Substack Business Model - How Does Substack Make Money?

Dev Gupta Dev Gupta
Jul 10, 2022 4 min read
Substack Business Model - How Does Substack Make Money?

Today, writers can reach millions of people around the world by writing blogs. They can earn money by leveraging the Google and Facebook ad models. This might seem a safe option to make money but, it also restricts the creativity of the writers.

Writers are not able to create a direct connection with their readers because they have to constantly think about the on-page and off-page SEO.

Writers know that if they don't rank their article on the first page of Google they won't get the traffic due to which they will not earn money. This was a big problem for writers. To put an end to this, Substack was launched in 2017.

Within a few years, it has empowered the relationship between a reader and a writer. It has gained immense popularity and people are loving this platform. Substack has over 5,00,000 paying subscribers.

Let's understand the business model of Substack and how it makes money.

What is Substack?
Business Model of Substack
How Does Substack Make Money?
Future of Substack

What is Substack?

Substack was founded in 2017 by Chris Best, Jairaj Sethi, and Hamish McKenzie. The headquarters of the company is in San Francisco, California, USA.

It is an online platform that helps writers launch their email newsletter. Writers can earn money by collecting a subscription fee from email newsletter subscribers.

The platform provides all the tools to the writers which allow them to write high-quality content. The best part about Substack is that writers can publish unlimited content for free.

Business Model of Substack

The business model of Substack is simple. It provides all the tools to the writers to write content and earn money through subscriptions.

You can manage your email list, add subscribers, send emails and analyse the analytics. Readers can subscribe to your email list monthly or annually.

Apart from making things simpler, Substack has made the bond between readers and writers stronger in the following ways:

Freedom to Write Content

Page view metrics and advertisers have taken away the freedom to write authentically from the writers.

Most writers feel that their creativity is lost due to these algorithms and metrics. Substack helps the writers to write content on their terms and build a genuine audience.

Writers can keep all their subscription lists and content with them. Substack provides all the editorial and publishing tools so that writers can make engaging content. Most importantly, the platform has provided financial freedom to the writers.

Substack V/S Website

Now, the main question lies in why should someone use Substack instead of simply creating their own website?

See, if you opt for a website you need to think about the domain, hosting, website design, payment integration, funnel management and a lot more. You have to hire a professional website developer to do all of these things.

You have to figure out and make all these arrangements by yourself. Now, tech-savvy people won't find it tough to do all these. This will also take a lot of time and you also need to invest money. But People who just want to write engaging articles without being involved in all these technical customs use Substack.

Building Trust

Trust is a very significant aspect of any business. Substack helps to build trust between the readers and writers. Due to the newsletter subscription model, writers engage in a one-to-one conversation with their readers as the article is directly sent to the email inbox.

Since there is no algorithm pressure on the writers, the main focus stays on creating quality content for readers. Writers can understand what a reader finds interesting and write content accordingly.

Substack producer, Valerio Bassan quoted, “As a publishing tool, newsletters provide a solid answer to the number one question in media today: how can we rebuild trust between us and our readers?”

Using Substack writers can build their own brands. Emily Atkin who previously worked at The New Republic and ThinkProgress moved to Substack. She is now the author of the climate-focused Substack newsletter. Emily now earns more money as compared to her previous salaried journalism job. She is an excellent example of how Substack is changing the lives of many writers.


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How Does Substack Make Money?

Substack makes money by charging a 10% commission to every paid subscriber. So, until you make money using Substack, the platform also does not make any money. The minimum subscription fee is $5 per month to $75 per month.

To make more money the main focus of Substack is to get more writers to produce content on their platform and make those writers earn money.

The subscription model incentivizes the writers to make engaging content and give more value to their readers. Contrast this to an ad model where the incentive for writers was to gain as much attention as possible.

Future of Substack

In the future, Substack may add discovery tools like a recommendation engine which would help readers find interesting content according to their preferences. This will boost the relationship between writers and readers.

Podcasting is another great opportunity. Substack already allows its writers to distribute free podcasts. These podcasts are monetized through ads. Rather than following the ad model, Substack can add a paid subscription option for podcasts. This will help both the company and writers to earn more money.

FAQs

How does Substack work?

Substack helps writers publish their content, build an audience and make money by collecting a subscription fee from email newsletter subscriptions.

How does a Substack subscription work?

A Substack subscription starts from $5 a month and can go upto $75 a month. The price goes up as you increase the number of subscribers.

How does Substack make money?

Substack makes money by charging a 10% commission to every paid subscriber.

Is Substack profitable?

Yes, Substack is profitable as writers can build their brand on the platform and earn money by collecting a subscription fee from email newsletter subscriptions. Writers can leave the platform at the time they want and keep all the subscription lists with them.

Does Substack own your content?

No, all the content you publish on Substack is owned by you.

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