The Unexpected Fallout From The Substack Pro Freakout

The financial details that have been made public raise some real questions for writers

Yes, I know, you’re probably sick to death of reading about Substack and I promise this post isn’t about the current Substack Pro drama (well, not entirely) but rather a few questions related to the platform I’ve been thinking about for some time.

In the wake of the hyperventilation over who got what Substack Pro deal, a few writers who received those deals have gone public with financial details. Matt Yglesias, in a Slack conversation with Vox writer Peter Kafka, shared some interesting tidbits

“But in some cases, Substack has also shelled out one-off payments to help convince some writers to become Substack writers, and in some cases those deals are significant. Yglesias says that when it lured him to the platform last fall, Substack agreed to pay him $250,000 along with 15 percent of any subscription revenue he generates; after a year, Yglesias’s take will increase to 90 percent of his revenue, but he won’t get any additional payouts from Substack.

As Yglesias told me via Slack (he stopped working as a Vox writer last fall but still contributes to Vox’s Weeds podcast), the deal he took from Substack is actually costing him money, for now. Yglesias says he has around 9,800 paying subscribers, which might generate around $860,000 a year. Had he not taken the Substack payment, he would keep 90 percent of that, or $775,000, but under the current deal, where he’ll keep the $250,000 plus 15 percent of the gross subscription revenue, his take will be closer to $380,000.”

Yglesias, in a thread posted to Twitter, explained why he took the Pro deal instead of the traditional Substack deal that would have netted him significantly more -- in a nutshell he has a wife and child to support and therefore can’t play Russian roulette with his finances. In taking the Pro deal everyone wins; Yglesias gets the financial certainty he needs to take a chance on Substack, the company makes a ton of money on the deal, and after a year Yglesias knows he will be making exponentially more than any outlet could ever come close to paying him. 

Freddie deBoer, who just launched his Substack newsletter this month, took transparency one step further. He posted screenshots of his payout schedule from Substack, his Substack dashboard showing how many paying subscribers he has, and his Stripe account showing how much money has been paid in subscription fees. According to the data he shared, his Substack Pro deal is for $135,000 paid out in four installments with the first installment of $45,000 paid out on March 12th. His Substack dashboard screenshot shows a paid subscriber count of 1,076 with his Stripe screenshot showing a gross volume of $35,514. Clearly, Substack is going to make a killing on this deal too; again, deBoer’s newsletter isn’t even a month old yet. 

To be sure, I always knew that the top-tier writers who fled their media jobs for Substack would do fine financially. Yglesias’ and deBoer’s numbers are well north of “fine” though, and there is speculation based on Yglesias’ earnings that Andrew Sullivan and Glenn Greenwald are making close to if not over $1M a year, and Matt Taibbi will be in that same bracket once his Pro deal expires. Extrapolating downward from Yglesias’ earnings, it’s a safe bet that every newsletter in the top 25 of the politics section of Substack is making a healthy six figures. 

When I say I expected writers who moved to Substack would be fine financially, I was thinking low six figures; I figured someone like Greenwald would pull somewhere between $250,000 - $300,000 a year.

Friends, I did not expect there to be multiple people making at or over $1M a year on Substack. 

Which brings us to the question I had even before the Substack Pro controversy blew up -- what does this mean for mainstream media and its ability to hire and retain talent, both in the short term and in the long term? 

I’ll start with my thoughts on the short-term ramifications. Any writer who has a decent following and hasn’t thought about making the move to Substack either really doesn’t like money or REALLY likes their current job. For writers who don’t meet that second criterion, life just got real interesting. Now that writers know they can take their talents to Silicon Valley, I think (I hope) there will be a great reduction in the amount of bullshit they’re willing to endure to keep their paycheck; when one has viable options to leave an arrangement, one’s willingness to deal with bullshit plummets dramatically. To keep talented writers on its staff, outlets are going to have to start taking care of how those writers are treated by their colleagues and by management. 

