How Newsletters Make Money for Writers with Hamish McKenzie of Substack

Hamish :
... even if there are already 100,000 people in the entire world who even care remotely here about this esoteric interest you have, that's still a good enough audience to maybe find 10,000 people ultimately who would pay you money. And if you can get 10,000 people to pay you money for a subscription newsletter, then you can not only support yourself, but you can get really quite wealthy from it.

Introduction:
Welcome to the Become A Writer Today podcast with Bryan Collins. Here you'll find practical advice and interviews for all kinds of writers.

Bryan:
Would you like to build a relationship with your readers or are you looking for a way of earning more money from your writing? Well, have you considered starting a newsletter? That's what we're going to cover in this week's interview with Hamish McKenzie, the founder or co-founder of the newsletter service Substack. Now, I recently started a newsletter using Substack, and I'm surprised by how easy it was to set something up and send it out to readers. My newsletter is about productivity, creativity, and leadership. In other words, it's a little bit different to the writing advice I offer here on Become A Writer Today, but if you're interested, I'll put details about my newsletter in the show notes. I was interested in setting up a newsletter for two reasons. Firstly, back in 2008 and 2009, I was a washed-up technology journalist in Ireland and I was struggling to pay the bills, and back then I always questioned if it was possible for a writer to earn an income.

Bryan:
In fact, I was on social welfare for a while and I had to rely on my wife to earn an income while I minded the kids, and that was a pretty demoralizing and depressing experience, and I pretty much gave up on journalism after that. And it was a long roundabout journey that got me back into writing or writing online. But even today, I wouldn't consider myself a journalist so to speak, but one of the things I am interested in is how writers earn an income. So I was struck when I came across Substack and read its mission, which states they want to make it simple to start a publication that makes money from subscriptions. The second reason why I'm interested in newsletters is because of something I learned from the entrepreneur author, Gary Vaynerchuk.

Bryan:
Now, you're probably familiar with Gary because he's all over the internet, and whatever you think about Gary, his approach to creating content is inspiring because he'll take a blog post and he'll re-spin that blog post as a podcast episode, he'll turn the podcast episode into a video, he'll turn extracts from the video into posts for Instagram and for Facebook, and he might also re-spin all of that for Medium. Now, Gary has a team that helps him do all of this. In fact, he has a videographer who follows him around so they can create content, and video clips, and so on, on the go. However, Gary explained how his strategy to creating content works in a SlideShare presentation that I'll include in the show notes along with this episode, but basically he walks through how create multiple pieces of content at once, and that's something I've tried to do over the last year or two.

Bryan:
I'll look on Quora, for example, and I'll see an interesting question related to creativity, I might write a short answer, and then if the answer gets some reaction or some shares, or even if I just find it interesting myself, I'll potentially turn that into an article for Forbes. Later on, I might take that article and rewrite it slightly for Medium, or I might use it as part of a book or within a book chapter for something that I'm working on. Many of the authors that I've interviewed here on the Become A Writer Today podcast, I've actually used those interviews to write articles for Forbes as well. So I'll talk to somebody about why they set up a business, or why they wrote their book, or what their big idea is, and that will help me write an article for Forbes, write a blog post for my site, and create a podcast episode like this.

Bryan:
And what I like about this approach and what I learned from Gary is that if you create one piece of content and then retell it in different ways, in video, in audio, or even as a social media post, you're giving yourself more chances to connect with readers and to build your audience. And remember, people like to consume information in different ways, so sometimes I just like to sit back and disconnect from the internet and read a paperback book, on other occasions, if I'm on the go, I might like to read a long-form article on my phone using the app Pocket. And then there are times when I'll like to read a YouTube video if there's this tutorial I'm taking, for example. So if you have an interesting idea, if you've written something before, I'd ask you to consider how you can transform that into another piece of content that will help you connect with more readers, and you could even increase your income as a result.

