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Why I left Substack and the Email Renaissance

kevin-indig.com

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Re: Why I left Substack and the Email Renaissance

#21

Post by jacamera »

kevin_indig wrote: post #2

2 years ago, I started a newsletter on Mailchimp called Tech Bound and built it out to +3,000 subscribers. 3 months ago, I decided to migrate to Substack. One week ago, I went from Substack to publishing on my own site. In this post, I explain why, what my current stack looks like, and a larger trend that has been in full swing for 2 years.

Great read! The problems that you point out with social networks served as the motivation for my co-founder and I to create Readup [1]. We rank articles based on complete reads which slows down the overall pace considerably and cuts out a lot of noise since users cannot post or comment on articles they haven't really read.

I'd be really curious to hear your thoughts on our proposed business model since it's based on compensating writers when Readup users read their articles to completion. In short, users pay $10/mo to use Readup, we keep $5 and divide the other $5 among the writers whose articles the user has read to completion during that month.

You keep your own stack and there's nothing you have to do other than verify a Readup account with us so we know who you are and collect any money earned. Readup users can read your articles using our browser extensions or mobile apps (I just did! [2]). You can view the full pitch [3] on YouTube.

[1] https://readup.com

[2] https://readup.com/comments/kevin-indig/why-i-left-substack-...

[3] https://www.youtube.com/watch?v=uFw-OiK3zjI

Re: Why I left Substack and the Email Renaissance

#22

Post by ThomPete »

tinyhouse wrote: post #14
Dowwie wrote: post #11

Earlier quoted context omitted.

They're charging "ad valorem" -- relative to the value received. The value that a Substack user with 4000 subscribers receives isn't the same as what someone with 50 subscribers receives. This is a very common fee structure that exists across industries.

The fact it's a common fee structure that exists across industries doesn't mean it makes sense for Substack. And I wouldn't call 10% standard. Most companies I know of, take Stripe for example, charge much smaller fees percentage wise and rely on high volume transactions. Maybe a better example I can think of is a referral site. Maybe a site like Kayak can charge Marriott 10% each time they refer someone who books a…

This is called value based pricing.

No cure no pay.

They take care of everything for you and will provide more and more tools for you.

Furthermore it's a white label solution which means you aren't on some platform like medium. People pay for removing branding on platforms these day.

I am biased as we are currently launching a similar model for live video 1-1 sessions, classes and events but I believe you will see much more of these types of solutions in the future.

10% + credit card fees isn't a lot to pay and if you become really big you can always pay someone to build your own platform.

Re: Why I left Substack and the Email Renaissance

#23

Post by tinyhouse »

tinyhouse wrote: post #18
dna_polymerase wrote: post #15

Earlier quoted context omitted.

And you think Substack can achieve the same high volume as Stripe does? > Substack does help with discoverability, and that's probably where their main value is (similar to FB, Instagram, etc), but the problem is that unlike the Marriott example, the fee is not a one time payment. No, they also provide the platform, the tools, the analytics. They are not just an aggregator. Also, Marriott has to pay for every transac…

> No, they also provide the platform, the tools, the analytics Maybe I'm in a bubble but I don't see it as their main value for successful users who make money from their newsletter . I've setup a newsletter with analytics a few weeks ago without writing a single line of code and with a fixed cost (and custom domain...). Yes, starting with Substack is cheaper to start with but long term it'll cost you). > Marriott ha…

> No, I was referring to the whole Marriott thing. If you book a Marriott hotel with an aggregator (like Kayak), Marriott has to pay for that booking. If you do it the next week again, Marriott has to pay again.

> Substack fees work the same, you pay a fee to Substack whenever a person renews (transaction).

> So to make the loop back, no the Kayak example works the same way as Substack does.

Replying here since HN doesn't let me reply to the comment directly (probably reached the max number of nested replies).

I now understand your example but I disagree with it. A newsletter, unlike a hotel, relies on a small number of paying users who are likely to renew their membership. Many even pay for annual membership. The main cost is finding a new paying user. Once the user is subscribed it's the newsletter's job to keep that user paying. Marriott pays Kayak only for new users. Next time the user can book a room via the Marriott site. It doesn't need to keep paying Kayak for life every-time that user books a room.

Re: Why I left Substack and the Email Renaissance

#24

Post by bgroat »

jacamera wrote: post #21
kevin_indig wrote: post #2

2 years ago, I started a newsletter on Mailchimp called Tech Bound and built it out to +3,000 subscribers. 3 months ago, I decided to migrate to Substack. One week ago, I went from Substack to publishing on my own site. In this post, I explain why, what my current stack looks like, and a larger trend that has been in full swing for 2 years.

Great read! The problems that you point out with social networks served as the motivation for my co-founder and I to create Readup [1]. We rank articles based on complete reads which slows down the overall pace considerably and cuts out a lot of noise since users cannot post or comment on articles they haven't really read. I'd be really curious to hear your thoughts on our proposed business model since it's based on…

edit: brackets 40% to 49%)

This is such a nitpick, but do the economics work at 40% (or even 49%)?

