Death by a thousand substacks

I’ve spent almost my entire adult life in newsletters.

Prior to building beehiiv, I was the second employee at Morning Brew. We scaled the business to nearly 4M subscribers and a $75M acquisition by Business Insider. Since then, I’ve worked closely with hundreds of talented writers and businesses, helping them scale successful newsletters and media initiatives.

And what’s clear?

Publishers are sleepwalking into another slow motion train wreck where they lose control to platforms hungry to play puppet-master.

Substack has become the Amazon of publishing. It offers the consensual hallucination of independence and ownership while deceivingly consolidating control and dictating the terms of success for sellers (i.e. you, the writers).

Yes, standalone businesses on Amazon can make good, often great, money – but they’ll never be truly valuable companies.

And here’s why: they don’t truly own the customer relationship… Amazon does.

When I shop on Amazon, I rarely seek a specific brand. My entry point is Amazon’s app or website. Searches are algorithmically sorted to favor Amazon’s interests, prioritizing their own products or those with the highest margins. After a purchase, I receive emails from Amazon, the item arrives in an Amazon box, and my relationship with the seller is almost non-existent. Amazon collects vast amounts of customer data, while only minimal insights are shared with sellers.

This same misalignment of incentives exists between Substack and its publishers: writers might feel independent but are actually operating within constraints set by the platform (see above: consensual hallucination).

It’s a fundamental reorientation of Substack’s priorities to ensure that the Substack name and brand is front and center wherever possible.

While this may seem subtle, it’s death by a thousand substacks. This is a calculated erosion of writers' brand identities and connection with their readers to build a successful social app on the back of the platform's top voices.

Said differently, Substack’s incentives are no longer aligned with their publishers.

How we got here

Remember Facebook’s abrupt algorithmic shift away from publisher content in 2018? That coupled with their deceptive (and inflated) metrics absolutely decimated newsrooms and triggered massed layoffs.

Twitter followed suit, allegedly deprioritizing links to external websites and implementing new algorithmic changes in 2023. Meanwhile, publishers who have spent years paying tribute to the search gods now find themselves perpetually scrambling to build their own distribution channels – a panic exponentially intensified since AI entered the scene.

This erosion of legacy media has affected some of the industry’s most talented journalists. It’s why we chose to launch the beehiiv Media Collective — a multimillion-dollar investment to support independent journalism.

Ironically, Substack initially launched with a similar thesis but has since shifted its focus. The platform has transitioned from a publishing tool for independent writers to a full-fledged social app.

They've gone from, "We're here for the writers" to "We're here for the Substack brand," faster than you can say, "Dude, read my Substack."

The problem? As I alluded to above, the incentives between publishers and social networks are entirely at odds:

• Lack of ownership. Social platforms act as gatekeepers, owning the relationship with readers while sidelining publishers.

• Algorithmic dependency. Distribution becomes unreliable as platforms shift priorities to serve their core interests.

• Erosion of brand identity. Social platforms homogenize content and experiences at the expense of publishers' unique identities.

• Lack of data and analytics. Publishers receive little meaningful audience data, restricting how they understand and engage with their audiences.

Anyone who has interacted with the Substack platform might recognize these shortcomings — but make no mistake, these are deliberate features, not bugs.

Substack is deploying the classic social network playbook: Gradually eroding the ownership, identity, and independence of writers on the platform. From Substack’s perspective, this makes perfect sense — it may be the only way to justify its lofty 2021 valuation.

50 shades of dark patterns

“Social networks are easy to scale” said no one with more IQ points than thumbs, as the number of even remotely successful social apps launched in the last decade can be counted on one hand.

So rather than bootstrapping a social network from the ground up, Substack deployed a clever strategy to build its network:

1. Pay prominent writers and publishers with large existing audiences an upfront sum to publish their content on the platform (i.e. Substack Pro).

2. Push their readers to download the Substack app to populate the social network.

3. Offer the service (i.e. Substack) for free as a loss leader to attract additional publishers.

4. Continue to extract its publishers' social graph and audience as Substack’s own.

A friend recently recommended that I subscribe to Kyle Poyar’s Growth Unhinged newsletter.

Here’s the current signup flow when going to subscribe:

These are blatant dark patterns: design features that subtly encourage users to perform a specific action that, unlike good UX, benefit the company and not the user.

Case in point? Every screen.

They all push me to download the Substack app. On the final screen there’s not even an option to skip or continue to the website; the “complete your subscription” language implies this is a required step.

The most important thing you can take away from this entire post: when your hard-earned readers download their app, that reader becomes their user. They own the relationship, the distribution, the notifications, and everything in between.

To add injury to incapacitation, most large newsletters and media outlets leverage paid acquisition to scale their readership more quickly. Now imagine Kyle spending a few thousand dollars each month to acquire new readers, with each additional reader being immediately thrown into this dark pattern to download the Substack app.

