Substack is one of the new and latest rivals of Twitter in the race to find competitors that began after the arrival of Elon Musk as the new sole owner of the platform.
After Mastodon —the obvious competitor—, and new candidates like Artifact or Blue Sky, Substack has been one of the last to come to the fore after the launch of notesvery similar to Twitter, although its potential as a possible contender was already latent.
But since so many have come out twitter-killerswe want thoroughly analyze Substack substrate and also your accounts. Because although she has grown quite a lot in recent times, it is also possible that more is said about her about the real weight she has and, above all, their ability to be profitable is hardly in questionwhich at the moment seems very far away.
stack was born as a platform for sending newsletters in 2017 that it has been gaining relevance and engulfing other types of formats to become a kind of house that offers everything a digital writer, blogger or author needs.
And the most important, charge subscriptions for extra content for readers or followers who support you, trying to change – and this is its great promise – an ecosystem of content based on ads towards one based on subscriptions. A speech that Musk also wanted to make his own on Twitter through Twitter Blue and the recently launched subscriptions, heirs to the Superfollows.
Although he started with the newsletters as an initial proposal, Substack as a platform closely resembles that of the decadent Medium. In 2022 it introduced the possibility of send podcast and videoin addition to a chat integrating with your readers.
Your ultimate goal: drive more and more traffic to your app, where you can make full use of all these features, which to a large extent denies its birth linked to newsletters and email, one of the few agnostic protocols left alive in the Web.
Twitter vs. Substack, and Elon’s Wrath
as you will see, its focus on text makes Substack already a rival to Twitter for that very reason. Perhaps not for all its users, but for that part made up of the creators and voices that most actively used the social network. Journalists, creators, influencers that they did not have as much weight in the video as Instagram or TikTok propose, and various opinion makers.
The hard blow came when Substack launched his counterpart of Twitter, called Notesto which Elon Musk responded by cutting off the possibility of giving like or retweet tweets that contain links to the platform. A manual Streisand effect that was soon reversed.
Since its launch in 2017, Substack has only grown thanks to attracting several renowned journalists in the United States and some writers for its benefits. The case of Casey Newton, who migrated her newsletter from The Verge to this platform, where it has continued to maintain its own audience, in addition to monetizing it, although it continues to collaborate with the header.
This makes Substack has also played of late with a somewhat bombastic speech about themselves: “This is how we have changed the media ecosystem” or “How we have changed the internet” are some of the publications that can be read on his blog. Not another thing, but they are held in good esteem.
Looking at it from a data perspective, Substack has 600,000 registered authors, 35 million users or readers of which 2 million are paid. These generate 300 million dollars a month in payments for accessing extra content. From there, Substack gets to keep the 10%as we will explain later about its business model.
Who were its founders? Well, curiously, one of them has connections with Musk. Based in San Francisco, it was created in 2017 by Christ Best, Hamish McKenzie and Jairaj Sethi.
Before launching Substack, Best, its current CEO, had been an entrepreneur for nearly a decade. At the end of 2009, he co-founded Kik Interactive, responsible for the development of Kik Messenger, a messaging application.
Kik is where he also met his fellow co-founders, McKenzie and Sethi. Sethi joined the startup after graduating from the University of Waterloo (Canada) in 2011 and rose to become its platform manager.
McKenzie, for his part, had a less direct trajectory. This New Zealander, a journalist by profession, had worked as a reporter for various media outlets. In 2012, he was hired by the now-defunct technology site PandoDaily to cover Tesla and Elon Musk.
And it was Musk who later hired him in January 2014 as a “head writer” for the automaker. McKenzie would only last a little over a year, as he decided not to write for, but about Tesla, beginning work on what would become a book entitled Insane Mode.
Substack accounts: all that glitters is not gold
But to be a rival of Twitter to take into account, it must also overcome what has been one of the great obstacles of the social network: be profitable on a sustained basis. And that seems that Substack is far from achieving it.
Recently, after failing to get a regular new round of investment, Substack through the platform WeFunderset up a fundraiser open to everyone starting at $100.
They’ve beaten their goal of raising $5 million—as of this writing, they’re going for $8 million—but that amount seems meager compared to the money they’ve raised so far. For example, Andreessen Horowitz entered them in two rounds 15 and 65 million respectively.
The reason is that the commitment to only earn money through subscriptions does not seem to be fitting in quite well. Its model is as follows: Substack does not charge anything for its use, unless the newsletter author activates a paywall on its content or part of its editions. That’s where he gets that 10% commission.
For now Substack only generates losses. A balance of its results obtained by The Information shows that in 2021 spent 25 million dollars and only raised 12.
But why is he losing so much money? In a strategy to attract top talent, Substack guaranteed some writers a minimal income. And there he ended up paying more than what he entered.
Substack, furthermore, laid off 15% of the workforce in 2022 and cut its programs based on guaranteed funding for writers.
His model, deep down, is strong and weak on the same side. All the facilities that it gives its authors so that they create are based in the background on a list of subscribers via mail (although each time they want to bring more reading and conversation to their app); and if Substack does badly, it’s easy for anyone to just export their list and walk away.
Meanwhile, its CEO recently emphasized that they are not comparable to anything —what has been said, they seem to hold themselves in good esteem. When questioned about the similarity between Twitter and Notes answered:
“I think the difference between Substack and a social network is not how it looks. The difference is the business model. The difference is what you don’t see. You don’t see ads, you don’t see the incentive structure that ads necessarily generate. It works. with a totally different business model, it works with paid subscriptions. The customers are different: Substack readers are the customers. On a social network, they are the advertisers.”
We will see how they evolve and if this change in model, which others have already tried, becomes impossible again or not. No one can take away, yes, the worth of trying.