What's the deal with Substackanomics?
An answer to a mail bag question about the economics of writing a newsletter
The best gift you can give a writer is cash, but there are plenty of other good gifts too. Coffee makes a nice gift. Ditto for coffee mugs. Pens are always appreciated, as are notebooks. Sharing a writer’s work with friends, influencers, or powerful literary agents is also nice. But one of my favorite gifts is a question. Here’s why: anyone can ask a question, and a question gives me something to write about. That’s a win-win, situation normies.
Recently, I received a very good question from a long-time situation normie named Tab. Here’s what he wrote:
The other night, during a period of insomnia, I was thinking about the
fact that most of the Substack authors I’ve found have been begging for
subscribers (to paraphrase the old Tom Lehrer song line, “Now there is a
fee for what they used to give away for free.” ) You’ve mentioned the
numbers of paid vs. free subscribers coming out as around 2%. And most
subscriptions seem to run about $50-60/year. Would a lower cost get
more subscribers, and a higher total payout, or not attract money from
those who aren’t paying anyway?
Paying for one subscription doesn’t seem all that bad, but as I start
thinking about the requests to pay a bunch of authors, it suddenly adds
up to more than the cost of Amazon Prime which can give me dozens of
hours of entertainment and might even not cost my wife any money for
shipping the tons of packages that show up on my doorstep each day. Or,
more than the cost of buying a book online each month which gives me 300
or so pages to read.
I don’t know the percentage of Substack writers who actually get a
significant number of paid subscribers, making the writing a paying job
rather than a labor of love. It makes me wonder whether the authors
could work out something with Substack to have a monthly Substack
subscription and have Substack pay the authors a percentage of the take
each month based on the number of people who read their posts similar to
what the entertainment strikes have been asking for?
Thank you for this question, Tab! The fact that my financial prospects occupied your sleepless thoughts warms my heart. Seriously! I really appreciate your email because I can tell it come from a place of concern. I’ve been a professional writer for twenty years, and aside from a few friends and relatives, and the occasional creditor, nobody asks these important questions.
OK, let’s get into it.
Can I lower the price?
Not really, no. I can offer periodic discounts, but I can’t lower the price of a Situation Normal subscription because Substack sets a minimum price of $5 per month. That means a Situation Normal subscription currently goes for the platform minimum. Or, put another way, Situation Normal is the best darn deal on Substack!
Upgrade now for the best darn deal on Substack!
But wouldn’t it help if I could lower the price below the floor?
Before I answer that, I need to confess something. I took a few economics classes at Wesleyan, and I passed most of them, but only because I promised my professors that I wouldn’t become an economist.
ANYWAY, as I understand it—and here I use the word understand loosely—lowering prices to meet demand should raise revenues, all other things being equal. How’s that, Professor Adelstein?
The thing is, I can’t go below Substack’s floor. Here’s why: without a floor, writers will end up in a race to the bottom. At first, that race starts out with writers competing over price. But soon enough, things will turn ugly. We’ll compete over trivia questions, over feats of strength, and even do swimsuit competitions. Nobody wants that, especially me, because my Speedo is in the shop.
Keep my Speedo in the shop (where it belong) by upgrading now👇
What about a Substack writer a bundle?
At the moment, Substack doesn’t allow a group of writers to sell subscriptions in a bundle. But I’ve heard plenty of writers and readers ask for a bundle option. And recently, at a fancy literary salon, I heard Substack co-foundersay that a bundle was a “possibility.” I probably should’ve asked a follow-up question, but instead I asked about dessert. Sorry. Anyway, maybe we’ll get a bundle someday, and if we do, I hope you’ll support whatever newsletter federation includes Situation Normal in its bundle.
Situation Normal is a reader-supported publication that’s currently served à la carte. Speaking of à la carte, I ended up paying for my own dessert at that fancy literary salon, so please consider upgrading to a paid subscription to help me cover the cost of the baked Alaska I ordered👇
Can we talk about the elephant in the room?
You bet! Tab didn’t ask this question exactly, but he made a good point about wanting to support more Substacks than his budget allows. And he made another good point about the value of one Substack relative to a book, or an Amazon Prime membership, which includes free shipping that isn’t free, movies, TV shows, and a bunch of other stuff.
I think about these questions a lot, but I don’t have any answers. Here’s why: I can’t tell you how to set your spending priorities. Situation Normal is a (mostly) free publication. People pay because they love my work and they want to support it. I’m so grateful for that. If you’d rather pay for Amazon Prime, or another Substack, or a book, that’s totally up to you. I won’t be upset, and I won’t exclude you from the fun either.
But if you do want to pay for Situation Normal, you’d really make my day👇
But don’t you need the money, Michael?
Yes! I need the money.
I need the money to justify the time I put into Situation Normal.
I need the money to cover minor expenses because sometimes Situation Normal stories incur minor expense, like parking, snacks, and legal fees.
I need the money to pay Todd for his time, tools, and talent so that the Situation Normal podcast can dethrone Joe Rogan and those smug bastards at NPR.
Mostly, I need the money because I promised Christina I’d get the money.
But Situation Normal isn’t my only gig. I’m a freelance writer. I write op-eds for technology leaders. I do some journalism. I do some copywriting. Basically, I’ll write you anything, except a check.
I write Situation Normal on spec. People pay because the love it. I dunno know if that’s a good deal, but it feels like an honest deal👇
Can I ask you a question, Michael?
Yes, please do! I love hearing from Situation Normal readers. Ask me (almost) anything, and I’ll answer your question in a future issue of Situation Normal.
Email me at firstname.lastname@example.org
Stick around and chat!
I’ve got questions, maybe you’ve got some answers.
Do you pay for any Substacks? Which ones? Shout ‘em out!
Aside from cutting carbs and doing Pilates, how can I improve my chances in the writers swimsuit competition? Think outside the box!
Will Wesleyan revoke my degree after this post? Tell it to me straight.
How did Jeff Bezos convince us to pay for free shipping that isn’t free? Is he wizard, or did he just hire a really good copywriter?
Have you ever been to a literary salon? Did you also make the mistake of thinking that you could get a haircut there?
Have you listened to the Situation Normal podcast?
Want more Michael Estrin stories? I’ve got two books!
Ride/Share: Micro Stories of Soul, Wit and Wisdom from the Backseat is a collection of my Lyft driver stories🚗🗣
Not Safe for Work is a slacker noir novel based on my experiences covering the adult entertainment industry💋🍑🍆🕵️♂️
The ebook versions of my books are priced between 99 cents and $2.99, so if you don’t have the budget for a Situation Normal subscription, buying an ebook is a great way to support my work. Bonus: you’ll laugh your butt off!