It’s a pretty great deal for Substack: their publishers pay to acquire new readers while they usurp them into their own app ecosystem. Thanks for participating, Kyle.

Back to 50 shades of black, the second screen has its own distinct dark patterns.

While signing up for Kyle’s newsletter, I was presented with 18 people to follow on the Substack app and 3 additional newsletters to subscribe to (all auto-selected, of course). Most unsuspecting visitors will quickly tap through to finish the signup process, accidentally subscribing to 3 additional newsletters sight unseen.

These accidental subscriptions are largely responsible for the “network effects” Substack likes to take credit for. Its recommendation network is what many of its writers cite as their main reason for staying with the platform.

But the value of these subscribers, especially as writers depart the platform, becomes increasingly clear. Those subscribers were unengaged and likely never meant to sign up in the first place.

• Casey Newton, who left Substack in 2023, cited churn improving by more than a third since leaving the platform.

• After leaving Substack, Ryan Broderick found that readers acquired through Substack’s recommendation network had 10% lower open rates, zero upgrade potential, and three times higher churn.

It’s quite intentional that Substack doesn’t give publishers the data they’d need to understand the quality and engagement of these accidental subscribers. The platform surely has the data; it’s just part of the social network playbook to keep these insights under wraps.

Once again, the incentives are misaligned; Substack’s only incentive is to maximize the number of nodes in the social network.

Beyond the signup flow, Substack unapologetically imposes itself elsewhere too. Each piece of content created by these “independent” writers involuntarily includes several calls for readers to download the Substack app.

Substack, under the guise of Kyle, has emailed me to download the app (a lot). While no publisher like Kyle intentionally tries to annoy their readers by sending these incessant emails, he doesn’t have a choice.

Why? Because – see above – he doesn’t own the relationship; Substack does.

A successful social app requires millions of app downloads, increased time spent on the app, and ever-increasing daily active users.

Substack owns the distribution and is free to contact me (i.e. the reader) whenever they please to help serve these core objectives. They are also free to make sweeping changes on your behalf as they please.

Following the money

It's important to understand Substack's revenue model to fully grasp the incentives at play: the platform takes a 10% cut on all paid subscriptions, indefinitely.

Substack isn’t very transparent with its numbers, but let’s assume they’re trending towards a power law where the top 1% of publishers on the platform might account for the majority of revenues.

So, let's break publishers into two categories:

• The breadwinners: The top 1% who generate most of the revenue for the company.

• Everyone else: The long tail of users who feed the breadwinners and make the system go.

Said differently: if you’re not a breadwinner on Substack, you’re the yeast. The yeast is responsible for driving app downloads, granting access to their social graph, and funneling their readers towards the platform’s top earners.

These publishers attract their own followers (with their own dollars) and leverage their own social networks to introduce new readers to the platform. Substack then uses algorithmic recommendations and “community” features to direct these audiences to their most lucrative writers, ensuring that the long tail of creators supports and enriches the top earners.

If that sounds akin to a caste system for writers, trust your independent instincts.

But the view isn’t so rosy from the top either. Some of Substack’s largest publishers earn well over $1M annually; stuck paying Substack hundreds of thousands of dollars for what amounts to a simple API call to Stripe (something any junior developer could build in just a few hours).

Building within a walled garden has its limitations. Besides the lack of ownership, brand identity, audience data, and control of distribution… you’re locked into a closed ecosystem.

Substack doesn’t offer an API, webhooks, or integrations with any third party platform. That’s right — all of the incredible tools and platforms that make up the modern creator ecosystem are entirely shut off to those on Substack.

From essays to echo chambers

As Substack continues to morph into a low-calorie Twitter clone, it’s sending top-tier publishers running for the hills. Substack launching its new “follow” feature was the last straw for several popular writers like Tyler Bainbridge who came to experience the Substack growth paradox firsthand

Followers are the platform’s latest attempt to lock publishers into the platform. It’s another step away from creator ownership and toward platform dependency.

The cracks are beginning to show.

• Substack ditched its plans for a Series C after a lack of investor interest and instead laid off 14% of staff in 2022.

• They were approached by Elon Musk to merge with X earlier this year (if you still had any doubts Substack was a social app).

• Several popular journalists have left the platform in the past year: Ty Burr, Casey Newton, Nathan Tankus, Molly White, Ryan Broderick (and more are on their way out — trust me, I would know).

I'm not saying Substack is evil — it genuinely serves hobbyist creators well. But those with broader ambitions shouldn’t aim to become the next Facebook profile chasing likes.

We’ve walked this path too many times. Publishers deserve independence and ownership, not hollow vanity metrics and fleeting followers.

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