Substack

Substack is an internet platform for people who write regularly. Anyone who creates an account there can publish texts that are automatically sent as an email to everyone interested. Such regular circulars are called newsletters. The special feature: authors can charge money for their texts, for example five euros a month. Substack takes care of delivery, payment, and the website, and in return keeps a fixed share of the revenue, usually ten percent. The company was founded in 2017 in San Francisco.

Why journalists are leaving their newspapers

In the past, you needed an editorial team to reach many readers. A newspaper owns the printing press, the brand, and the subscriber list. Anyone who quits there loses their audience. Substack reverses this relationship: the list of email addresses belongs to the author. They can take it with them and move to another platform.

This has triggered a wave of switches. Well-known journalists with a big name sometimes earn more on Substack than in their old permanent position. Ten thousand paying readers at five euros a month add up to around 600,000 euros in annual revenue. Such cases are rare, but they shape the platform’s image in the media.

For investors, Substack is also an example of the so-called creator economy, meaning business models in which individuals are paid directly by their audience. The downside is also discussed. Without an editorial team, no one fact-checks the texts, and Substack rarely intervenes with controversial content.

From text to subscription model

Technically, Substack is a mix of word processing, mass mailing, and a checkout system. The author writes their piece in an editor in the browser. With one click, it goes out to every address on the list and simultaneously appears on a dedicated website. Payment runs through the payment service provider Stripe, which processes credit cards.

Central to this is the division into free and paid posts. Some of the texts are visible to everyone and serve as advertising. Other texts are reserved for paying subscribers only, often with a truncated preview. This pattern is called a paywall.

The business model itself is remarkably simple. Substack does not charge a monthly base fee, but only earns when the author earns. On top of that come payment service fees of about three percent. A common misconception is that Substack is a social network like Instagram. While there are now comments, recommendations, and an app with a feed, the core remains email.

Where Substack turns up in the news

Anyone interested in technology, business, or politics quickly comes across such newsletters. Many influential analyses of the AI industry do not appear in newspapers but in individual newsletters by experts. Quotes from them then end up in traditional media. Financial analysts and market commentators also use the format.

In business news, Substack usually comes up in three contexts. First, when prominent authors switch platforms. Second, when it concerns funding rounds and the valuation of the company, which is not yet publicly traded. Third, in disputes over content, for example when subscribers protest against extremist authors on the platform.

Substack is also not alone. Competitors like Ghost, Beehiiv, or Patreon offer similar services, sometimes with different pricing models. For distinction: Patreon relies more on video and community, Ghost sells the software itself. Substack stands for the combination of email, subscription, and a name that many readers know.