It seems intuitively wrong to me that your value captured is greater than the content creators.

If the economics don't work, feel free to instruct me to take a long walk on a short pier

Re: Why I left Substack and the Email Renaissance

#25

Post by swyx »

tinyhouse wrote: post #10
Angostura wrote: post #9

Earlier quoted context omitted.

% fees are very attractive to people who are starting small or experimental and have no real idea as to whether the idea will take off. It’s and automated, easy to understand freemium model.

That's the catch. It's easy to start and experiment. But as you grow bigger you start realizing it's a bad deal so may start looking for alternatives. That's bad for Substack since why would you like your most successful users to be unhappy? A better model IMHO would be a fixed tiered price based on the number of subscribers you have, similarly to how most email providers' business model work. For most users it would…

you say this but there are dozens of people running million+ dollar substacks with no plans to leave. this market is huge, writers really don't like to futz around with tech as much as we do

Re: Why I left Substack and the Email Renaissance

#26

Post by kevin_indig »

jacamera wrote: post #21
kevin_indig wrote: post #2

2 years ago, I started a newsletter on Mailchimp called Tech Bound and built it out to +3,000 subscribers. 3 months ago, I decided to migrate to Substack. One week ago, I went from Substack to publishing on my own site. In this post, I explain why, what my current stack looks like, and a larger trend that has been in full swing for 2 years.

Great read! The problems that you point out with social networks served as the motivation for my co-founder and I to create Readup [1]. We rank articles based on complete reads which slows down the overall pace considerably and cuts out a lot of noise since users cannot post or comment on articles they haven't really read. I'd be really curious to hear your thoughts on our proposed business model since it's based on…

I side with @bgroat a bit, the unit economics seem a bit steep. I like the idea of filtering internet content in general for 100% completion. I think there is something there.

I'm not sure if the incentive for creators is there, e.i. why would a creator share revenue for fully read articles?

I think you found a value-add for the demand-side of the market but not the supply-side. That's something I'd iterate on :).

Re: Why I left Substack and the Email Renaissance

#27

Post by criddell »

jacamera wrote: post #21
kevin_indig wrote: post #2

2 years ago, I started a newsletter on Mailchimp called Tech Bound and built it out to +3,000 subscribers. 3 months ago, I decided to migrate to Substack. One week ago, I went from Substack to publishing on my own site. In this post, I explain why, what my current stack looks like, and a larger trend that has been in full swing for 2 years.

Great read! The problems that you point out with social networks served as the motivation for my co-founder and I to create Readup [1]. We rank articles based on complete reads which slows down the overall pace considerably and cuts out a lot of noise since users cannot post or comment on articles they haven't really read. I'd be really curious to hear your thoughts on our proposed business model since it's based on…

Have the writers whose work you are monetizing opted in to being visible through Readup?

My first impression is that a 50-50 split doesn't seem very fair to the writers. You created the platform but most of the value comes from the writers.

Re: Why I left Substack and the Email Renaissance

#28

Post by criddell »

Dowwie wrote: post #11
tinyhouse wrote: post #8

I'm surprised Substack's business model is charging ~10% from one's revenue. A fixed pricing would make more sense. Why would anyone who is planning on profiting from their newsletter would go with a deal like that? Building a newsletter site these days is a pretty simple task with many no code solutions. I'm not saying what Substack provides is not worth paying for, just that it's a bad deal for people with successf…

They're charging "ad valorem" -- relative to the value received. The value that a Substack user with 4000 subscribers receives isn't the same as what someone with 50 subscribers receives. This is a very common fee structure that exists across industries.

Maybe I don't understand how the fee structure works, but if it's a percentage that doesn't feel very equitable.

If I launch a paid newsletter with one reader, I'm getting a lot of value from the platform. Once I gain a second reader the platform isn't doing twice as much for me. It's gone up a smaller, incremental amount.

Re: Why I left Substack and the Email Renaissance

#30

Post by jacamera »

bgroat wrote: post #24
jacamera wrote: post #21

Earlier quoted context omitted.

Great read! The problems that you point out with social networks served as the motivation for my co-founder and I to create Readup [1]. We rank articles based on complete reads which slows down the overall pace considerably and cuts out a lot of noise since users cannot post or comment on articles they haven't really read. I'd be really curious to hear your thoughts on our proposed business model since it's based on…

edit: brackets 40% to 49%) This is such a nitpick, but do the economics work at 40% (or even 49%)? It seems intuitively wrong to me that your value captured is greater than the content creators. If the economics don't work, feel free to instruct me to take a long walk on a short pier

The economics very well could work at a different split! We chose a 50/50 split because we estimated that we could grow and survive on $5/mo per user. We're 100% open to shifting that split and plan on making all the economics transparent to users so they know where their money is going, both the cut that we take and how the writer take is split up.

We don't want to over-promise on the revenue share at the beginning because we've got 3 key promises that we never want to compromise on but do limit us somewhat financially:

- Absolutely no advertising.

- Absolutely no selling/sharing of user data, even in aggregate or "anonymized".

- Reach profitability ASAP so we don't have to fund raise endlessly and lose control of the company.

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