapsing? · IndieNewsNow LIVE! Clips

• 0:00
  [music]
• 0:05
  SPEAKER_00: Who are these people?
• 0:09
  SPEAKER_01: There is something happening on Substack, and that's why I brought this.
• 0:13
  SPEAKER_01: This gentleman,
• 0:14
  SPEAKER_01: Scott Carney,
• 0:16
  SPEAKER_01: uses his own evidence,
• 0:17
  SPEAKER_01: but also a Taylor Lorenz freakout,
• 0:21
  SPEAKER_01: which we always love to see Taylor Lorenz freaking out.
• 0:24
  SPEAKER_01: Speaking of Mockingbird Media,
• 0:26
  SPEAKER_01: who's denying how she works for Pierre Omidyar,
• 0:29
  SPEAKER_01: though she takes a check from Pierre Omidyar's Charitable Foundation and That's
• 0:34
  SPEAKER_01: a whole other thing we covered that last year.
• 0:37
  SPEAKER_01: A few years ago,
• 0:38
  SPEAKER_01: Substack transformed away from being a niche newsletter delivery system and into
• 0:42
  SPEAKER_01: the main refuge for tens of thousands of journalists who were fleeing
• 0:46
  SPEAKER_01: or had been kicked out of the mainstream media.
• 0:49
  SPEAKER_01: The value prop was simple.
• 0:51
  SPEAKER_01: Writers could come here to build an audience that would actually pay directly for their writing.
• 0:56
  SPEAKER_01: The platform recommended writers put paywalls on posts that would encourage readers
• 1:00
  SPEAKER_01: to financially support their favorites.
• 1:03
  SPEAKER_01: The trade-off from other social media platforms was that
• 1:06
  SPEAKER_01: the paywalls would inherently limit the reach of their best work.
• 1:10
  SPEAKER_01: Nonetheless,
• 1:11
  SPEAKER_01: with a thousand paid subscribers,
• 1:13
  SPEAKER_01: you could live the middle-class dream of earning close to $100,000 a year.
• 1:17
  SPEAKER_01: Well, more like $80,000 after all the fees.
• 1:20
  SPEAKER_01: And for a while, it seemed like a reasonably good trade.
• 1:23
  SPEAKER_01: No one wanted journalism to die,
• 1:25
  SPEAKER_01: and the new influx of writers was doing pretty good work on the platform,
• 1:29
  SPEAKER_01: albeit with lower budgets than traditional newsrooms.
• 1:33
  SPEAKER_01: But the model raised an obvious question.
• 1:36
  SPEAKER_01: How many individual newsletters could the platform rationally expect readers
• 1:40
  SPEAKER_01: to pay $8 a month to access?
• 1:43
  SPEAKER_01: Again, talking about shitlibs, early adopters on the platform did the best.
• 1:50
  SPEAKER_01: As usual,
• 1:51
  SPEAKER_01: writers like Heather Cox Richardson and Matthew Iglesias arrived early
• 1:55
  SPEAKER_01: and earned millions.
• 1:57
  SPEAKER_01: But as more writers showed up, the subscription revenue pile didn't grow commensurately.
• 2:03
  SPEAKER_01: Even with Substack's discoverability mechanism,
• 2:06
  SPEAKER_01: which is something that's missing on places like Ghost and Beehive,
• 2:09
  SPEAKER_01: which are Substack newsletter competitors,
• 2:12
  SPEAKER_01: it was getting more difficult to establish a real career here.
• 2:16
  SPEAKER_01: So Substack tried to solve this problem by adopting a strategy
• 2:20
  SPEAKER_01: that every other tech company had already worn thin.
• 2:24
  SPEAKER_01: They pivoted to adding a Twitter-like function called Notes,
• 2:28
  SPEAKER_01: which created a distinction between subscribers and followers.
