Three Problems With The (Paid) Substack Model

Practicing The Write Stuff Issue #42

This Issue was obliquely suggested in a conversation I had with a PTWS Subscriber. And it’s something I’ve been thinking about at odd times ever since. So I decided to summarise that thinking (for myself) by devoting Issue #42 to it.

If you don’t read this Issue fully, please scroll down to Section 2.2 as I give two pieces of advice at the bottom of that sub-section that - if you implement - will reward your investment of time to read this issue and/or that sub-section.

Two things to note before we get started:

1. Back in the day I used to run what would now be called a paid newsletter - I called it a subscription based online magazine. That magazine was weekly, ran for 10 years and 504 issues, was typically between 50 to 80 pages long(!), never had a massive subscriber bass (approx. 750 subscribers was the most I ever had) and yet was the foundation of a 6 Figure Business.

2. I’m not dissing on Substack, even if seems like I am. Instead I’m putting down some thoughts, and you never know maybe someone at Substack might read this and make changes that benefit both them and us (us being the writers who create the content that fuels Substack’s model).

Sidebar: that second point might seem optimistic. But back in 2009 or 2010 when the first wave of kindle spam was despoiling one of the best innovations for writers since Gutenberg, I wrote an article called something like: An Open Letter to Jeff Bezos: Please Stop The Kindle Spam. Said article generated some interesting feedback, some press interviews and the publicity either directly or indirectly led to Amazon making changes to KDP that wiped out that first wave of kindle spam. Sadly, it’s been a game of ‘whack-a-mole- for them ever since.

Enough with the trips down memory lane, let’s dive into the three problems that the paid model of Substack has.

Problem #1 - Controlling The Order That The Reader Consumes Your Content

That might not sound like a massive problem.

For some niches it may not be. For some writing styles, that’s the case too. But imagine this scenario:

• You, the creator, creates a body of work over a period of time (measured in years rather than months).

• There are foundational pieces of content contained within that body of work that are ‘foundational’ for new subscribers to read, consume, and implement.

• Those foundational pieces of content will be buried within your publication. It won’t be intuitive for a new subscriber to start with those foundational pieces.

Now there are ways that you can provide breadcrumbs to guide new subscribers. For example Substack lets you create a welcome post/email. And you could create a guide there. Or you can create a ‘Start Here’ style issue (and link in the welcome email).

If you write about multiple topics, you can have a page/post for each of those topics with a suggested reading order for your readers to go through to help them navigate the maze of content they will otherwise face.

But you can only suggest this to the reader. There’s no guarantee they will consume your content in the order that you’d like.

Might sound like a minor issue….to me it’s major. One of the goals of your content should be to help identify your ‘True Fans.’ And help guide readers who are not yet your True Fans down the path to become one. If you don’t set clear parameters, at some stage you'‘ll lose readers who would have become True Fans simply because they weren’t guided along the path and got lost along the way.

(Paul’s Note: at some stage, I’ll write an issue about how I see the ‘True Fans’ model and how it works for you.)

One immediate takeaway here (for me): although this is a free publication, and I don’t envisage monetizing that, I’ve written on multiple topics. There’s no welcome email. There’s no page with suggested paths through the content. And so on. So I’ll need to work on that. Because although this is not paid, I do have long term business goals at play and implementing this step will help with those. (Although I also enjoy writing these issues because I’m a writing nerd.)

There’s a bigger financial issue with the Substack model though…but I’ve grouped that with the second problem.

Problem #2 - Monetizing Your Back Catalogue Effectively

Although Substack gives a simple way for writers to monetize their writing - both in terms of the simplicty of using the platform and in terms of setting up subscriptions - the monetization model is inefficient.

2.1 - New Subscribers Get Instant Access To Everything

Say you’ve been writing for two years. Posting a 5000 word issue every week. (Or whatever the wordcount iS). In two years time, a new subscriber who signs up for a subscription gets instant access to everything you’ve written for that subscription.

There’s an intrinsic unfairness built in here. Let’s say your first 10 subscribers joined on Day 1….and have paid $10 a month for two years for the 104 issues you’ve created in that time period. Someone who comes along as Issue 105 is about to release, pays their first $10, and have instant access to Issues 1 to 105.

One way to try and combat this is to increase subscription prices as you add more value to your overall subscription package (i.e. more issues). But increasing the price makes the job of attracting new subscribers harder, and you have to work harder to communicate the value proposition that the back catalogue of 104 issues has to new subscribers.

One other thing to note: that 104 Issues also creates its own amount of potential resistance due to overwhelm.

The bottom line - especially if you’re thinking in terms of multiple years rather than months - is that the paid Substack model doesn’t monetize your back catalogue well.

2.2 In An Ideal Scenario - You Could Do This

When I ran the magazine I referred to in the intro to his Issue, here are the different ways I used to monetize the magazine (that I remember):

• Annual Subscription

• Monthly Subscription ($20 a month at the time my 10 year run finished).

• Selling individual back issues (ranging from $5 to 7.50 depending on when they’d been written as the $7.50 issue had more content and value).

• Selling back issues in ‘yearly packets.’

• Splintering sections of each magazine and selling those pieces individually ($2.50 each if memory serves).

• Building serialized courses into the magazine to create value….then when finished, splintering those sections off and selling them as standalone courses.

• Selling a one year only subscription as a Black Friday deal (with the previous years content as a bonus). At the end of that year those ‘Black Friday buyers’ would get an offer to become recurring subscriber members at a price between what they paid on that Black Friday, but less than being advertised.