Bryan:
And of course, one form of repurposing that you could consider is to start a newsletter. And that's something I did recently, which we talked about there a few moments ago, and I was really surprised by how easy it was to set something up on Substack and to send it to readers. In fact, it only took me about five minutes. So that just left me with the age old problem of figuring out what to write about, who to write for, and then to actually go and do it. And those are questions that writers will face no matter their audience or where they write. So I recently had the opportunity to interview the co-founder of Substack, his name is Hamish McKenzie, and he's based in San Francisco. Substack at the time of recording the interview employees four people, so it's a relatively small company, but they recently completed a funding round last July, so it's definitely becoming a service that every writer should consider.

Bryan:
Hamish, who's an author himself, explained to me in this interview why a newsletter is a fantastic way of building loyal relationships with your readers and how it can help you earn an income. He also talks about why an ideal newsletter should start with an ideal reader and how to write for that person. Hamish also gets into how you can take a newsletter and grow it so it becomes popular, and people are sharing it, and reading it, and engaging with your content. There's lots more we cover in the interview, including how to stick to a consistent routine with your newsletter, but I started by asking Hamish why he decided to set up a newsletter company like Substack in the first place.

Hamish :
When we started Substack, we were very frustrated by the existing media structure and how increasingly we, as a society, were finding ourselves trapped in an attention economy where what you had to do to get ahead was shout the loudest. And so the people who do well on Twitter or on Facebook, which is a last chunk of how we consume media these days, are people who are willing to provoke extreme reactions, and so things like delight and joy in the good cases, but anger and rage in the bad cases. And we've gotten to this position where these social media platforms become so compelling and so effective that it's becoming harder for other media organizations to succeed. So newspapers are shutting down, journalists are leaving their jobs, and we'll get into this terrible situation where society was tearing itself apart and continues to because we are finding it harder to have reasonable conversations online, and to find trustworthy storytelling and information sources.

Hamish :
And so we figured that part of the whole problem was that all the rules of the game are set up to create this race to the bottom type of game, and that is going to be true for as long as online advertising is the dominant part of their revenue mix, and so we wanted to provide an alternative to that where readers pay writers who they trust directly. And so subscriptions, we believed, were a good thing because they're recurring payments and they help writers be independent and uncompromised, and help writers do the best work where their customers are their readers, not an advertiser. And one simple way to enable an ecosystem like that was to just give writers a simple tool that allowed them to publish to email and the web, and to accept payments from their readers in the forms of subscriptions. So that is basically what Substack is.

Bryan:
And could you give me an idea of how many people are using Substack today, or do you have any numbers like that you can share?

Hamish :
Well, we just say thousands of writers and millions of readers.

Bryan:
Okay. And what does it take for a writer or a creator to build up a successful newsletter?

Hamish :
Dedication is important. Well, to actually get started on Substack, it's really simple and straightforward. You can set up a publication, and be publishing, and even accepting payments within minutes, it's even more simple than setting up a WordPress blog, but to actually succeed, you need to be writing good stuff that resonates with an audience and be consistent. And the audience doesn't have to be huge. You can be appealing just to a small group of people, and if they're paying you some money, then that small group can actually support a pretty healthy income pretty quickly. So it's not like the old world where you have to reach an audience of millions in the hope of getting some advertising revenue, but 100 people paying $100 a year works out to about $10,000 a year, which can be good side money, and build up from there.

Bryan:
Certainly a nice side income. So what is the best way to build up a list of subscribers? In the past, people have tried things like guest posting, and Facebook ads, and so on for building blogs email lists, so is it the same approach for Substack or should people try something else?

Hamish :
Social media is pretty central to helping people grow their list in that this is one thing that social media does really well, it helps people share good stories, and if you write something that's good and appeals to an audience in a way that rewards their attention rather than exploits it, then will find out on Substack that they can sign up onto your mailing list because they trust the content so much and they trust the writer so much, and then once you've got someone on your mailing list, they can help spread the word to others and you can grow by word of mouth, but often it's a piece that will break out in social media on Twitter, or LinkedIn, or Facebook, or people will share it a lot online, or some blog will link to it, or some media publication will pick up on it and you'll see big spikes in your growth of your mailing list when you have a piece that does the rounds like that.

Bryan:
And at what point should somebody who set up a Substack blog consider monetizing it or a Substack newsletter?