I’d also be curious to see if this new info has any effect on salary negotiations between writers and publications going forward. Substack is exposing exactly how much a writer is worth in financial terms, which is not a metric mainstream media outlets share with their writers. If more Substack writers choose to share their subscriber counts and subscription revenue publicly, I can see that leading to a lot of uncomfortable conversations when it comes time for popular writers to renew their contracts with their publications. 

On the topic of uncomfortable conversations surrounding money in mainstream media, Mike Solara tweeted the quiet part out loud

It has been an open not-so-secret that the revenue generated by top writers has been subsidizing the work of mid-tier writers for ages now, as has the fact that the revenue from the opinion section has been subsidizing the newsroom.

*whispers - why did you think it is that certain people get away with certain behavior?*

Solara is right, if the top talent heads for the greener pastures of Substack en masse (or more en masse than they already have) that’s going to put a hurt on mainstream media outlets financially. If those outlets want to stop that flow of money away from them, they’re going to have to think long and hard about how they conduct business. 

For the long-term prospects of mainstream media outlets being able to attract and keep talent,  my thoughts are this -- with the environment in media as hostile and toxic as it is, why the hell would any writer with talent and a following bother working for a mainstream media outlet? 

I’ll be that jerk and use myself as an example; why would I go into a workplace where my colleagues would think it’s OK to berate me on social media, talk shit about me in private Slack channels, where management absolutely will not stick up for me, and have the constant fear of losing my paycheck over some ginned-up nonsense? Why would any writer with other financial options do that? Short answer -- they wouldn’t.

Then there is the work of getting to the point where a mainstream publication would be interested in hiring you. Building an audience takes years of no-pay or low-paid writing, then getting some freelance writing gigs, and then hopefully parlaying all of that into having a media outlet notice you. If this is the work I or any other writer have to put in with the hopes of maybe getting a gig for a mainstream outlet, why would we not take the surer bet of monetizing our audiences ourselves? Not to mention you can monetize a Substack newsletter whenever you wish -- there are no prerequisites as far as your reach or audience size. 

And, contra Annalee Newitz’s nihilism over writers never making it to that top level, I’m OK with never making scads of money on Substack. Would I like to make Sullivan money? Of course -- I mean, if you’re not swinging for the fences why are you standing behind the plate? -- but there are a LOT of numbers between $0 and $1M I’d be deliriously happy with. That’s the beauty of Substack, that you can take a number of paying subscribers that a mainstream outlet would scoff at and turn it into a source of income. 

In short, this stupid internet drama over Substack Pro and who got what revealed something deeper; that Substack as a platform poses a real threat to mainstream media outlets both in the short term and in the long term. If those outlets want to survive, they’re going to have to adapt to new realities. However this pans out, I’m excited for writers to have a legitimate option for revenue outside of mainstream media. 

It’s about time. 

Coda - Casey Newton reported via Twitter that the New York Times is no longer allowing its writers to have their own newsletters, paid or free, unless approved by a committee. The move is part of a new policy the Times is implementing to centralize its approval process for staff members’ book, TV, and speaking deals. 

I’m sure the Times ran this by their legal and HR  departments to ensure its legality, but ethically speaking it seems a bit hinky to me and the optics of cracking down on newsletters right now is not great.

The Times has the prerogative to set restrictions on its writers appearing in non - Times outlets but the time to set those restrictions is during a contract negotiation, not arbitrarily and with no way for an employee to renegotiate the terms of their contract in light of the new restrictions. If I were a Times writer, I’d be a bit pissed right now.

As for the optics, remember when I pointed out earlier in this post about how Substack could lead to some uncomfortable conversations about salary? This move feels like the Times trying to close the barn door before the horse gets out, both in terms of writers leaving altogether in favor of Substack and in making sure its writers don’t find out exactly how much their work can fetch on the open market. Again, it's the Times prerogative to make this change but the timing is extremely suspect to me.

Whatever the Time’s motivation is in making this rule change, it's clear the publication views Substack as a threat -- I’d be surprised if other mainstream publications don’t follow suit and crack down on their writers starting their own Substack newsletters.