SUBSTACK
CORE BUSINESS
- Substack is a two-sided subscription platform which connects writer/creators
(newsletters, podcasts, video) with readers through paid and free subscriptions.
- For services it provides, which includes publishing, payments, analytics, and discovery
tools, it charges 10% of the revenue share.
- Substack relies on a reader-funded model, instead of the traditional advertising model,
where creators own their content and their mailing list.
- In 2025, Substack reported 5M+ paid subscriptions with millions of active subscriptions.
The company itself raised a $100M Series C round at a $1.1 billion valuation.
NETWORK EFFECTS
- Substack mostly relies on indirect network effects. As creators produce quality content, it
attracts more quality (paid) readers. This, in turn, attracts more creators to the platform.
- The recommendation system on the platform’s home feed suggests new Notes,
publications, podcasts, live feeds etc., which increases value for readers and raises
discoverability.
- Substack also allows creators to share their content across several other social platforms,
helping creators expand their readership.
HOW DATA IMPACTS ITS SERVICES
- Substack supports payments via Stripe which gives creators visibility into subscriber
cohorts, churn rate, and payment method insights.
- With Stripe, Substack is also able to support payments telemetry like KYC and failed
debit disputes which reduces friction at checkouts.
- It also supports annual discounts, promotions, and trials which help creates A/B test their
pricing structures.
- The platform provides insights on open rates, comments, and paywall which can trigger
nudges to extend subscriber lifetime value.
SINGLE-HOMING VS MULTI-HOMING
- Creators on Substack can maintain their presence across several other platforms like
Medium and Patreon which allows them to diversify their audience and revenue streams.
- Readers can often switch to different subscription tiers depending on their needs, creating
reader-side multi-homing scenario.
- Substack supports multi-author setups, mitigating a reason to multi-home solely for
collaboration features
CORE BUSINESS ADJACENCIES
- Substack allows creators to develop content through different modes, including
newsletter, video, live streams and chat/Notes.
- It’s recommendation network and Notes feature allow creators to promote their content
with their followers and potentially invite new readership.
- The platform also provides programs like Creator Studio which allow creators to upskill
and improve reader retention.
LEGAL AND REGULATORY CASES
- Substack faced investigation over its alleged hosting of neo-Nazi content in 2023. Since
then, it has removed around five publications but still faces backlash over its passive
response.
- It has come under public scrutiny over its aggressive centralized takedowns, which raised
questions regarding risk controls. The leadership has issued statements, emphasizing that
they’re working decentralized moderation tools.
- Since its recent Series C round, Substack has come under public scrutiny over its
moderation and growth claims.
- In the growing political background, Substack is also facing escalating expectations from
its readers over its risk mitigations policies.
SUMMARY
- Strengths: simple, creator-friendly stack, strong network effects, growing subscription
culture.
- Risks: Content moderation, fee structure, limited automation opportunities.
Citations:
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2025/04/the-power-of-tiers/