• 2:33
  SPEAKER_01: Soon,
• 2:33
  SPEAKER_01: they incorporated video and live streaming and encouraged posters to clip shorts
• 2:37
  SPEAKER_01: into their feeds with an AI-generated clipping program,
• 2:42
  SPEAKER_01: which I think is actually outstanding,
• 2:44
  SPEAKER_01: underutilized, and one of the best resources out there.
• 2:48
  SPEAKER_01: They make your captions for you.
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  SPEAKER_01: You can choose how they look.
• 2:51
  SPEAKER_01: I've been making shorts out of the Substack videos.
• 2:56
  SPEAKER_01: But you can actually make them yourself off the transcript.
• 3:00
  SPEAKER_01: I don't normally accept the AI ones that are automatically generated by them.
• 3:05
  SPEAKER_01: But what had happened was,
• 3:07
  SPEAKER_01: in other words,
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  SPEAKER_01: Substack's growth strategy was to offer almost the exact same things
• 3:11
  SPEAKER_01: as every other social media network with more paywalling capabilities,
• 3:16
  SPEAKER_01: more Stripe plug-in capabilities, better live stream integration.
• 3:21
  SPEAKER_01: They pushed the idea that the subscription revenues would keep the best creators
• 3:25
  SPEAKER_01: on this platform and
• 3:26
  SPEAKER_01: the new engagement opportunities would grow truly massive audiences.
• 3:31
  SPEAKER_01: Stated plan was to make Substack the go-to place for everything internet in
• 3:36
  SPEAKER_01: a winner-take-all contest.
• 3:37
  SPEAKER_01: Now, what also happened was one of the founders worked for Tesla and had
• 3:45
  SPEAKER_01: a personal vendetta against Elon Musk.
• 3:48
  SPEAKER_01: Upon the announcement that Twitter was going to shut down their public API
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  SPEAKER_01: that made tweets available to everyone,
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  SPEAKER_01: that Substack was getting massive benefit from being able to embed tweets
• 4:00
  SPEAKER_01: into articles published on Substack.
• 4:04
  SPEAKER_01: And they saw that was going to be ending and didn't know what they were going to do about it.
• 4:08
  SPEAKER_01: They saw that they were going to miss the shares from Twitter over to Substack
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  SPEAKER_01: and decided to build their own engine here.
• 4:18
  SPEAKER_01: Eight months before, in October of 2022.
• 4:23
  SPEAKER_01: They launched it in April of 2023, just a week before Twitter shuts down their API.
• 4:29
  SPEAKER_01: But then something else happened.
• 4:31
  SPEAKER_01: TikTok got bought and started censoring people left, right, and sideways.
• 4:36
  SPEAKER_01: And the reason why you see all this vertical video on Substack is
• 4:40
  SPEAKER_01: that they also decided they wanted to go after TikTok's creator audience.
• 4:46
  SPEAKER_01: Because TikTok was demonetizing people.
• 4:49
  SPEAKER_01: They were eliminating videos.
• 4:51
  SPEAKER_01: They were doing all kinds of censorship.
• 4:55
  SPEAKER_01: And Substack wanted to be the anti-TikTok when it came to that.
• 4:59
  SPEAKER_01: They're not.
• 5:00
  SPEAKER_01: They don't have a TikTok-style feed or algorithm And that's been, in my mind, a failure.
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  SPEAKER_01: But they have brought over some of the largest TikTok news people to generate,
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  SPEAKER_01: create their own substacks.
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  SPEAKER_01: Guy Christensen and that guy Aaron Parnas,
• 5:17
  SPEAKER_01: who I don't like, but he's there and he's got a massive Substack following.
• 5:21
  SPEAKER_01: But what happens is, is that creators started to earn a lot less.
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  SPEAKER_01: So, Taylor Lorenz crying on notes,
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  SPEAKER_01: I have over 200,000 followers, yet my paid subscriptions have fallen off a cliff.
• 5:35
  SPEAKER_01: Aww.
• 5:36
  SPEAKER_01: I'm beginning to wonder what's going on with the platform economics of Substack.
