Dear subscribers,

What’s the right business model for good writing?

Many platforms have strong opinions about how writers should make a living:

1. Advertising remains the go-to model for many publishers.

2. Subscriptions has been embraced by the NYTimes, Medium, and Substack.

3. NFTs are a new model championed by web3 platforms like Mirror.

So what’s the answer? Let’s dive into a writer’s needs and evaluate each model below.

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A writer’s hierarchy of needs

I wrote about a creator’s hierarchy of needs a few years ago. A writer is a creator that cares about “love, fame, money” as follows:

1. Love: The writing process (well, it’s more of a love/hate 😉).

2. Fame: Reach more readers.

3. Money: Make a living.

Platforms that help writers make money also need to think about “love” and “fame.” Keep these needs in mind as we explore the business models below.

Advertising

The ads model is simple: Get your writing in front of as many readers as possible and hope they click on ads.

Ads align well with a writer’s “Fame” need to reach more readers. But once hot publishers like BuzzFeed, Vice, and Vox are struggling (Buzzfeed’s stock is down 80%+ since it went public). There are several problems with ads:

1. Rewards click-bait content: As Buzzfeed found, people are more likely to click on simple listicles than award-winning journalism.

2. Relies too much on algorithms. Ads-based publishers are at the whims of Google and Meta’s algorithms for discovery. Many have struggled to build a direct, loyal audience.

3. Terrible user experiences: If you have ever tried to read a news article on your mobile browser, you know what I’m talking about.

So is advertising 100% evil? I don’t think so.

Advertising can be done tastefully if writers have more control.

Consider the following newsletters that run on ad sponsorships:

• Morning Brew has 4 million readers and made $50M in 2021 from sponsorships.

• Not Boring has 140K readers and makes money from sponsorships despite being on Substack, a platform that’s focused on subscriptions.

I chose sponsorships over subscriptions for this humble newsletter because I want as many people to read it as possible.

To recap, here are the pros and cons of advertising:

Pros: Lets writers reach as many people as possible.
Cons: Leads to click-bait content (could be mitigated by “tasteful” ads).

Subscriptions

Let’s look at subscriptions through two writing platforms - Medium and Substack.

Medium pivoted from ads to subscriptions in 2017 after then CEO Ev Williams wrote:

The broken system is ad-driven media on the internet. It simply doesn’t serve people…The vast majority of articles…we all consume on a daily basis is paid for — directly or indirectly — by corporations who are funding it in order to advance their goals.” - Ev’s post

Instead of ads, readers subscribe to Medium which then decides how much to pay each writer based on reading time. This model has led to memes like:

gaby.eth @gaby_goldberg

The creator economy has never been more rich. Comment below where I should spend it

March 4th 2022

8 Retweets209 Likes

Medium had 700K paid subscribers and made ~$35M in 2021. However, as Nathan wrote, this model doesn’t attract the best writers who would rather own their audience and brand.

Substack also started in 2017 with a similar mission:

When readers pay writers directly, writers can focus on doing the work they care about most. A few hundred paid subscribers can support a livelihood. A few thousand makes it lucrative. - Substack page

The difference, of course, is that Substack lets writers own their audience and brand through email. With Substack, readers subscribe to the writer directly.

Substack had over 1 million paid subscribers and made $9M in 2021. The company wants to help writers make their subscriptions more valuable. Consider Lenny, who offers several benefits through his subscription:

1. Paid newsletter

2. Private community

3. Access to resources, events, and discounts

But even Lenny has written about how he spends a lot more time on his free posts than the paid ones. That’s because the free posts bring in new readers while paid posts have limited reach.

To its credit, Substack has built a recommendation feature that’s been critical in helping writers grow. But it sucks to spend hours writing a great post only to paywall it to 10% of your audience. Furthermore, many Substack writers monetize through sponsorships and the company gets 0% of that revenue. Its 100% anti-ad stance has also opened the door to competitors:

Nathan Barry @nathanbarry

Sponsorships and ads represent more than 70% of income in the broader creator economy, but they aren’t a viable path for most newsletter creators. We’re changing that:

June 27th 2022

32 Likes

To recap, here are the pros and cons of sponsorships:

Pros: Writers can earn stable income even with a small, loyal reader base.
Cons: Limits audience reach.

NFTs

NFTs are an emerging monetization channel for writers. Consider Mirror, a web3 publishing tool that:

1. Lets writers crowdfund their next project. For example, we raised 32 eth ($50K) for a web3 education portal.

2. Lets readers collect great writing pieces as NFTs. For example, 51 readers paid 2.86 eth total ($4K) for an article about web3 communities.

It’s still early days for Mirror. The platform has 80K accounts and has helped creators raise 11K eth ($16M). If anything, I think Mirror has more potential as a crowdfunding tool than a writing platform.

NFTs can also be an alternative to subscriptions for bringing a writer’s 1,000 true fans together in a community. I’ve written at length about how this might work.

To recap, here are the pros and cons of NFTs:

Pros: Could be a great way to align a writer’s incentives with their true fans.
Cons: Unproven and still early.

So what’s the right business model for good writing?

I think it should be up to the writer.

Some writers want to reach millions of readers. Others enjoy writing for a tight-knit community of paid subscribers. Still others use multiple models to segment reader willingness to pay:

I think writing platforms are too opinionated about how writers should make money. Instead, they should empower writers to pick the right model themselves. A good example is Every, which helps writers monetize through subscriptions, sponsorships, and even NFTs.

Writers just want to focus on writing. Platforms that make it easy for writers to find sponsors, subscribers and more will win long term.

P.S. One of my favorite newsletters is The Publish Press by long-time Youtubers Colin and Samir. They do a great job breaking down the creator business and curating the most important creator news stories. Join over 30,000 readers by signing up below:

Visit the Publish Press