Let’s Talk About Substack

Atelier Ventures' Portfolio

About a year ago, a friend asked me what I thought of Substack. For those who don’t already know, Substack is a Silicon Valley start-up providing software for people to publish their own newsletters and charge for subscriptions. It’s all the rage today with promises of monetizing the work of individual journalists. The site has even been promoted as the future of digital media, a way to cut out the middleman in the process of monetizing the content of mostly opinion writers. The company considers itself a pioneer in the new media struggle to pay journalists in the wake of disruptions to their formerly well-paying employers.

I’d never heard of it, which bothered me, because, despite retirement, I still think of myself as pretty informed about new media. I watched as others wrote about its great value and speculating it would provide financial relief for the Fourth Estate. More people asked my thoughts, so I put my new media guy hat back on, and this essay is the result of my analysis. I’ve been following the goings on enough that I’ve developed my own opinion, and I’m confident this falderal is mostly a pile of steaming bullshit. Here we go.

It’s an attempt to provide an OnlyFans model for content other than the salacious.

Substack, it turns out, is an investment child of venture capital firm Andreessen Horowitz and a host of other investors all in the business of disrupting media. So much money is being thrown at Substack that the newest round of investing has set the company’s value at $650 million. Is it worth that? Not even close, but that won’t stop the money tree. Disrupting media is big business these days with roots in many places, so building a successful business here may not be the point.

Substack is unnatural as a new media player in 2021. It’s old media pretending to be a breakthrough. It’s a high-priced, glossy, and expensive magazine. It’s what we used to call an aggregator. The value proposition flows from the oldest mass media play in the books, bringing an “audience” to a “show.” In this case the show is the many newsletters brought together in one place for subscribers to read and enjoy.

The idea that its uniqueness is built around the term “newsletter” is actually pretty hilarious. The first journalists were paid to travel to foreign countries that were in competition with their benefactors back home. They wrote “letters” back to those business moguls who were eager to know how their competitors were doing. These were called “newsletters,” so the word actually represents the oldest form of journalism, not some bright and shining new object. Fun software notwithstanding, the content sure resembles blog posts, and there ain’t nothing groundbreaking about that! The rush of big-name journalists to the platform has gotten a lot of attention, but this really has nothing to do with excitement over this “new” model. They’re being given enormous revenue “advances” ranging up to $350 thousand dollars in order to marry their brands to Substack. If a guy knocked on your door and handed you an envelope with that much cash, I suspect you’d quite quickly join your personal brand to his. Here’s a paragraph from a Substack blog post last month:

Six months ago, as a demonstration of our confidence in the model, we started a financial program to help writers launch their own businesses on Substack – and it’s working so well that we are going to expand it rapidly. In fact, the viability of the Substack model has become so clear that Facebook and Twitter are now chasing us.

The truth is closer to the reality that you can do things with somebody else’s money that you could never justify in a more realistic business plan. It’s like a giant thumb on the scales, and therefore, the fruit of this “financial program” can’t be used to judge the value proposition presented by Substack. Anybody who thinks they will make up for all of this with future revenues likely also has a prescription for medical marijuana. It’s all bright and shiny right now, but that simply can’t last.

Today, the press is just beginning to discover things my tribe used to write about 15–20 years ago and longer. It was all there for anybody to seize, but newspapers thought they knew better than the geeks who were actually building the technology of the web, so they simply copied their print model and moved it online. This is why media companies use words like pages, display ads, and below the fold. We can now look and see our prophecies coming to pass, even though we all went to great lengths to reveal the coming disruptions before they occurred.

The point is there is nothing new or different from Substack. I don’t think there’s a viable subscriber fee big enough to support this kind of journalism model for the writers absent the investment money tossed at them ahead of time. A newspaper was itself a form of aggregator, but its offer was many for one relatively small fee. If that’s Substack’s ultimate business plan, well, that’s already failed. If anything, it’s a model for the rich, because only one percenters could afford more than a handful of these newsletter subscriptions. This, of course, makes great sense, because there are right-wing forces present in our world that would love to own the narrative that everybody else has to follow. Trump taught us that, if nothing else.

But, there’s another huge problem with this, and that is the tangible way it supports the idea of celebrity journalism. I wrote of this in 2010.

The press changed forever during and in the wake of Watergate. Never before had the press “brought down” a sitting President of the United States. The Washington Post did this through an FBI source that we now know had an agenda. It was the pinnacle of professional journalism and spawned a whole new genre known as the “investigative reporter,” a redundant term if there ever was one. It also spawned the age of the celebrity journalist, because Woodward and Bernstein are enshrined forever as sterling examples of what to emulate in the world of professional journalism.

For celebrity journalists, attention must be given to brand identity and marketing, which is usually done on somebody else’s dime. Unwanted thoughts enter in, like “I can’t say that” because I’ll have to defend it later,” or “I have to get my hair done and don’t have time for that.” It can so burdensome to be a star, right?

Of course, with celebrity comes status and with status comes compensation for such. Who knew that journalism was such a big money business? Murrow was not on the same social rung as the people he covered, but such is not the case today. Celebrity is a trap of the God/mammon variety, and the pursuit of such status cannot help but produce shaky ethical behaviors. Not always, but often enough to take a step back and ask ourselves what we’re doing.

I’ve worked big egos all my life and especially in the business of TV News. There’s something about the people who are willing to risk complete embarrassment and even shame in front of a camera that lends itself to an emotional fragility that would probably surprise those who only see them on TV. Now that new media is producing a whole slew of reporter/anchor type personalities, this thing about ego is going to continue for the industry. Substack plays to that ego by making them feel good about themselves as celebrity journalists. “Come join us” is their cry, but the bag of cash in their back pocket reveals something untoward to me.

Journalism in 2021 is a living organism consisting of millions of cells working together in real time to keep us all informed. That’s it. Twitter and Facebook are much closer to a contemporary, participatory, 21st Century news organism than anything that came before. There’s no role in that for thousands of thousands of subscription newsletters, so I can say with confidence that Substack is not only doomed but likely not what it appears to be. In the modern news rivers (h/t Dave Winer) of today, it’s pretty stupid anyway to link to pieces that require a subscription in order to read.

Moreover, news is no longer a story with a beginning, middle, and end. That was the finished product model of the deadline-based news of the past (see: News is a Process, Not a Finished Product). This means that the Substack model is bucking the movement of the news model by dangling big cash in front of writers with the fallacious belief that the OnlyFans model will work for content other than the girl next door taking her clothes off for a few dimes.

Call me a nut, but I think we’ve just about reached the end of milking the mass media model. The web is a 3‑way communications medium, the first of its kind. Yes, you can do a form of one-to-many media, but that’s a terribly juvenile approach to such a powerful technology. Fatted calves are being whacked with regularity by the evolution of those who use the technology. I’m sorry, but that’s exactly what Substack’s investors are seeking.

Substack may surprise me yet, but I doubt it. Instead of jumping head first over a big (BIG) check in their hands, perhaps these journalists who are transferring their work to Substack should instead try playing out the tape that leads to tomorrow.

Finally, this is a classic case of plausible hyperbole, which is what big investment money can provide.

My conclusion? Proceed with great caution.