Substack's Opportunity

More than Newsletters

Could Substack become the modern newspaper habit?

The great hurdle that any new online service must face is the daily routine of its would-be users. This is as true for writers who post their content online as it is for nascent social networks. The very first—and possibly the most difficult obstacle—they must overcome is the daily coffee ritual.

Coffee isn’t mandatory, but becoming part of that ritualized moment is. I’m talking about those moments that all of us have. It’s that time of day when we sit down to check our e-mail or catch up on the news. If a writer or a platform is able to become part of that habit then their success is almost guaranteed.

Substack has succeeded in becoming a part of my daily routine. I’m not alone in this. Many thousands of people are now checking their inboxes or opening the Substack Reader app so they can read the latest updates from their favorite writers. I don’t know if Substack readers are as ubiquitous as newspaper readers once were, but they have built the foundation and one can hope that they will continue to grow in that direction.

Older generations began each day with the morning paper. They read it at the dining room table, on the train to work, or during the lunch break.

The Nightly Wind-down

Routines aren’t limited to mornings. Many of us have nightly routines. Whether that’s tucking the kids into bed and reading them a story, brushing your teeth, or engaging in some type of skin care regimin there are many possible routines that people follow.

One thing I do every single night before I go to sleep is to read fiction. Sometimes for far longer than I should. I’ve been doing it since I was a child. I’m not sure I could go to sleep now without reading at least a few pages of something.

Could Substack make an entry into this ritual as well? There are several authors serializing their books on the platform. There are others who are uploading short stories. There are even several people posting comics on a regular basis.

I love all of those things, but I’d like to be able to read full-length stories without waiting for the serialization process to end. It made me wonder if Substack could begin to offer content like that? The more I thought about it, the more I began to realize that there is a need for another venue that offers book-length fiction outside of Amazon.

I feel like my suggestion is an obvious one. It may actually be part of their existing growth strategy. I say that because the company has already built so much of the needed infrastructure to make this happen. I believe Substack should consider creating a storefront for both e-books and audio books.

Two Reasons Why:

The first reason is that online fiction is a growth market. At the moment much of that growth is in the Asian markets for sites like Webnovel, Dreame, GoodNovel, and Fizzo. It’s been reported that this is a 3.7 billion dollar market in Asia. Indeed there is so much potential here that even Amazon has made tentative steps to move into this market with their newish Vella program.

The second—and probably more obvious reason—is that this feels like a natural expansion of what the Substack team is already building. They’ve built a site, an app, and business model focused entirely on writers. Selling books and audiobooks on that site is merely the next step in pursuit of their stated goal of helping writers.

It’s true that this current iteration of Substack is focused on newsletters, but how many authors of said newsletters have also written books of some sort? How many reporters are currently developing an in-depth examination of some recent or historical event? How many analysts want to more fully explore the ideas that guide their incisive think pieces? How many fiction writers have already written novels or collections of short stories? Offering a storefront for these volumes right here on the site solves several problems:"

1. It allows authors to directly speak with their readers. This is something that no other book store (to my knowledge) or platform-based website offers writers working with book-length titles.

2. It would encourage authors who are not currently using Substack to consider this as a viable alternative to their existing distribution methods.

3. It provides authors with an existing network of potential readers because thousands of people are already using Substack.

4. It creates a new growth path for Substack because as more authors migrate to this platform their fans will create accounts or begin using the app to read their work.

5. An increase in the number of Substack accounts benefits every author on the platform because it creates a larger funnel of potential readers who may discover their work.

Why Would Authors Switch?

For the past decade Amazon has been the only game in town for self-published authors. Yes, there are some outliers who have been able to build followings via Kobo or Barnes and Noble, but the great bulk of working authors who are able to support themselves with their writing are uploading titles to Amazon and many of them are doing so exclusively.

Let’s just examine a few of the reasons why authors may want to expand distribution beyond Amazon alone. The biggest reason is that Substack provides a direct relationship with readers. The importance of that relationship can not be overstated. That relationship allows authors to bypass algorithms, corporate buyouts, changing business models, and the shifting focus that so many platforms experience as they continue to seek out new ways to find revenue.

