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Inside Substack, where authors are suddenly making serious money in the newsletter game—but it’s publish or perish

October 7, 2021, 9:30 AM UTC

Last summer, the writer Emily Nunn, 60, formerly of The New Yorker and the Chicago Tribune, was living in a barn in Ashe County, N.C. She’d gone there to finish writing a book and ended up staying. “I went underground,” she said. “And when I came back out, I was like, ‘Oh, you’re too old to get hired.’ I wasn’t getting any freelance. There’s this whole new world of food writers and I don’t really fit in with them. I was like, oh, I’m in so much trouble.”

The bright side were the salads. Surrounded by amazing produce, “like really Norman Rockwell fruits and vegetable stands and markets,” she started throwing together “peaches and plums and berries and tomatoes, everything that I liked and not worrying about whether it matched. This is gonna sound so corny, I hate this word: They were healing.” She posted her creations on Twitter, where the food writer Regan Fletcher Stephens and the actress J. Smith-Cameron encouraged her to do a newsletter. “I was like, ha ha. Very funny. I should.”

In October 2020 she did, launching The Department of Salad on Substack, an online platform that lets writers create and send newsletters directly to subscribers. Nunn’s took off right away. At first it was free. By February 2021 she had introduced a paid option. By late March, the company had taken note. Nunn was offered a Substack Pro deal, which functions kind of like a book advance: It’s a set amount of upfront money for a year, or sometimes two, that writers can live on while growing their business. They also take home 15% of their paid subscriptions. When the deal is over, the share reverts to the standard Substack agreement: The writer takes nearly 90% while Substack gets 10% and Stripe gets about 3% for processing credit card payments. Nunn, who recently moved to Atlanta, won’t disclose the amount of her deal, but she says it “was enough that when he said it, I was like, ‘Well, there’s no other way I’m going to make that much money in one year. I was afraid, but I took it.”

Emily Nunn launched her Department of Salad newsletter in October 2020. It took off right away.
Audra Melton for Fortune

The Pro deal has limited requirements; the one Nunn finds most burdensome is the need to publish at least twice a week (in the free phase of her newsletter, she just did one weekly post). But Substack also pays an editor of her choice to work with her and provides her access to Getty Images and free transcribing (with a monthly limit). With more than 15,000 subscribers, she charges $5.50 monthly or $50 yearly; the typical conversion rate you can expect from unpaid to paid readers is somewhere between 5% and 10%, Substack says. “I’m not making a million dollars, but it feels really stable,” she said. “It compares to my salary at the Chicago Tribune, and I had a pretty good salary there. It sounds really corny, again, but it kind of gave me back my career as a writer, and I got to be the writer that I wanted to be.”

As the media landscape has been fraying and decaying for two decades, and most old-media companies have never fully found a way to square paying for high-quality writing with the transient, clickbait-y nature of what a Google algorithim rewards, Substack is one of a handful of companies that are trying to right that equation by connecting writers with readers who will pay for their work. In many ways, it’s working: There are well over 500,000 subscribers paying writers to read their newsletters on Substack, along with millions reading for free. The top 10 writers on the platform, ranked by leaderboards divided by revenue and audience across common categories, make more than $20 million annually, according to the company.

Dollar signs like these in the current media environment have resulted in a sort of feeding frenzy over the money to be made via Substack. But just because some subscribers will pay some writers for content doesn’t mean everyone can make big bucks (or even a living) that way. Then there are the questions and inevitable complications that ensue when a company that solidly falls in the VC/tech space attempts to disrupt the old-school media landscape, giving creators a chance to DIY it in a time in which misinformation and disinformation run rampant but where, also, the odds of landing a staff job with a decent salary plus health benefits feels almost like winning the lottery. To many writers, Substack is a buoy to cling to in dangerous waters; others feel like they’re just being cast further out to sea as they attempt to simultaneously be their own scribe, editor, publisher, art director and PR machine. But what nearly everyone can agree on? Substack is rewriting the rules of writing.