Hamish :
Yeah, it depends on the writer, and their expectations, and their goals, or how much money they want to make or how they it fitting into their lives, but what you want to see is consistent growth of your mailing lists and good feedback from your readers. So if readers are telling you that this is valuable and they like it, or if you're seeing it in the metrics, your emails have been opened at a good rate, 50% or higher, well 40% or higher even, and you feel like you're in your own good rhythm with the publishing schedule and that you have a good, firm grasp of what your publication is about, and you're enjoying writing it and can see yourself doing it for a long time, then if you've got more than 1,000 people on your list, you could consider turning on payments.

Hamish :
You can even turn it on for lower than that if you're happy with just pocket money, but often if you're doing basically the right things, we see that about 10% of your mailing list will convert into paying subscribers. So do you have 1,000 people on your list? You can think that 100 people might pay you if you're basically doing the right things.

Bryan:
Do you recommend a price point for new creators who are using Substack?

Hamish :
Yeah, if you're writing for a professional audience where the people can justify the price of subscription because it helps them with their professional developments or it helps them do their jobs better and therefore they can put it on their company credit card, for example, then we always say start at $10 a month or $100 a year, and you can go anywhere up from that because people are less price sensitive in that category. If it's for a personal interest audience where people are following along because they just love you as a writer, or they love your voice, or they love the subject area you're writing about and they're deeply passionate about it but they're paying out of their own pocket as a general consumer audience, then we say it's closer to $5 a month or $50 a year is the right range to think about.

Bryan:
I received the recent Substack update about how you've introduced a fellowship, and what I was struck by was the diverse range of voices who created newsletters. Could you give me an idea or a flavor of the types of popular newsletters that are around Substack at the moment?

Hamish :
Yeah, really there's no rules for what kind of content does well on Substack. We think that there are millions of editorial niches that can be flourishing on Substack and making money for the writers. But yeah, some of the top ones on Substack are ranging from an intelligence briefing sheet about the most important news from China, progressive politics in the United States, cryptocurrency, reading recommendations, faith in life, some comedy writing, even. It really runs the gamut.

Bryan:
And the people who have set up, that's quite a diverse mix, from cryptocurrency to comedy writing, did they have an existing platform that they're bringing to Substack or are some of those started from scratch?

Hamish :
A lot of the cases ... In a lot of cases, they have some kind of platform or audience gathered somewhere else, like on a mailing list that they import into Substack, or they've been writing the blog for many years, or they've got a large Twitter following, or even a modest Twitter following but their following is well engaged with that writer, and so the game for them becomes converting that following into a dedicated mailing list, which is the highest form of flattery for a writer that someone allows you into their inbox. But we have also plenty of people who are starting from scratch, and have started from scratch and gone to great success within the Substack environment too.

Bryan:
I was also struck by how easy it is to use. So I was able to upload audio and imagery, and write within the editor without any issues. Reminded me a little bit of Medium in some ways, but in terms of the actual content that people put into the newsletters, what makes for a good newsletter or newsletter update?

Hamish :
What makes for a good single post?

Bryan:
Yeah.

Hamish :
Well, something that demonstrates your voice as the writer, your particular worldview and your quality of thought. So those are the things that people are subscribing to really, they're not subscribing to content, they're subscribing to you the writer, and so your worldview, the way you look at things, and interpret things, and then communicate that is really important, but on a practical level as well, things that are on a single subject and very focused tend to be more shareable because then people can say on Twitter, for example, "Hey, look at this great post about Brexit," or about the climate crisis, or about some particular thing that might be surprising on some way, perhaps deeply insightful, and so posts that are roundups of a collection of links and recommendations, they don't do so well on social media, and it's harder to grow your base off that. And so we encourage people to think of their Substack publications as just as much like a blog that is ongoing and a series of posts that you just can mail out, just as much that as it is a newsletter and what people might traditionally think of a newsletter as being.

Bryan:
So I could see how somebody was running a company, like an entrepreneur, could use Substack for taught leadership, but perhaps they're struggling to find time to do all of the things they have to do as part of their job on Substack. So do you have any maybe tips that you could offer somebody who wants to set up a newsletter but has struggled to fit it in into their week or month?

