A song to read by: “I Wanna Be a Cowboy, Baby!” by CMAT
What I’m reading: “Lincoln in the Bardo,” by George Saunders
Given the proverbial inkwells I’ve emptied writing about Substack and the siren song of its subscription-centric model, you can imagine my surprise when I began to see advertisements popping up on Substack newsletters.
Not traditional banner ads, mind you, nor the sort of pop-ups that kick my laptop fan into action, but a variety of jerry-rigged promotions, creatively cobbled together and inserted tidily into their respective templates.
In fairness, newsletter advertisements are nothing new; in fact, just about every modern publication has a suite of free newsletters to build habit in readers, and these are regularly strewn with advertisements. The only newsletter I read every morning, Protocol’s Source Code, is sponsored by Roku this week, and entire media empires have been built on the backs of newsletter advertising.
Read my Business Insider story on one such product, Newsette, here, or just read the room. Morning Brew was just bought by my lovely employer Business Insider; The Skimm owns an audience of several million; Girls Night In is slowly evolving into a retail store in an email; 6AM City and WhereBy.Us are riding ad-laden newsletters to national scale; and Goop, now more religion than brand, began as a lowly newsletter, heavy on esoteric product placement. All were bankrolled by advertising.
And why shouldn’t newsletter have ads? With rare exceptions, they have generally been free, and as we all know by now: When the product is free, you’re the product.
Newsletters have long underwritten their entire existence with advertising, as was the prevailing model throughout the media industry until the last few years.
Plus, not only have newsletters been a natural fit for ad-placement, they have been coveted real estate. Advertisers love running ads in newsletters, because only very engaged readers subscribe to them.
Claire Atkin, who alongside Nandini Jammi makes up BRANDED, a newsletter about marketing’s outsized role in breaking society, says that the magic of newsletters is that their readers choose to be there.
“Newsletter subscribers are an opt-in audience for — and I really want to stress this — email,” said Atkin. “A person’s inbox is a precious and rare place to be invited. This kind of self-selecting audience is way more valuable than random visitors to a website.”
Newsletters are also what ad-buyers call “brand safe,” meaning that the odds are low that their advertisement will run alongside a photo montage of a grisly murder. Advertisers like to avoid these kinds of negative associations, but digital advertising can be a challenge to chaperone. Newsletters’ relative safety only adds to their allure for brands, says Atkin.
“Newsletters offer us a channel with more control. If a writer suddenly becomes brand unsafe, we can address that quickly. That’s extremely attractive right now,” said Atkin.
As a result, newsletters have traditionally commanded high advertising rates, which makes runnings ads in emails practically a money-printing operation.
Enter the Substack
This, of course, is part of what makes Substack such a counterintuitive concept. The newsletter platform chose to bet its fate on a largely novel premise: that readers would pay writers directly for their output, no ads needed.
This reader-revenue would allow the newsletter-writers to turn a profit, almost from Day 1, which makes them far more accessible. Anyone can start a newsletter, monetize it, and make more money as their audience grows.
Advertisers, on the other hand, will only cough up if you can promise an audience of substantial size. These required readerships are smaller than that of a homepage, sure, but few brands will open their checkbooks for less than several thousand subscribers. That means that monetizing a personal newsletter with ads was, essentially, impossible for the average writer, at least without years of work.
It’s too soon to call it, but Substack’s gamble seems to be paying off. Writers and journalists, their interest piqued by the prospect of being able to monetize themselves, have flocked to the platform.
Yes, it seemed like Substack had finally convinced the writing world that it had found its Eden, a medium unspoiled by the ravages of the advertising industry.
Then the advertisements showed up.
The serpent in the walled garden
McCormick, consummate business-newsletter-writer that he is, created a deck for potential advertisers and shared it in his newsletter when he first began running ads. In it, he offers several options, which provide varying degrees of exposure for a variety of prices. At minimum, he charges $1,000 for a blurb at the end of his newsletter; at maximum, for $8,000, McCormick will devote his entire newsletter to dissecting the business model of its sponsor.
McCormick’s arrangement reflects the most traditional kind of newsletter advertising. He writes a popular email that more than 18,000 business-curious people read, so he sells those eyeballs to brands that want to reach his engaged, business-curious audience. So far, most of his ads have been banners or blurbs, not unlike the kind you would see in a newsletter from an established publisher.
Collaborations x collaborators
These kinds of traditional set-ups are the exception. Given that many of the Substack newsletters featuring ads are run by busy writers with little time on their hands, most of these promotions have a guerilla feel to them, or are at least technically undemanding.
In fact, outside of Not Boring, most of these promotional packages are not ads in the traditional sense. They are, however, all mechanisms designed to generate revenue by exposing a readership to a specific piece of information, which is a watered-down, metaphorical description of an advertisement.
The Deez Links x Study Hall collaboration, for instance, is a prime example of the kind of creative solutions newsletters have employed to generate non-subscription revenue. Combined, the two newsletters reach an audience of more than 10,000 readers, most of whom are in the media or in a media-adjacent role.
So, the duo runs a series of “media classifieds,” where writers can promote their newsletters, publications can put out calls for pitches, and publishers can run job listings. For $150, you get one ad in both Deez Links and Study Hall; for $500, you get four spots in each. (Disclosure: I have run an ad using this service, and Study Hall is not a Substack newsletter.)
Delia Cai, who runs Deez Links, and Kyle Chayka, a cofounder of Study Hall, figured that they were already attracting a large audience with a similar psychographic profile — in media, New York-centric, youngish — and that they could spin that readership into a source of revenue.