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Kindle Unlimited’s Golden Handcuffs

Kindle Unlimited has been a tremendous boon to the self-publishing community, but it has also created a series of problems. Chief among those problems are the fluctuations in how payouts are calculated.

From WrittenWordMedia:

…Looking at these numbers, it is easy to see why many authors were upset by the change to pay per page. Before KU, if you wrote a 150 page eBook, and priced it at $2.99 you would make $2.09 (after Amazon’s 30% royalty) off of a sale of that book and you would realize that revenue as soon as a reader downloaded the book. Under KU, that same book nets you $0.75, and that is only once a reader completes the entire book, which may happen within 24 hours or 6 months of the reader borrowing the book. Additionally, as an author, you do not know what the payout per page will be until the following month, so it’s hard to determine what the max. value of your book in KU is in any given month.

Authors do have a choice of whether or not their book is included in KU. An author can simply opt-out of KU altogether by not enrolling their book in KDP Select. This decision proves agonizing for many authors, and there are authors who make good arguments for both sides…

Another area of concern is the opaque nature of the algorithms that Amazon uses to calculate sales rank and how the Kindle Unlimited enrollment status may affect those numbers.

…It is thought that Amazon gives preferential treatment to KU titles, although there is no definitive proof. A glance through the Kindle Top Charts shows a large portion of the best performing books as eligible through KU. Perhaps this is simply because a KU borrow counts the same as a normal sale or download, so it is easier for these titles to climb the charts. The effect of this is discussed in the most recent Author Earnings report.

The major publishing houses don’t publish their books through the KU program, so the competition within the KU program (which includes the books listed in the Kindle Countdown Deal charts, and elsewhere) are other indies or small presses. The major traditional publishers are not currently competing…

That being said, I believe that many authors have made peace with those issues. It’s less than ideal, but for the most part it’s been something they’ve been willing to live with in exchange for access to the large number of readers who are enrolled in Kindle Unlimited.

It’s an Ad, Ad World

Amazon’s decision to offer ads in the search results has created a certain degree of angst within the author community. It’s not too difficult to imagine scenarios where authors have to pay for visibility. Some authors feel this has already happened. I’m not sure things have gone that far yet, but the algorithms have been introduced.

Jon Hamm portraying Don Draper in Mad Men.

There are two ways of looking at this. The first is that Amazon does have to preserve the basic utility of its search function because to do otherwise would frustrate the end user. The other side points out that that’s the entire point. The end user has no viable alternative choice. Why not fill the top results with paid advertising? Not doing so is just leaving money on the table, right? Regardless of which approach is correct, the frustration and fears that authors experience regarding this issue do exist.

Not Just eBooks

Author discontent with Amazon is not limited to the written form. It also extends to the audio equivalent. Audible is in the midst of a class-action lawsuit because authors who sell books through that site feel that the company has used deceptive accounting practices.

From the About page of AudibleGate:

Corporate greed and antitrust drama courtesy of your friendly Audible App

Authors docked 100% for each return & Audible keeps 100% of the profits  

Welcome to Audiblegate, the public site of the Fair Deal for Authors and Narrators group.

We are currently at war with Audible, who have for years clawed back sales from authors secretly through opaque reporting, while they gave away our books via their over-generous "Easy Exchange" policy for readers.

Since October 2020, when a glitch at ACX, (associated Amazon company through which independent authors post their books to Audible) revealed the true depth of the returns, we authors, narrators and rights holders have waged a war of words with Audible to force them to reveal our returns data and pay us compensation. Audible charges 100% of the cost of returned and exchanged books to authors, narrators and rights holders, all at zero cost to Audible. Audible keeps the membership fees and keep us under contract while they give away our content in an unauthorized lending scheme…

And this:

…Along the way, though, we learned that Audible has been misleading authors, misrepresenting earnings and calculation rates. They have ignored their own contracts with authors and have been paying us incorrectly for years. When we brought this to their attention, they denied this.