Media is “broken”

The company was founded in 2017 by Chris Best, Hamish McKenzie, and Jairaj Sethi, who had all worked together at Kik, the Canadian messaging app, which Best cofounded. Best had written an essay and shared it with McKenzie, a tech journalist who had also been lead writer at Tesla. “It was about how the prevailing media system was broken because it was based on this incentive structure that rewarded behaviors and content that drive people apart rather than help them work together, or work toward some idea of truth,” McKenzie said. “The post expressed a realization that this isn’t something that’s going to be simple for one of the social media giants to fix with an algorithmic tweak.”

The essay was good, McKenzie told Best, but everyone in media pretty much knew this was a problem. What about trying to offer a solution?

What emerged was another essay, published on the newly imagined platform of Substack. “It was kind of like our manifesto, laying out the vision for how this beautiful world can be created, where writers can flourish by changing the incentive structure by really realizing the power of the Internet to help writers and readers connect directly, but not be subject to the malicious forces of the attention economy,” said McKenzie. “The solution had to be readers paying writers who they trusted, and not just payments but subscriptions, because subscriptions provide a sustainable source of revenue that recurs for the writers.”      

Of course, Substack—“Subscription + stack” because it’s the “full stack” of everything you need packaged together—didn’t come up with the subscription model, nor did it create the age-old newsletter (in interviews, McKenzie and others at the company note they prefer “publication” to “newsletter”), but it did send traditional media into a little bit of a tailspin. Traditional media was already suffering from the demise of the ad model and from layoffs that gutted local and global newsrooms, along with decreasing circulation, widespread misinformation and conspiracy campaigns, and the constant, numbing degradation of the journalist. For a writer, there’s a real salve in what Substack offers: the ability to own your content and your contacts, to know that you can take it all with you if you decide to go.

Clearly, there’s something in it for readers, too. The most popular Substackers include Boston College history professor Heather Cox Richardson, with Letters From an American; Willy Woo, who writes The Bitcoin Forecast; and author and investigative reporter Matt Taibbi, with TK News. Other top writers—rankings often shift—include Hunter Harris, Andrew Sullivan, Judd Legum, Bari Weiss, Michael Moore, Casey Newton, and Lenny Rachitsky.  High-profile Substack Pro deals, like the one former Vox writer Matthew Yglesias got for his newsletter, Slow Boring—($250,000 along with 15% of subscription revenue; he’s said he’d be making more without the Pro deal)—range in the hundreds of thousands. Salman Rushdie in September announced his own Pro deal (for far less than he’d get to sell a book, he noted to the New York Times); he wanted to “try things I haven’t done before.” As for the writers who aren’t, say, Yglesias and Rushdie, McKenzie said, “There’s an invigorating number of people who are making money that I would qualify as meaningful.”

At first the business was pretty bare-bones, the three cofounders crowded around a table in Best’s apartment together, CTO Jairaj Sethi remembers. “There’s a classic photo of us from when we raised our first round of funding: no shoes on; Cassie, Chris’s dog; hanging out. It was exactly that for like a full year,” he says. The company launched with Bill Bishop’s Sinocism—a then five-year-old newsletter about China that had been free—as the first publication, and it immediately made money. Though they could have stuck with a “boutique-y business and never had to raise funding,” said McKenzie, in 2017, The Toast founder Danny Lavery started a newsletter called The Shatner Chatner (now called The Chatner). The founders were struck by how Lavery’s readers were so different from Bishop’s, who could put the subscription on their corporate credit card as a job expense. “Danny’s audience was like, librarians in the Midwest, paying $5 a month or $50 a year out of their own pocket. And because those are such disparate use cases, we thought, this actually could be something special,” said McKenzie. (Lavery also has a widely publicized Pro deal, two years for $430,000.)

Two of Substack’s cofounders, Hamish McKenzie (left) and Chris Best, in the company’s San Francisco office.
Katie Thompson for Fortune

The founders applied and were accepted to the startup accelerator Y Combinator, going on to raise a total of $82.5 million. The company has a current valuation of $650 million after a $65 million Series B led by the VC company Andreessen Horowitz in 2021. Substack has gone from 13 employees at this time last year to 75 “and growing weekly,” per communications VP Lulu Cheng Meservey, who notes that 20 of those staffers work in partnerships, which means supporting writers and helping them build community. A new headquarters in San Francisco is in the works. They’ve recruited a slew of notable authors, introduced podcasting capabilities, decided to “bet on comics creators,” and launched a legal defense program for writers. There’s a Substack Grow program to help creators learn how to literally grow their audiences; there are fellowships and grants to get people off the ground; there’s “Substack Local,” a “$1,000,000 initiative to foster and develop the local news ecosystem by helping independent writers build local news publications based on the subscription model.” On Oct. 1, the company announced a Writer in Residence program to spotlight creators who are building their own Substacks and allow readers and the community of writers insight into the process. In the past five months, the company has also acquired three organizations: People & Co., which does community-building strategy; the public correspondence startup Letter; and, most recently, the team of Cocoon, a subscription-based social network that will keep running as an independent company.