Hamish :
Yeah, I think you have to think about it. So you're investing in your independence, an independent of whatever job you might have, and so it's a decision about how can you best use your energies, because the mailing list, once you've got it, is an incredibly valuable asset to have as a writer, then it's not controlled by anyone but you, can't be taken away by an employer, it can't be mediated by an algorithm, and it can be monetized through subscriptions at some point. So even if you're just starting out and you're working full-time in some other job that takes up a lot of your energy, if you can get to some point where you can publish regularly, just once a week even, and start building up an audience, you get a head start on that mailing list and you start opening up options for yourself. So schedule an hour into your calendar each week to write, and just make yourself do it, and start putting down the groundwork for what could be your future media business.

Bryan:
I like that. I like that. And I noticed you said write, but Substack actually supports audio and podcasts as well.

Hamish:
Right, you can host and distribute a podcast for free through Substack, and every time you click publish, it goes to your mailing list on your Substack website and into the podcast apps, and you can decide then on an episode by episode basis, is this episode only for my paying subscribers or is this episode free for everyone? Which is the same model as the text-based posts in Substack.

Bryan:
Yeah, that's a good way to approach distribution. So how do you decide as somebody who's [inaudible 00:17:12] what to focus on and what to not focus on, so to speak? Because Substack strikes me as something that's quite narrowed down to a particular audience and there's not much distractions when you use it, so how do you avoid scope creep, I guess?

Hamish:
Yeah, well one of our theories of the world is that in the future, there will be many, many subscription publications that are focused on niches, and so owning a niche is really helpful. And so when you're setting out and figuring out what your publication is going to be, figuring out that area of authority that you control and that you become known for is really important. And so often, actually, it's not just I'm the expert on skiing, it's I'm the expert on skiing and something else. So the intersection of skiing and aging, for example, is one I've been talking to someone about recently. They want to write a publication about skiing for people who are over 60. And a lot of people are writing about skiing and a lot of people are writing about aging, but not that many people are writing about the intersection of those two things, and that is a market opportunity.

Bryan:
So it sounds like they've narrowed down to their ideal reader or subscriber.

Hamish:
Yeah, and you shouldn't be going for something that you think is going to have an audience of millions, necessarily, you should be going for an audience that might be smaller but more devoted. And so even if there are already 100,000 people in the entire world who even care remotely here about this esoteric interest you have, that's still a good enough audience to maybe find 10,000 people ultimately who would pay you money. And if you can get 10,000 people to pay you money for a subscription newsletter, then you can not only support yourself, but you can get really quite wealthy from it.

Bryan:
Yeah, that's good advice. And what about, just to return to what we talked about a few minutes ago, about social media becoming quite noisy, some people say that email is on the way out. I presume that's something you don't believe in, but is that something you're actually seeing in terms of engagement with people who are [inaudible 00:19:15] newsletters?

Hamish:
I'm 38 and been focused on covering technology industry since 2006-ish, and throughout that whole time everyone's been saying email's dead. I definitely do not believe that email is dead. Most of the readers in Substack are reading the posts entirely in email. It's a nice, quiet space away from social media and it also happens to be an app that is on everyone's phone, so you don't have to convince someone to go download your app to read your publication, you can just piggy back on this incredibly dominant, evasive media platform that people already use.

Bryan:
I also noticed that you have published a book recently. So how did you find time for writing a book and building up a company like Substack?

Hamish:
I didn't start on Substack until I'd finished the book.

Bryan:
Okay.

Hamish:
Yeah, I would definitely not attempt that, it'd be too difficult.

Bryan:
And are there many employees at Substack? I think I read it that there was three, but perhaps it's changed since then.

Hamish:
Yeah, our headcount has skyrocketed and we're now at four people.

Bryan:
Okay, so 25% increase.

Hamish:
Yeah. Actually, in a couple of weeks-

Bryan:
[crosstalk 00:20:28].

Hamish:
In a couple of weeks, we'll be five people, but we are now focused on building the team. It's getting a little bit absurd trying to manage the workload that we've got with such a small team and there's so many opportunities to go after, so we're starting to build a team of amazing engineers and operators.

