I'm sure the NYT editors were cackling at this story. It wasn't too long ago that there was a huge worry that paid newsletters were going to subsume a huge portion of the subscription market for professional newsrooms. Substack was offering guaranteed contracts to writers worth more than their subscription revenue could justify in order to bootstrap a network effect. The classic VC strategy of selling dollars for fifty cents. That ultimately backfired because they were indiscriminate about who they let on their platform which raised hackles from some writers who saw it as a platform for unsavory opinions.
> Substack was offering guaranteed contracts to writers worth more than their subscription revenue could justify
That isn't what I read. Their big payments (which weren't structured as advances but as guarantees for which writers had to forgo X months of subscription revenue) to big name writers ended up being lower than the standard author cut of the subscriptions those writers generated. So much so that this might account for a significant part of the $9MM.
I'm only going off a few media reports from what was disclosed, you're technically correct but the guarantees were in excess of what they would likely have earned from subs.
This writer had 18k subs at $50/yr ($90k/yr revenue, of which Substack would take 10%) but was paid $430k for 2 years. Maybe they grow their reader base to close some of that gap but it's still a loss leader to build reputation. It's possible some other writers took less favorable deals but I haven't seen the details.
> [...M]any of the writers who took advances now regret doing so: They would have made more money by simply collecting subscription revenue, and paying Substack 10 percent, [rather] than making the more complex deals with money up front.
> The former Vox writer Matthew Yglesias calculated that taking the advance wound up costing him nearly $400,000 in subscription revenue paid to Substack. The writer Roxane Gay told me she earned back her advance within two months of starting The Audacity ($60 a year) with an audience of 36,000, about 20 percent of them paying.
Your article was a reference for what I said, and I remember running into a few others.
Substack offered contracts to a tiny sliver of writers. Most journalists can look at the names they gave contracts to and could figure out that what those names provide is commentary, rather than journalism. Journalists usually prefer the latter.