Jairaj Sethi, co-founder and CTO, is based in Canada.
Courtesy of Substack

There’s a whole lot going on, but the concept behind it all is simple: Clear the way for writers to not have to deal with “accounting and building a website and designing a logo and all of that stuff that drains your mental and creative energy,” said Cheng Meservey, who clarifies that not all Pro deals include a financial guarantee. “We place much more emphasis on the services we offer. The magic happens because the technology is there, the tech support is there, the customer support for your readers is there, you’ve got services like editing and health insurance”—which the company subsidizes for certain writers who are particularly active on the platform—“and legal defense and production. Plus, there’s a community. All you have to do is focus on writing and doing really good work.”

As the writers come, so, the team hopes, will entire economies of publishing, with writers (and sometimes Substack) hiring editors, designers, marketers, producers, and publicists to help them create their finished products. This is, in fact, happening. In January, the writer Roxane Gay introduced The Audacity on Substack, where she publishes essays from emerging writers (and pays them) as well as hosting a book club. Judd Legum, the ThinkProgress founder who runs Popular Information, has a team of two, a writer and a researcher, working for him. Former Buzzfeed writer Anne Helen Petersen, who writes Culture Study and has about 56,000 subscribers, pays guest writers $500 a post as well as paying graphic designers and columnists. “These are all people who are part of the economy making money off of these direct relationships, not just the newsletter writers,” says Cheng Meservey. “This is like a whole entity.”

“It’s kind of like a renaissance where a whole lot of people can actually do well through writing,” said McKenzie. “We certainly see a very clear way to make the company profitable, and not only profitable, but a really significant business. We want to keep on building this incredibly lively ecosystem.”

Pushback against the stack

Given that it caters to a universe of writers and readers, it’s not surprising that in its relatively short existence, the company has had the dubious honor of accruing an outsize portion of the media mindshare. It’s been written about from The Atlantic to The New Yorker to The New York Times, where it’s been described as both a potential threat to democracy and something “we’re freaking out about.” It’s been called a scam; it’s been decried for failing to take a stand in battles over misinformation and hate speech; it’s been questioned about whether it’s a “platform” or a “publication” and what those responsibilities entail; it’s been criticized for “platforming” and giving Pro deals to people who are anti-trans or otherwise bigoted, facing a backlash in March that led to notable departures of writers and still hasn’t exactly been cleared up.

Substack has notoriously light content guidelines, drawing the line at harassment, threats of violence, doxxing, and pornography, and it has consistently taken a “very pro freedom-of-press stance” and “a hands-off approach to censorship,” per McKenzie. “We don’t currently have a policy about what is or isn’t misinformation,” said Cheng Meservey. “Our stance is not to designate ourselves the referees of what is true on the internet or censor people for being wrong. But we have a very strong position that we’re not going to reward outrage-driven virality.” It seems intuitive that the founders would be hard-pressed to cut off some of the writers who are most pilloried—who don’t necessarily have Pro deals; the company leaves it up to the writer to share what they want to about those arrangements, which creates some of the confusion—after all, they make Substack large amounts of money. McKenzie said that when it comes to the Pro deals, “The most important thing for us is that we’re not taking any ownership. It’s more like a bank assessing whether this is a good loan to make than it is a book publisher trying to put an editorial work into the world.”

While lots of terrible people surely get bank loans, there’s a broader question to answer about whether a platform can truly remain agnostic about politics in this increasingly political time, and where companies have a moral obligation to draw the line. Rusty Foster, who wrote the media-fave Today in Tabs on TinyLetter from the end of 2013 to 2016 and brought it back as a Substack in 2020 with nearly 25,000 subscribers, has been publicly critical of the founders online, arguing they should be more transparent about who they’re funding. He feels things have been better of late, but issues remain. “Graham Linehan [who was banned from Twitter over transphobic comments] should not be on the platform,” he said. “They would not lose anything by getting rid of that guy.”

