Helping Writers Monetize Their Free Readers More Effectively By Opening The Platform Up (and Taking a Cut)
Consider me a fan of Substack. Yes, I disagree with aspects of their content policies (and occasionally wince at the arguments they make to defend said choices), but the company founders fundamentally want to see writers do their best work and make a great living in the process. Getting creatives paid is a mission I’ll always support.
Beyond the aforementioned community standards questions they inspire a lot of public debate for something which is basically a CMS, email list management tool and Stripe integration. One way to understand the coverage is via Aaron Zamost’s important narrative clock metaphor. The fact Substack raised large amounts of capital during a particularly bullish time in our industry (and the people they raised it from) made them a particularly delicious topic.
“A company’s narrative moves like a clock: it starts at midnight, ticking off the hours. The tone and sentiment about how a business is doing move from positive (sunrise, midday) to negative (dusk, darkness). And often the story returns to midnight, rebirth and a new day.”
But this isn’t a post about any of that. At least not directly. Instead consider it a companion to my “Why a Paid Newsletter Won’t Be Enough Money for Most Writers.”
So long as Substack offers a great publishing platform (and helps grow audiences) they will have enough writers. Yes, Author Development will still be a staffed function and various incentives (such as the well-covered Pro guarantees) may exist, but I’m actually not worried about the ‘supply side’ of their business, at least at the top of the funnel.
What does give me pause is how many of those publications will (i) want to monetize at all [you can just use Substack as a free newsletter publishing tool if you want], (ii) how much revenue those writers will be able to make directly from a subscription fee [sidenote — one ‘risk’ of the Substack Recommendations product is it yields primarily low paid conversion rate new subscribers, which means monetizing free readers becomes more important] and (iii) a belief that Substack’s 10% take rate isn’t sufficient margin for them to grow a scaled robust business. Hence, and now we get to the title of this post, Substack Needs an App Store.
What do I mean by ‘app store’ in this case? Substack should partner with a broad set of 3rd party products to enable deep integrations inside of their newsletters. Kinda like Heroku, Shopify, Salesforce style app store more so than Apple. You’d need a basic developer platform and some APIs that to the best of my knowledge don’t publicly exist yet.
What “deep integration” benefits does a partner get for working through Substack: ability to make use of the data about the publication, its subscribers in aggregate, and even the individual reader in order to maximize the performance of the specific ‘app.’ In return, Substack should take a percentage of the revenue produced by that app (from the app provider side, not the author’s cut, even though yes, I realize that it’s kinda semantics if you’re talking about one pool).
Examples of ‘apps’ that I see working today in Substack newsletters:
- Job boards like Pallet (some writers are making an incremental six figures a year from these links — or at least they were in the go go hiring market of 2021)
- Branded creator merchandise
- Event tickets
- Books, music, and other content downloads
- Maybe even one day… sponsorships (which I see as different than programmatic advertising, which the company has been opposed to)
and so on….
I’m not suggesting that Substack create a walled garden — any author should continue to be able to embed or link to any service that complies the platform’s general Terms of Service. But Substack should offer to ‘enhance’ strategic partners in a way which grows the pie (while taking their share).
And also they’d need to cross the rubicon on data and targeting: how much granular data do they want to make available to these partner apps and under what terms. We’ve already seen with Facebook and others what can happen when a developer platform is too promiscuous or encounters bad actors.
But there’s real value — to all sides of the transaction — with better personalization. For example, customize the Pallet job links more specifically to me as opposed to just the general subscriber base. Pitch me coffee mug merch (since you can tell I like that) while showing a different reader t-shirts (since they seem to have bought those in the past from other Substack authors). And so on. Interest, geo, demographic and other dynamic customization which improves the performance of these ‘apps.’ Incentives like this will also inspire new types of units to be built for Substack by 3rd parties which might otherwise not take the risk.
My stake in the ground is that Substack needs to figure out how to make more money per reader without directly increasing their subscription take rate. And this is the best solution I have for that problem: the Substack App Store.