Cai had experimented with posting job-listings and plugging projects sporadically for several months. When Covid struck and left thousands of journalists in need of work, she and Chayka began the project in earnest. After receiving positive feedback and hearing that her listings were helping readers find jobs, Cai turned the one-off project into an operation.
“I love the concept of classified ads because I think they work really well when you have a niche audience” said Cai. “Plus, I'm now in my fifth year of doing Deez Links, and I was ready to figure out a way to make it a more sustainable passion project.”
In a similar collaboration, media newsletter The Objective has struck a paid-content sharing agreement with Nieman Lab. According to Gabe Schneider, a cofounder of The Objective and former Medialyte interviewee, Nieman Lab pays The Objective $75 to feature their newsletter content every other week.
The return is minimal, but Schneider points to the low lift on his end and the appeal of passive income as strong incentives. Schneider has insisted, from Day 1, that The Objective try to pay its writers, editors, and associated staff for their work. Deals like the one with Nieman Lab, as well as one with Poynter that Schneider says is in the works, help The Objective do that.
“We want to be able to pay everyone for any bit of work that they do, and that takes a lot of capital,” said Schneider. “There are a variety of ways that we can tackle that, looking for revenue for us to pay our writers. And I don't think we're going to discount any of them.”
Finally, some Substack writers, like Terry Nguyễn and Mary Retta, the authors of Gen Yeet and close but not quite, respectively, host no ads, exchanges, or classifieds on their newsletters, but simply list their Venmo or CashApp handles.
Unlike an advertisement, these subtle placements promote nothing but the writers themselves; like advertisements, the plugs are non-subscription-based sources of revenue.
Retta and Nguyễn’s monetization method represents advertising at its most abstract, but it accomplishes the same primary goal: it generates revenue, and with little work. On average, said Retta, a typical newsletter brings in between $30 - $80.
Why ads, instead of the paywall?
Most of the newsletter writers I spoke with offered a nearly identical set of reasons for why they monetized the way they did.
For one, when you paywall your content, you restrict how many people it reaches. Paywalled writing is harder to share, which means new readers are less likely to find it. As a result, while paywalls yield subscription revenue, they do so at the expense of growth.
Plus, as McCormack points out, transitioning to a paid Substack can lead to more work.
“Subscriptions are great because they bring in recurring revenue, but they would have meant either doubling the amount of content I put out to keep growth up while giving subscribers something exclusive, or putting the good stuff behind a paywall and limiting growth,” said McCormack.
Second — and this concern was nearly universal — Substack writers want their writing to be accessible, not price-restricted. Even though most subscriptions cost less than the cost of a coffee a month, even a $5 fee can turn away an eager but money-strapped fan. Retta, whose newsletter revolves around class and race, felt a keen pressure to keep it democratic.
“A lot of the people who subscribe to my newsletter are younger, students, POC, or low-income, and it didn't feel right to put up barriers that would prevent people who otherwise would like to keep up with my work from reading,” said Retta.
Advertising, for all its various and sundry ills, is popular primarily because it offers a solution to two conflicting needs: the writer’s need to make money, and the reader’s need (or want) for cheap (or free) content.
So, instead of building a wall around their content, many Substack writers prefer to find a mission-aligned method of advertising that generates revenue and keeps the product free for readers. That way, both parties win, mostly.
Finally, when a writer turns on the paywall and convinces readers to pay for their writing, that agreement can feel like a contract. Suddenly, the hobby of newsletter-writing has turned into an obligation; your readers are paying you, after all.
The desire to avoid these golden handcuffs spurred many of the writers I spoke with to seek a route to monetization that avoided long-term commitments, and advertising provides just that.
How might Substack feel about all this?
On Substack’s “going paid” page, a FAQ says: “Substack is entirely focused on subscriptions, so we don't build any additional functionality to support affiliate links or advertising, but you are free to use them.”
This language, combined with the founders’ generally supportive approach to their writers’ out-of-the-box thinking, would suggest that the company has no qualms with the rising popularity of homemade advertising.
Atkins, of BRANDED, says that this new phenomenon poses little threat to Substack as it currently is. However, if the website continues to grow into a fully fledged platform, that might change in the future.
“If Substack decides to grow as an advertising platform, their responsibility to advertisers would expand into brand safety issues including content moderation,” said Atkins.
And of course, there is the obvious issue: Substack’s business model is predicated on writers converting to paid accounts, because Substack only makes money by taking a 10% cut of writers’ subscription revenue. If free newsletters start deciding, en masse, to stay free but use ads to monetize, then the writer, the reader, and the advertiser win, but Substack loses.
So long as the emergence of advertising remains an isolated event, popping up only in scattered newsletters, there is no significant cause for concern. But there is a reason why media and advertising were such cozy bedfellows for so long: easy money is hard to resist, even when it comes with strings attached.
Indeed if Substack was once Eden, a virgin platform free from the temptations of advertising, the serpent might just now be slithering in.
Some good readin’
— My favorite founder story is hubristic white guy sells crock product, makes millions, and escapes completely unscathed, because it is definitive proof that there is no cosmic justice. (The New York Times)
— Seriously you have no idea what I would give to write like Kaitlin Phillips. (Spike Art Magazine)
— Paywalls: Will they finally own the libs? (The New Republic)
Cover image: “The Fall of Man” by Peter Paul Rubens