Bryan:
I also read your update there yesterday about the fellowship. Could you explain how the fellowship works?

Hamish:
Yeah, the fellowship, this is the very first version of doing this program, and so we've selected five writers who are already in motion on Substack and are showing great promise with the subscription publishing model, and writing about important things, and have good talent, as we want to help them just do the best publications they possibly can, so we've given them access to editorial expertise, legal support, how to build a community, design, and social media strategy, publicity, all the things that you need to run a really first class publication. Also, we've given them a little bit of money and are flying them out to San Francisco and hosting them here for an all-day event that includes a nice dinner, and a hotel amidst coaching sessions, but the idea here is to not just think that building some software and giving it to writers is going to be enough to make [inaudible 00:21:48] impact here, we want to be part of a system that supports writers generally and gives them some way to learn and grow as they work on their publications.

Bryan:
Definitely something I think that would appeal to perhaps people who are new to marketing their work online or at least position it to an ideal audience. There's also a lot of journalists on Substack as well. Is it weighted towards journalists or otherwise?

Hamish:
I think it's just really appealing to journalists. It doesn't have to be just journalists, we think Substack is ideal also for analysts, and curators, and bloggers, and academics, and industry experts, thought leaders, but journalists find it appealing because they are seeing, more than ever, the benefits of having a direct relationship with their readers, one that is not mediated by an employer who might go away anytime or mediated by an algorithm or social media platform that decides which of your pieces get the attention, and even how you get paid. And also, it's a little bit of a reflection of my personal bias, because I'm a former journalist and I have been, from the very first days of Substack, building the network of writers and affecting people to use the platform, and I know journalists, and so I started to look at journalists first, and then journalists tell other journalists, and network has developed like that.

Bryan:
Yeah, I'm actually a former journalist as well. So do you think journalism is in trouble? In other words, is it difficult for journalists to find employment work today or is it just evolving into different models, like what you're offering?

Hamish:
The industry as it exists is certainly in trouble, and that is having terrible consequences for journalism too, especially if you're looking at local news. I was talking to someone who was working for a newspaper in South Dakota the other day, when he joined the newsroom a couple of years ago, there's 25 people. Today, there's only nine people. For the first time, they were unable to send anyone to cover the school board meeting. That sort of stuff is terrible and needs to be fixed. I think there are going to be ... there are going to be solutions in that a model like the one that Substack enables can actually help journalism thrive and be better than ever, and the market for journalism can increase, but there is still going to be a painful transition period. I mean we're working as fast as we can to try and build a structure that can provide more hope, but the pain is already happening, and so the trouble is here.

Bryan:
Yeah, I spent a few years out of work after I left journalism and then I started to work elsewhere. I'm also curious, do you have an ideal early morning routine?

Hamish:
I don't have an ideal one, I have one that I just make work, which is that I get out of bed groggily, I get my kid out of the bed, and he's two and a quarter, and I get him dressed, feed him breakfast, have my breakfast somewhere at the same time, have a quick shower, drop him off at daycare, and then get to Substack, and then work intensely until the end of the day when I had to go pick up my kid again.

Bryan:
Okay, that sounds similar to my routine. So if somebody's interested in setting up a newsletter, what's the first step, they should take?

Hamish:
Go to substack.com/signup and just start. Just don't overthink it, just write something, get in motion, listen to feedback from whoever reads it, ask them what you could be doing better, how you could be better serving them, and then write another thing, and then write another thing, and write another thing, and then you'll look over your shoulder and realize that you've got a few readers, if things are going well. And then you can start maybe being a little bit more strategic about the shape of the publication and the audience you're trying to reach, and just get better each time.

Bryan:
Thank you, Hamish. It was very nice to talk to you today.

Hamish:
Thanks, Bryan. Lovely to talk to you too.

Bryan:
I hope you enjoyed this podcast episode. If you did, please leave a rating on the iTunes store. And if you want to accomplish more with your writing, please visit becomeawritertoday.com/join and I'll send you a free email course. Thanks for listening.