So, we call on legislators around the world to examine Audible CEO Bob Carrigan, Don Katz, and their co-conspirators in these manipulative practices against not only authors, narrators and rights holders but also against consumers. 

Audible has employed an #antitrust #anticompetitive system for years to habituate readers, while manipulating sales prices to prevent competition. They have underpaid authors in manipulating payouts through concealment and denial…

Authors are Already Looking for a Way Out

The few issues I’ve listed above and many others have led to a quiet discontent within the author community. It’s becoming increasingly common for authors to announce that they have set up a Shopify store on their personal webpage. That store allows them to sell their books directly to their readers and allows the readers to feel good about purchasing the books from them there because it allows the author to keep a greater percentage of the profits.

Joanna Penn has begun to offer a class where she explains why authors need to go independent and then provides them with an overview of how to setup a Shopify account so you can begin selling direct.

BookFunnel is a distribution tool. Authors who aren’t quite ready to make the jump to Shopify have used this with success. Authors using this approach still need to setup a payment system on their site, but once that’s done Bookfunnel is capable of delivering the files to end user’s reader of choice.

Cory Doctorow is running a Kickstarter right now to help fund the publication of his newest book Chokepoint Capitalism. The premise of that book is that large tech platforms have been exploiting creatives for years by laying claim to an inordinately large share of their earnings and then designing systems to lock those creators onto that platform.

I fully agree that authors are best served if they handle everything themselves. That being said, I just don’t want to do all of the technical stuff required to make an online store work… and keep working.

I would much rather trade 10% of paid revenue (and payment processing fees) and have Substack handle all those things for me. Let them handle the security updates and all of the technical maintenance. I’d prefer to focus on the writing part.

I am willing to go all in on Substack because I feel that their cut of the profits is fair and—more importantly—they allow me to own the essential element that all other retailers lock down: the customer relationship.

Discoverability

On top of that, Substack seems to be actively striving to improve the the biggest pain point for any author: discoverability. Since I joined the platform they have made vast improvements to the site’s search feature and have introduced a slew of other features all with the goal of helping readers to find and connect with new authors. You can read about some of the steps they have taken in the article below.

Substack generates 1 in 3 new subscriptions on the platform

Additionally, they have begun beta testing a new feature called Threads that I love. This is a community feature that allows authors to host conversations with their subscribers. I’m really excited about this because visibility is limited to publication subscribers. Let me say the same thing using different words. The only ones who will see the posts are the ones who have expressed a shared interest around that publication’s topic. Finding a community of people who shares your passion or interest in a topic is so powerful and Threads seems like the perfect tool to leverage that opportunity in a way that can help authors and encourage readers to spread the word about the great conversations that are taking place in that space. All of these things together can lead to increased visibility and allow new readers to discover your publication.

It’s still early days with the company and their offerings, but you can see the dominoes lining up… or at least, it feels that way to me. Even now authors are getting to know one another, meeting and conversing with readers in the comments section, responding to one publication’s essays with a post of their own to share their point of view. I love all of that stuff and feel that this is one of Substack’s killer features… albeit in its first iteration.

My Take

Seeing the way Substack has grown and iterated has caused me to dream about other areas where it could potentially upend the writing environment. It is my hope that a future version of Substack provides a home for book-length material that is made available not only as part of a subscription (as they offer with newsletters), but also at retail through an online storefront.

I feel like the idea of asking Substack to host a retail outlet for books and audio books may get pushback because it seems to be outside their core competency and the initial focus on which they were founded. All of those things are true. However, there was a time when Amazon sold only physical books.

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What do you think? I’d love to hear your objections, suggestions, or alternate ideas. Speak up in the comments and tell me if you agree or think I’m wrong. I’d love to know your point of view.

1. Yes, I do see the irony that the entire point of my article is to get Substack to expand their platform because it will offer a new source of revenue to both the company and the creatives who use their services.