Of course, there’s always the option of leaving. Facebook released its own platform for independent writers, Bulletin, in June, and Twitter has its own newsletter service, Revue. “There are so many other options out there,” said Petersen. “It’s not like any of us, I think, have some sort of brand loyalty to the platform, which is good and healthy.” On Oct. 1, the meteorologist and climate journalist Eric Holthaus announced to his nearly 500,000 Twitter followers, “I was under contract with Substack until yesterday. Today I left. Substack has refused [to] restrict harmful speech—on gender, COVID, & climate—on their platform. I refuse to believe that any of us should have to accept a world where the status quo is trying to actively kill us.” But for everyone who leaves Substack for Ghost or Buttondown or even Medium, it seems there are more who join, along with those who decide to stay. “I would have left if I could, but there is at least one sort of deal-breaker with every other platform that I looked at,” said Foster.

Your only advocate is yourself

After journalism school, Delia Cai, 28, got a fellowship with Atlantic Media doing strategy research, which was basically keeping up with trends in media and “reading lots of Nieman Lab.” Wanting somewhere to share her own thoughts, in 2016 she started a TinyLetter; in 2018, she moved it over to Substack. Even though Cai has never charged for Deez Links, “a weeklyish link to cool shit happening in and around the media industry” from June 2020 to June 2021, she made $20,000 by running media-focused classifieds on it. (Substack’s founders may not like ads as a business model, but there’s nothing saying you can’t use them.)

With the wave of Pro announcements over the summer, Cai wondered if she was missing out. “I kind of felt like a chump because it seems like this huge gold rush is happening. Maybe I really could go out on my own and do what these other writers are doing. But I don’t have this fantasy of working for myself and sitting in an apartment all day. I like working for an outlet and like having coworkers and I still have a lot to learn. So the goal was always, I hope this gets me noticed for a cool editorial job.” It did: Cai is now a writer at Vanity Fair, a job she got because of her newsletter writing, and recently sold her first novel, Central Places, after sharing that she was working on it in Deez Links.        

In the beginning of July, Cai put her newsletter, which has nearly 11,500 subscribers, on hiatus, but new subscribers continue to trickle in. She found herself drawn back to it on a recent Sunday. “You know, it’s a different kind of writing. I definitely can’t run it at the same pace that I had before my job, but I’m also very cognizant that this is an audience that has subscribed to me personally and is really valuable,” she said. “To be totally transparent, you know, I’m trying to publish a book next fall.”

Deez Links newsletter author Delia Cai near her home in Brooklyn. “Art and money, it’s almost like they’ve never been more closely tied than they are now.”
Rebecca Greenfield for Fortune

Some of the beauty of Substack, and newsletters in general, Cai feels, is that you get the satisfaction of being a patron of a particular person, granted access to some inner circle of their thoughts. You can even speak back to them directly. But how many voices can you have in your head (or newsletters in your inbox, or charges to your credit card) at once? A friend recently bemoaned to me that she’d overdone it on subscriptions, trying to support other friends. She couldn’t possibly read, or, really, afford them all. But if she unsubscribed, she worried, they’d get notice of it. She ended up unsubscribing to at least a few and writing them notes to explain why. “If things keep going this way, are we all just going to take our Substack money and use it to support other Substackers?” she wondered. (Not for nothing, 10% of that support would go right back to the company itself.)

“Art and money, it’s almost like they’ve never been more closely tied than they are now,” said Cai. “In some ways, that can be really wonderful, where the people who are actually supporting you are the people who are also reading your work, but also, it does feel so transactional. You are the only person advocating for what your work is worth. And maybe that’s the part that has always kind of turned me off from going full-time. I was just like, I can’t advocate for myself like that.”

