As a "retirement writer" who could never have gotten anything published except for letters to the editor, I am massively grateful for sites like Medium and Substack. Whatever you think of them as companies, they give people like myself (Autistic/Doomer) a place to express myself and create/find a community of others.
That GOOD, shouldn't be forgotten in discussions about Medium and Substack as companies.
Having said that, I thought your analysis was interesting if not completely convincing. Let's break it down.
Publishing is the graveyard of Startups.
No argument there. Although that was true even before the Internet and the rise of self publishing. Publishing has always been a highly speculative business and profits have always been relatively small.
The "big money" in publishing has always been in newspapers and magazines. Because newspapers and magazines had Advertising in them. That was always the main revenue stream for publications.
The first problem for book publishers has always been the lack of advertising revenue.
The second problem has always been that only about 20% of the population READS on a regular basis.
Reading may be "fundamental" but it's not NATURAL.
Most people, the 80%, have to be "trained" for 13-14 years to teach them how to read. Once they leave school, most of them will rarely read anything for the rest of their lives.
The pool of "readers" is always going to be fairly small.
Keeping that in mind lets let's look at Medium.
There are basically two models for a site like Medium or SubStack.
Writers Collective versus Writers Marketplace.
Writers Collective was the original model.
In this model, people sign up to get into the "flea market" of writers. They browse around and everything in the flea market is free to them once they pay the admissions fee.
ALL the money goes in ONE POT.
At the end of the day, MEDIUM takes the 'gate fees' and gets its cut "off the top" for running the flea market. My estimate is that's about 25% of total revenue.
Then, like a casino does, they decide what percentage they will pay out to the writers. This is something that they are completely opaque about but some inferences can be made.
Because, they will give writers 50% of the split for each subscription they get. This gives a clue to what MEDIUM's overhead and profitability numbers must look like.
The system figures out which writers got the most reading time. Then it allocates "the pot" out to all the writers based on a straightforward so much money per minute of time basis.
It's a "All for One, One for All" kind of model.
Writers Marketplace is the "New Model"
In this model, Medium is the "flea market" owners only. They "rent" you a space and the rest is up to you.
This is pretty much how SubStack works.
In this model, writers get subscribers. For each subscriber you get, you get part of "the gate" and the Marketplace owners get part.
On Medium writers get about 50% of the monthly "dues" from their subscribers and Medium gets 50% for running the platform. This is a pretty good deal.
It's the same split brothels in Nevada give to sex workers. -FYI
In this deal, it doesn't matter what your 'reading time' metrics are. It's ALL about subscriptions.
It's an "Everyone out for Themselves" kind of model.
My personal experience with SubStack seems to gibe with that. It's a much more DIY sort of place.
However, you can make BIG MONEY on SubStack. That's the part I think you are dismissing too casually in your analysis.
Here on Medium I have 1,135 "subscribers" and 1 "referred member".
That referred member is about $2.46 per month. Overall, my 1,000 subscribers generate about $100 per month for me, but they put something like 5K into the Collective Pot.
If I had 1K referred memberships, my take would be $2,460 per month for me and $2,540 for the pot. Which MEDIUM then takes its cut of before dispersing the balance out to "The Collective".
The incentives are clear.
All of the member referred payments come "off the top" before MEDIUM pays out the per minute allocations. Smaller pot, smaller per minute payouts.
When they started the “referred members” system of payments this was the predictable result. The writers who aggressively market themselves and get those member referred payments are draining money out of the system at the expense of the Collective.
However, it makes MEDIUM more appealing to “BIG NAME” writers. Ones that people will sign up for Medium just to read.
It gives MEDIUM a way to entice them with the possibility of big monthly checks.
That's the consequence of transitioning from the "Old Model" to the "New Model".
Writers who have big subscriber fan bases will make BANK. But, they put next to NOTHING in the pot for the rest of the writers in "the collective".
On SubStack there is no pretense of being a "collective". It's a pure MARKETPLACE model. If you can build a subscriber base you can make BANK.
Right now I have 35 "followers" on SubStack and 1 paid "subscriber".
Setting up on SubStack costs me $60/year.
My one subscriber brought in a $50 payout that month for their 1 year subscription to my Stack.
On SubStack, if I got 1K paid subscribers my yearly net would be about $50K.
On Medium, if I got 1K paid subscribers my yearly net would be about $29,520.
As a writer SubStack is worth exploring if you think you can convert "followers" into subscribers. Your critique of Substack seems to be that it is paying out too much to the Writers and not keeping enough for itself.
That may be true. However, sic transit gloria mundi. It won't last but while they are building their numbers it's a great opportunity.
Unless I'm missing something?
