As I mentioned in a recent post, the engagement, traffic, and subscribers to my ‘stack have been taking a beating. At the time I was speculating that the powers that be were trying to nudge us unpaid ‘stacks to turn on the monetization, so that Substack gets their money.
Alas, Dave’s post today explains it:
(1) Congratulations to Substack on their Series C funding round. The company now has over a $1 billion valuation. Casey Newton has the details on what this likely means for the company and its product line. Tl;DR, for unmonetized newsletter writers like myself:
Yep, that is a dangerous place to be (but don’t read Casey Newton, fuck that Musk and AI simp). Part of the problem is that the underlying financials are not really set up to be oriented towards sustainable growth (not as bad was GenAI tho)
The underly finances of Substack’s core product do not scale well at all. As Casey puts it:
That business has never entirely made sense to me. The company takes a 10 percent cut of subscription revenue, meaning that the more your business grows, the worse a bargain it is for you. (The level of service you get paying the company $1,000 a year is more or less the same as it is if you pay it $50,000 a year.)
The higher the valuation, the greater the investor pressure to juice those numbers somehow. Substack is already warming up to adding programmatic advertising to newsletters. We’ll see how it goes, but I suspect newsletters like this one are going to face serious headwinds. I’m a Substack free-rider. One way or another, they’re probably going to try to make money off of my writing. And once they start trying to squeeze it for revenues, they’ll probably just keep squeezing.
Oh well, and I suspect that my ~ 2,000 subscribers is the point where I am becoming a serious drain on their operating capital.
What will I do?
The easy answer is to turn on subscriptions. That would get my material in front of more eyeballs on Notes (that is where about 3/4 of my subs come from), and a trickle of money in my bank account.
But then you, my faithful audience, might feel compelled to mash that “go paid” button. And I do not want to do that. The outpouring of support and kind words from that last post really touched me deeply (and not in a bad-touch way).
Going to Ghost (self hosted) would likely cost me $50 a month just for the email service (not too bad) plus $10 month for the hosting (I would set up a dedicated server for this on my favorite hosting platform).
Or just go the Ghost Pro platform, that would be $40 a month for the amount of subscribers I have with their creator level. $480 a year.
Anyhow, read Dave and enjoy his takes, particularly his spicy take on the NY Mayor race and the shit-takes by Bill Ackman and Bret Stephens. Real trash humans there!
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>> Oh well, and I suspect that my ~ 2,000 subscribers is the point where I am becoming a serious drain on their operating capital.
Is it, though?
Most of the infrastructure you’re free riding on is a sunk cost. If they’re spending a prohibitive majority of their revenue on maintaining that infrastructure, then they’re ALREADY doing something wrong here besides enshittifying. They SHOULD be spending that money on developing new features!
I think the main angle is that your refusal to adopt their marketing and monetization features ends up being a lost revenue opportunity. It may actually be counterintuitively true that going along with their monetization helps delay the enshittification — if they’re getting higher adoption, they’ll be less eager/desperate to do new shitty things.
It might be interesting to see Substack original business plan and five-year projection. I wonder if this was the plan all along, just waiting for critical mass. Makes sense for modern capitalism venture capitalists, I.e. it was always about the money.
>> Oh well, and I suspect that my ~ 2,000 subscribers is the point where I am becoming a serious drain on their operating capital.
Is it, though?
Most of the infrastructure you’re free riding on is a sunk cost. If they’re spending a prohibitive majority of their revenue on maintaining that infrastructure, then they’re ALREADY doing something wrong here besides enshittifying. They SHOULD be spending that money on developing new features!
I think the main angle is that your refusal to adopt their marketing and monetization features ends up being a lost revenue opportunity. It may actually be counterintuitively true that going along with their monetization helps delay the enshittification — if they’re getting higher adoption, they’ll be less eager/desperate to do new shitty things.
It might be interesting to see Substack original business plan and five-year projection. I wonder if this was the plan all along, just waiting for critical mass. Makes sense for modern capitalism venture capitalists, I.e. it was always about the money.