• Using a years worth of content as a bonus to a paid course. (And then upselling to becoming a subscriber a month later.)

• Paid trial periods. I experiemented with 7 day trials (for $1), 14 day trials for $1 and 28 day trials for $1. Conversion rates (i.e. people who stayed beyond the trial period) weren’t great so I discontinued these. If i had run the magazine longer I would have experimented more with this.

I’m sure there was more…I didn’t have a long term plan when I set out and as I went along I would try things to see what worked. If they worked….I repeated them. If they didn’t….I either iterated and tried again, or scrubbed that idea.

Two things to add here that you should take note of as they will be financially viable. I did the first, but didn’t learn about the second until I’d already made the decision to scrub the magazine:

1. When someone cancels their subscription, always write to them (you can use a template). The gist of that communication should be: thanks for being a subscriber, find out why they’ve cancelled (so you can iterate and improve), check their subscription has not been cancelled due to a paypal/card error and offer them a way to get back in if that did happen. From memory I think around 30% of cancellations were due to this….and some subscribers even thought I’d cancelled them! Never occurred to them it was a processing error due to a card issue.

2. Keep a database of people who have cancelled their membership. And work on some kind of ‘win back’ campaign to get them to re-subscribe in the future. If you think about this from Day 1….and your magazine offer includes a bonus that is shipped in the post…then you have their postal address. And the ‘win back’ campaign can be some kind of lumpy mail that you send to them.

2.3 The Niches Where Substack’s Model Is Golden And Works Perfectly Out Of The Box

If you write in any kind of niche where your writing is time sensitive then Substack’s model is great.

Niches where this is the case are anything to do with rapidly changing markets or ideas. So investing advice. Crypto. AI. Politics. Those kind of areas.

If your back catalogue is likely to become outdated and irrelevant quickly, but current content that is cutting edge….Substack is just about the best model of monetisation I can think of.

Problem #3 ….Substack’s Email Capabilities

Disclaimer here: I’m not an email expert of any sort. No claims to be one. And this is only my opinion…

But.

Substack’s email platform isn’t advanced enough for running a paid publication unless you’re running the kind of cutting edge content publication mentioned in the previous section. While it does have some simple segmentation capability, it’s just not sophisticated enough in the long run. Especially if you get buyers for products/training/courses etc that aren’t sold on Substack.

One final thing on email….make sure you back up your subscribers regularly (at the very least weekly). While Substack is an open platform at the moment - and hopefully it will stay that way for years into the future - all it would take is someone like a Big Tech company to buy it out followed by policy changes by banning of people whose content doesn’t fit in with those policy changes….and you’ve got a spot of trouble to deal with.

#4 Who Substack Is Great For

If you’re starting out, don’t have any products or services yet, want to build an audience via written content then Substack is probably the best place for you. Substack already has an audience and there are ways built into the platform to get some of that audience to see your content. And hopefully subscribe.

You can monetize that content too, and you don’t have to convert your publication to a paid one to do that. Ways of doing this include:

• Creating your own products and mentioning them/promoting them. (If you do this, make sure you set up a buyer’s email list on an email system that isn’t Substack.)

• Mentioning other people’s products where you have an affiliate relationship.

• If you build a big audience….you could sell paid sponsorships for an issue. Or sell ad space in an issue.

I’ve got a Use Case of someone I know who Substack is going to be perfect for. Here’s his scenario:

• He had a business that he started 10 years ago….for various personal circumstances he’s done nothing for 5 years. When I say nothing…..nade. Zilch. Absolutely fuck all.

• Yet he has YouTube videos that still collect subscribers to his email list every day. Despite the fact that he’s not emailed that list in 5 years.

• He has enough subscribers on his dead list that he pays $150 to Aweber every month.

• My advice: create a free Substack. Repurpose his most popular YouTube videos into more detail how-to content by breaking them into segments, adding text and checklists and the like and so on. Those will done weekly and will be ‘free Substack Newsletter’ content.

• The goal will be to email people on his list and get them to move from Substack. And then delete all the non-buyers from Aweber and use Aweber purely for buyers.

• All the descriptions on his YouTube videos will be edited to point to his Substack rather than his Aweber opt in.

• His Substack then allows him to reduce his website to a handful of pages and direct everything from his Substack.

• When I write his first book for him, he can then advertise it from Substack.

One caveat though: building a free list from scratch is hard work, and might need more free content to promote/build that list. My personal belief is the model of building a free list for the purpose of then selling to that list - which dates back to the early 2000s - is outdated in 2024 and a much harder task than it used to be.

So you’ve got to weigh what’s best for you. And it’s possible that building a Substack might not be the route that works best for you.

So you know…as well as PTWS I also have an ‘incognito’ Substack which is my anonymous take on politics. Again for that, Substack is perfect.

The Rideout

I’d love to hear your thoughts on Substack. Are you primarily a reader or do you write as well? If so, how is your publication going and is it paid or free?

Issue 43

Summer has been poor in the UK. Again. And it feels autumnal already….I find autumn and winter are great for my reading as I tend to go to bed early and read for 90 minutes. And in turn that reading feeds into my writing. So I’m starting to feel more productive and more full of ideas than I have done for a couple of months. So although I don’t like winter (unless I’m in the French Alps), I do like the extra hours of reading I get to do. Anyways…this is two Sundays in a row that I’ve hit publication deadline, so I’m looking forwards to that continuing. So I’ll catch you next sunday.