• 5:41
  SPEAKER_01: In the past six months,
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  SPEAKER_01: her paid subscriptions have plummeted despite her making no changes to her content,
• 5:48
  SPEAKER_01: yet her followers are skyrocketing.
• 5:51
  SPEAKER_01: Is anyone else experiencing this?
• 5:53
  SPEAKER_01: It makes her skeptical of Substack as a platform because it feels more
• 5:57
  SPEAKER_01: and more like this app is becoming another social media feed.
• 6:01
  SPEAKER_01: She wishes she could turn off the ability of anyone to follow her
• 6:04
  SPEAKER_01: because what good are followers when the follower growth seems correlated
• 6:08
  SPEAKER_01: with losing paid subs?
• 6:11
  SPEAKER_01: You're losing paid subs because people don't like what you have to say.
• 6:14
  SPEAKER_01: They don't like what you're writing and they don't like your material, Taylor.
• 6:19
  SPEAKER_01: And when you're not inflated by the machine that is corporate media,
• 6:24
  SPEAKER_01: people tend to phase in and out of subscription...
• 6:30
  SPEAKER_01: Services like this to different publications.
• 6:33
  SPEAKER_01: So people may subscribe to you for six months or a year or even two years,
• 6:37
  SPEAKER_01: but it's not ongoing in perpetuity.
• 6:40
  SPEAKER_01: Like you had a job ongoing in perpetuity.
• 6:42
  SPEAKER_01: People's tastes change.
• 6:44
  SPEAKER_01: Their viewing habits change.
• 6:46
  SPEAKER_01: Their time availability changes.
• 6:49
  SPEAKER_01: And because of it, they tend to not stick with the one-off creators.
• 6:54
  SPEAKER_01: Think about all these Rocket Money apps where they try to get you to eliminate
• 6:59
  SPEAKER_01: the monthly subscriptions that you're paying for so
• 7:03
  SPEAKER_01: that you can save yourself money every month.
• 7:06
  SPEAKER_01: In addition to the fact that the fucking economy is in the shitter right now, Taylor.
• 7:11
  SPEAKER_01: But, of course, she would have no acknowledgement of that.
• 7:15
  SPEAKER_01: So people can't necessarily afford as much to pay for a multitude of paid monthly
• 7:21
  SPEAKER_01: or annual subscriptions on different platforms.
• 7:26
  SPEAKER_01: And there's a lot of choice out there.
• 7:29
  SPEAKER_01: That's in addition to Disney+, Netflix, HBO Max, Paramount, Amazon Prime.
• 7:39
  SPEAKER_01: There are other ones out there.
• 7:42
  SPEAKER_01: That's in addition to YouTube memberships, Rumble memberships, Patreon subscriptions.
• 7:48
  SPEAKER_01: There is a highly competitive large marketplace out there that Taylor is competing
• 7:53
  SPEAKER_01: in, and she's mad that she has to compete.
• 7:57
  SPEAKER_01: Now, this person says that he doesn't have anywhere near Taylor's following,
• 8:00
  SPEAKER_01: but look at his numbers, which are surprisingly similar.
• 8:03
  SPEAKER_01: He's making $24,000 a year.
• 8:05
  SPEAKER_01: That's two grand a month off of his Substack.
• 8:07
  SPEAKER_01: Decent.
• 8:09
  SPEAKER_01: That's more than most are actually making.
• 8:11
  SPEAKER_01: It's way more than I'm making.
• 8:14
  SPEAKER_01: My gross annualized revenue for Substack right now is under $1,000.
• 8:19
  SPEAKER_01: I don't use this as a monetary source.
• 8:22
  SPEAKER_01: He has 9,000 subscribers.
• 8:24
  SPEAKER_01: I have about 7,500.
• 8:27
  SPEAKER_01: And that has been pretty flat for about the last 90 to 120 days.
• 8:33
  SPEAKER_01: He's got 268 paid subscribers.
• 8:35
  SPEAKER_01: I think we have 20 something, but not even all those 20 are actually paid.
