Is Substack the OnlyFans of journalism?
Substack, the platform on which you’re reading this newsletter, has come under a lot of criticism lately. Most of this seems to be emanating from woke corporate journalists who are indignant that people like Andrew Sullivan and Jesse Singal can publish articles without being subject to editorial oversight, or the threat of being cancelled by their colleagues. (It’s much harder to maintain a narrative when some of the biggest names in the business are contradicting you to thousands of their subscribers every week.)
Glenn Greenwald is another BNOS (Big Name on Substack) who’s been taking some flak recently. He moved to the platform after resigning from The Intercept – a media outlet he co-founded – because of interference with his “right to editorial freedom”. (Basically, the New York editors didn’t want him making Biden look bad before last November’s election.) And unsurprisingly for a guy who enjoys skewering the establishment, Greenwald has written a particularly cogent defence of Substack in his own newsletter.
I agree with pretty much everything he says in that piece – which is characteristically thorough and articulate. And as you might have guessed from the fact that I’m writing on Substack, you can count me among the platform’s supporters. Having said that, I’m not sure its arrival should be heralded as a wholly positive development. The reason being that Substack will probably exacerbate our economy’s winner-take-all effect.
I first learned about the winner-take-all effect from the economist Robert Frank. Back in 1995, he and Phillip Cook wrote a book called The Winner-Take-All Society, which was based on an earlier paper the two had co-authored. Their main point was that, in some markets, a handful of top participants end up with a disproportionate share of the total rewards. And there may be large differences in outcomes between participants at different ranks, even when the underlying differences in performance are relatively small.
Suppose J. K. Rowling is the top-ranked author in the world. Her books have sold hundreds of millions of copies, and Forbes says she earned $60 million in 2020. Now consider a lesser-known author – someone who’s nearly as good as Rowling, but has never quite “made it”. He or she may earn $60,000 per year, selling a modest number of books. So Rowling is slightly better than this lesser-known author, but she ends up getting 1,000 times more income.
Another example is OnlyFans. Virtually all the money generated on that platform goes to a tiny fraction – less than 1%, according to a chart posted on Twitter – of the creators. As I understand OnlyFans, most of the creators are women selling access to pornographic photos and videos of themselves, as well as one-on-one “chats”. It’s hard to imagine the highest-earning women could be that much more attractive or seductive than the lesser earning women. But still, the distribution of earnings is extremely right-skewed.
Or consider classical singers. Before the invention of hi-fi recording, you could make a decent living as a classical singer, especially if you were the best in your town. For example, you could get paid to sing on stage, in restaurants or at private events. But today, such opportunities are vanishingly rare. Once it became possible to store a flawless recording of Pavarotti or Domingo on a CD, the top singers captured almost the entire market. Why pay for the local guy, when you can get the best in the world for $12.99?
New technology isn’t the only factor that can cause winner-take-all effects. As Frank and Cook note, such effects are also driven by network externalities – when a good becomes more valuable as the number of people consuming it increases. I suspect both these mechanisms are at play in the case of Substack. Through its paid subscription model and minimum pricing, the platform makes it expensive to support multiple writers at the same time. A $5 monthly subscription to a magazine might go towards a dozen writers; at Substack it goes to just one.
What’s more, new writers who join the platform can’t rely on an existing pool of readers (like they would if they joined an established outlet). This tends to favour those who already have large social media followings, since more followers means more subscribers. You might be the greatest writer in the world, but if your articles are only being shared with a couple of hundred anons on Twitter, it’s going to be tough to make a living. Don’t get me wrong: I’m sure it’s possible to build a subscriber base from scratch if you’re really talented. But as Nassim Taleb would say, you have to make sure you don’t go bust before getting there.
What kind of money are the Substack superstars making then? Matt Yglesias, the Vox co-founder who moved to Substack last year, was apparently offered a deal: for the first year, they pay him $250,000 plus 15% of his subscription fees. Not too shabby, right? However, because he’s managed to attract so many subscribers, he’s actually losing money relative to where he’d be if took home all his subscription fees (minus the 10% that goes to Substack). Likewise, a recent FT article revealed that Glenn Greenwald is getting $1 to $2 million per year, which he describes as “more money than I’ve ever made in journalism before”.
None of this is meant as a criticism of Yglesias, Greenwald or the other BNOS (pronounce “bee knows”). They really are great writers, and I’m glad they’re achieving success on the platform. (One might add that inequality in journalists’ incomes is hardly the biggest problem in the world right now.) But it does suggest that, like many “disruptive” tech innovations, Substack is not an unalloyed good.
There’s probably not much we can do to prevent winner-take-all effects. New technologies and network externalities are simply facts of nature in the modern, globalised economy. Frank and Cook note that, with the growth of televised professional tennis in the 1980s, the amount by which the top-10 players out-earned those ranked 41–50 went from 12 times to 30 times in just seven years. And today, Roger Federer makes $106 million a year, while your local tennis champ almost certainly has a day job.
One thing that could make a difference at the margin is if Substack reduced the minimum price from $5 per month, to say $2 or $3. Competing with Greenwald on quality isn’t easy; but at least one could compete with him on price.
Will we eventually end up with a few dozen superstar writers, each earning several million per year, and then a very large throng of minor bloggers, commentators and other writers – all jostling for the remaining scraps of subscription fees? If trends in other sectors of the economy are anything to go by, we probably will. My advice: unless you’ve got a large social media following already, don’t rely on Substack as your main source of income.
Image: Norbert Nagel, New York City Stock Exchange, 2006
I’m now a contributor at the website Lockdown Sceptics. So far, I’ve written four short posts. The first notes that the number of deaths registered in England and Wales in the week ending 19 March is the lowest since 2014. The second argues that we should retire the ‘deaths within 28 days of a positive test’ chart. The third argues that offering everyone in England two tests a day is a waste of resources. And the fourth provides an update on South Dakota.
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