A gold rush

Edwin Dorsey, 23, is making money—a lot of it. He started his Substack toward the end of his senior year at Stanford University. “I had been passionate about stocks from a young age and was looking for a job at the end of my senior year,” he said. “I interviewed at a bunch of places and couldn’t find one I loved.” Inspired by Substack publications like Petition, which focuses on “disruption from the vantage point of the disrupted,” in February 2020 he began to write his own, calling it The Bear Cave. “Every week I’d put out this free email categorizing what’s going on in the activist short world and new corporate misconduct stuff and potential SEC investigations and stuff like that,” he explained. He moved out of his parents’ house and to New York City in September of that year and started charging $34 a month, or $340 a year, for “a deep-dive investigation, and I’d highlight a company that’s either misleading investors or hurting customers.” He hit $60,000 in annual recurring revenue after one week and was making $100,000 after two months. That’s when Substack reached out to congratulate him on his growth—and ask him how he’d grown so fast.

About nine months after going paid, Dorsey was taking in $330,000 in annual revenue, which after Substack’s 10% cut and 3% credit card fees is approximately $290,000. He says his subscriber list grows by about 20% in a good month. “It’s honestly the dream job, especially for any young person, because I can sleep in, I can set my own hours. And if you look at core words, I’m making nearly $15 per word I typed, which is like out of this world.”

Nine months after going paid with The Bear Cave newsletter, Edwin Dorsey was making about $330,000 in annual revenue.
Rebecca Greenfield for Fortune

How you actually do it is where programs like Substack Grow come in. On a recent Wednesday, 188 people who had applied and been accepted into the “crash course for writers ready to pursue independence by building a loyal readership and kick-starting paid subscriptions” signed into a Zoom to hear “the essential knowledge writers need to succeed on Substack.” Participants were directed to participate in a live thread in which they shared meaningful moments of personal growth. A raffle for editing help was announced. Then, Ali Abouelatta, the writer of First 1000, about how founders got their first 1,000 customers, was introduced to share his own tips for getting Substack subscribers: 188 hopeful people watched, taking notes.

When we search for dark sides in the Substack promise, here’s another one: It’s far easier to give people directions for growing their newsletter (which fits a certain sweet spot between advice and professional services) than it is to make them better writers. It’s a matter of repeated criticism of the model that some of the most successful writers came to the platform with years of experience and fully formed, paying audiences. It’s just not the same for the guy who hears about Substack and says he might try his hand at this thing. (Then again, he might end up making $300,000 a year.)

“Most people are struggling,” said Uri Bram, who took his own 12-year-old newsletter, The Browser, which has more than 74,000 readers, from Substack to the open-source, nonprofit Ghost after finding the latter more economical and adaptable. “I think Ghost is better even if you just use their default settings, even before we get to adaptability,” he says. He finds the Substack success story to be overblown. “Most newsletters are not doing well. They’ve got a smaller audience. It’s really hard to grow. You try so much stuff and you push really hard and it doesn’t work. It’s just, who’s going to say, ‘My Substack is making $600 a month and I work on it every minute’? And we haven’t even gotten to the part about the unwinding pace, and I suppose if you want to quit you have to refund everyone, which is like half of your revenue for that year.” 

Anne Trubek, founder and publisher of the independent press Belt Publishing, writes Notes From a Small Press, a Substack grant recipient of $2,500. She has some 3,000 subscribers, about 10% of whom pay. It’s her side gig, so that size, and the extra money she makes, is fine with her. What she finds fascinating is that people will actually pay and what this could do to the publishing world in general. Whether it’s sustainable or not may not matter as much as what the rise of Substack does to the entire economy. “I think that there must be some places that are thinking about their rates and their staffing, because people are leaving,” she said. “Anything that’s giving writers more money is going to shake things up. I think it will create some other ideas, and we’ll see how those things evolve.”

“I think this shift to subscription models is good,” said Cai. “Before, journalism almost felt it was at the whim of advertisers, right? I think it’s really healthy that outlets can either choose between the two or figure out the right mix.” But she does wonder about the get-rich-quick element of the current newsletter boom. “One, if you want to go the moneymaking route, it takes a really long time,” she said. “And the other thing is, you know, there are so many reasons to do it that don’t have anything to do with money.”

Petersen agrees. “It was never about, I want to be rich,” she said. “The industry is so fickle, and we know that. It was just, like, how can I find some modicum of control over my future, something that isn’t going to twist you around for a while? That feels good.”

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This story is part of Fortune‘s Creator Economy package.