• 8:40
  SPEAKER_01: Some are calm.
• 8:42
  SPEAKER_01: But what he's showing is that his paid subscribers have gone from over 300 here
• 8:45
  SPEAKER_01: to Now you're seeing it down in the 260s.
• 8:50
  SPEAKER_01: So he's lost 40 subscribers since May 1st,
• 8:55
  SPEAKER_01: which is more than 15% of his paid audience without picking up new ones, really.
• 9:01
  SPEAKER_01: I suspect that this is a platform-wide problem and it comes back to
• 9:04
  SPEAKER_01: the central issue of subscription fatigue.
• 9:08
  SPEAKER_01: As the platform promotes more and more free content,
• 9:12
  SPEAKER_01: users have less and less incentive and time to engage with the more thoughtful,
• 9:17
  SPEAKER_01: higher quality content that lives behind paywalls.
• 9:21
  SPEAKER_01: But also...
• 9:23
  SPEAKER_01: You have a lot more people that have showed up to Substack in the last year.
• 9:27
  SPEAKER_01: So like I said, Taylor,
• 9:29
  SPEAKER_01: your marketplace is a lot more competitive than it was a couple of years ago.
• 9:33
  SPEAKER_01: You've got Jim Acosta here now,
• 9:35
  SPEAKER_01: and you've got Don Lemon here now,
• 9:37
  SPEAKER_01: and you've got, again, massive personalities that are commanding $10 a month each.
• 9:44
  SPEAKER_01: Michael Burry is here from, you know, the big short.
• 9:48
  SPEAKER_01: And...
• 9:50
  SPEAKER_01: All these different creators are monetizing
• 9:52
  SPEAKER_01: and they're getting their purple checks now are starting to show up for the people
• 9:56
  SPEAKER_01: that have 10,000 or more paid subscribers to their publication.
• 10:02
  SPEAKER_01: 10,000 paid subscribers, you can actually make a living.
• 10:06
  SPEAKER_01: But you need 10,000 and most creators, 99% of the people on this platform are not getting that.
• 10:13
  SPEAKER_01: The TAO is another outlet that didn't exist a couple of years ago.
• 10:17
  SPEAKER_01: And I called all of these out.
• 10:19
  SPEAKER_01: And what this is doing is diluting the pool of creators.
• 10:24
  SPEAKER_01: Which sucks.
• 10:25
  SPEAKER_01: I saw this, and we're going to eventually probably be squeezed completely off the platform.
• 10:30
  SPEAKER_01: I'm going to use it till I can't anymore.
• 10:33
  SPEAKER_01: I've invested the last five years plus into Substack.
• 10:37
  SPEAKER_01: I've published over 2,200 articles and posts and live streams and appearances.
• 10:44
  SPEAKER_01: Everything I've been running this hub through has been here,
• 10:47
  SPEAKER_01: and I've seen my reach dwindle steadily over time.
• 10:54
  SPEAKER_01: What has helped has been the recommendation engines
• 10:57
  SPEAKER_01: from other larger creators like Guy Christensen.
• 11:02
  SPEAKER_01: All right.
• 11:03
  SPEAKER_01: Guy recommends this,
• 11:05
  SPEAKER_01: Indie Media Today,
• 11:06
  SPEAKER_01: and thanks to it, I've gotten over 2,500 new subscribers just thanks to Guy.
• 11:11
  SPEAKER_01: And I appreciate him for that.
• 11:14
  SPEAKER_01: I never, you know, I...
• 11:16
  SPEAKER_01: Again, I never asked him to do it.
• 11:18
  SPEAKER_01: I don't think I did.
• 11:18
  SPEAKER_01: I might have sent him a thing, but it really helps to help grow people's audiences.
• 11:24
  SPEAKER_01: And their recommendation engine,
• 11:27
  SPEAKER_01: Substacks,
• 11:29
  SPEAKER_01: automatically suggests the people that he recommends to his audience
• 11:34
  SPEAKER_01: to help them discover new newsletters.
