Star writers are making 6 figures on newsletter platform Substack, but the math shows how hard it is for most people to make a decent living off subscription content

  • The newsletter platform Substack allows writers to monetize their content by placing it behind a paywall.
  • Three months into the pandemic, Substack reported its revenue had increased 60%. It now reports more than 250,000 paid subscribers.
  • In recent months, several prominent writers have left publications to launch independent Substacks, and some have turned into six-digit success stories, almost overnight.
  • However, for writers without large followings, this kind of success is the exception rather than the norm. Media analysts like Thomas Baekdal and Josh Sternberg have pointed out the improbability of smaller newsletters becoming lucrative enough to support their creators.
  • Substack declined to comment, but offered a list of resources that they present to writers considering monetization.
  • Visit Business Insider's homepage for more stories.

In recent months, a slew of prominent writers have left major publications to launch independent newsletters on Substack, a platform that allows writers to monetize their content by placing it behind a paywall.

Tech journalist Casey Newton announced he was leaving The Verge, following in the footsteps of writers like Anne Helen Peterson, Andrew Sullivan, and Matt Taibbi, who left BuzzFeed, New York Magazine, and Rolling Stone, respectively, to launch their own ventures on Substack.

These writers, who all boast massive personal followings, have made headlines for how lucrative their new Substacks are. By effectively "importing" their audiences into the Substack paid model, megawatt journalists have reported earnings well above the six-figure mark almost overnight.

In a media landscape defined by a decline in advertising revenue and budget-cutting, the success these Substack superstars have experienced is a welcome anomaly. Stories like theirs, coupled with the economic desperation prompted by the pandemic, helped Substack balloon its user base by 60% earlier this year, according to previous reporting by Business Insider.

However, some critics have pointed out that Substack's financial model seems to make more sense for monetizing a preexisting audience, rather than growing one. 

The short and long tail

As media critic Thomas Baekdal recently pointed out, Substack's model is not as universally lucrative as many might have hoped. According to reporting from Axios, the top 10 publishers on Substack make $7 million collectively, and there are 250,000 paying subscribers on the platform. 

With a little napkin math, it becomes apparent that the top names on the platform earn the lion's share of its total revenue. "The fact that the Top 10 makes up 40% of their total subscriber base is not impressive," said Baekdal on Twitter.

Others who have monetized their readerships — known as premium writers — are left splitting the 150,000 paying subscribers among themselves, according to Baekdal. This means they are only making a fraction of the revenue that their big-league colleagues are enjoying.

Media reporter Josh Sternberg started his newsletter, Media Nut, in late April, after he was laid off from AdWeek. Since then, his newsletter has accumulated 3,300 subscribers, according to documents reviewed by Business Insider. It takes years to build a sizable enough newsletter following in order to substantially monetize it, says Sternberg, which is why he has kept Media Nut free. 

In a recent newsletter though, Sternberg ran through the financial improbabilities of ever making a living off of Substack. 

If 1,000 subscribers pay $5 per month for a Substack newsletter, the writer makes $60,000 per year and, "that's considered a success," wrote Sternberg. "Of that $60,000, you have bills to pay, mouths to feed, clothes to wear, and that little thing called health insurance. After the IRS takes its 30% cut, you're left with $42,000 to pay your $1,000/month health insurance, your $2,500/month rent or mortgage, your $100/phone bill, etc."

Though expected income tax rate is closer to 25%, the numbers quickly become intimidating. "The fact is: Not everyone will become self-sufficient as a newsletter writer," Sternberg said.

Still, an aspiring Substacker may choose instead to play ostrich to reality, focusing on outlier stories of amatuer success rather than the scores of labor-intensive newsletters that fail to turn a profit.

Food and culture writer Alicia Kennedy launched her Substack newsletter, From the Desk of Alicia Kennedy, in March, and has enjoyed vertiginous reader growth. Her newsletter has accrued 8,700 total subscribers, 1,200 of whom are paying readers, according to documents reviewed by Business Insider. 

Though Kennedy declined to share her exact revenue, her pricing tiers and number of subscribers mean she is earning between $3,030 – $6,060 a month from her newsletter, before Substack's 10% cut.

Substack's involvement

Substack declined to comment for this article, but a spokesperson emphasized many of the points that the company has long stood by. They have never obscured the fact that turning a newsletter into a full-time position would take time, talent, and a bit of luck. 

Substack offers comprehensive documentation designed to walk prospective writers through the process of monetization. They also work closely with their high-profile writers, using bespoke arrangements to lure in top talent, as was the case with former Verge writer Casey Newton. 

Newton revealed in an interview with One Zero's Sarah Jeong that he was receiving health insurance and a degree of legal protection from Substack, an incentive to join that Anne Helen Peterson echoed in her valedictory announcement. 

In addition, Substack has also awarded several grants to rising authors on the platform. In late July, Substack announced its winners and honorable mentions, one of whom was Alicia Kennedy. These writers received, to different degrees, legal help, mentoring, access to a Getty Images library, and other perks designed to help them flourish.

This kind of platform-writer intimacy is the exception, rather than the norm, but it demonstrates that Substack is invested in the success of its premier figures. For everyone else, the implication is clear: Show Substack that you're doing something special, and they might offer to help.

Kennedy credits part of her success to her understanding of this reality. She had realistic expectations for her efforts on the platform, and has been pleasantly surprised with her organic success.

"I'm happy and grateful for what Substack has provided me so far, but I have no illusions that this will be the thing that keeps me afloat forever," said Kennedy. "If I get proven wrong, that'd be dope. But I'm not depending on that."

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