• 11:36
  SPEAKER_01: That is that recommendation discovery engine that the author is talking about here.
• 11:42
  SPEAKER_01: Again, there's a lot more to this article.
• 11:45
  SPEAKER_01: I'll link it for the wonky people that want to read more
• 11:48
  SPEAKER_01: about my favorite passion project, Substack.
• 11:52
  SPEAKER_01: It's near and dear to my heart, which is why I talk about it.
• 11:54
  SPEAKER_01: But it's also important as a creator.
• 11:56
  SPEAKER_01: It's important from a censorship perspective because they have been one of
• 12:00
  SPEAKER_01: the least censorious platforms out there.
• 12:04
  SPEAKER_01: And to see the people that are trying to make it work,
• 12:08
  SPEAKER_01: not able to make a living from it is worrisome, to say the least.
• 12:14
  SPEAKER_01: All right, that was our quote-unquote lightning round.
• 12:16
  SPEAKER_01: That still took about 20 minutes.
• 12:17
  SPEAKER_01: Well, I appreciate that.
• 12:19
  SPEAKER_01: The battle to control perception crushing Substack model underfoot.
• 12:25
  SPEAKER_01: Maybe, but remember that Marc Andreessen, A16Z,
• 12:28
  SPEAKER_01: is also one of the largest investors in Substack,
• 12:31
  SPEAKER_01: as well as Stripe, which is the exclusive payment provider.
• 12:38
  SPEAKER_01: And processor for Substack.
• 12:41
  SPEAKER_01: So Andreessen Horowitz is making money on both sides of the transaction right now.
• 12:46
  SPEAKER_01: I don't think that they want to ruin this golden goose.
• 12:49
  SPEAKER_01: What they're trying to do is send more and more creators here,
• 12:53
  SPEAKER_01: but they're flooding the zone so much that it's becoming impossible
• 12:57
  SPEAKER_01: for any individual creator to make it work in my mind.
• 13:01
  SPEAKER_01: All right.
• 13:01
  SPEAKER_01: Tara Preda, good to see you.
• 13:02
  SPEAKER_01: Thanks for hanging out, too.
• 13:04
  SPEAKER_01: I'm glad the weather's beautiful.
• 13:05
  SPEAKER_01: I wish we all got to hang out and go walk the dog in some nice, beautiful weather.
• 13:12
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• 13:17
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• 13:19
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• 13:25
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• 13:27
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• 13:31
  SPEAKER_01: We have a Keep the News Free section.
• 13:33
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• 13:39
  SPEAKER_01: where there are a ton of t-shirts and tank tops and hoodies.
• 13:42
  SPEAKER_01: I know Adam Ayers and Chris H., who's in chat right now, he picked up a Shanda Masta t-shirt.
• 13:48
  SPEAKER_01: Really appreciate that.
• 13:49
  SPEAKER_01: Love him for it.
• 13:51
  SPEAKER_01: And then, of course, we're live on Substack.
• 13:53
  SPEAKER_01: We just talked about Substack.
• 13:56
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• 13:57
  SPEAKER_01: That's where I'm live right now.
• 13:59
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• 14:02
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• 14:10
  SPEAKER_01: There we go.
• 14:11
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• 14:13
  SPEAKER_01: We need it more than ever.
• 14:14
  SPEAKER_01: I'll see you next week, fam.
• 14:16
  SPEAKER_01: Love you all.
• 14:17
  SPEAKER_00: No!
• 14:18
  SPEAKER_00: We just fucking lost the stream!
• 14:22
  SPEAKER_00: I guess this isn't such an awful place Is that what you want me to say?
• 14:30
  SPEAKER_00: You prove it's possible to sleep for days And I still think you're right here awake
• 14:37
  SPEAKER_00: The cost of living isn't much to make But God, it's so hard to say.
• 14:45
  SPEAKER_00: And when they told you everything was safe, were you safe?
• 14:53
  Were you safe?