Hey, my name is Greg Piechota. I study news media business models for INMA and write about innovations in digital subscriptions and beyond in this regular newsletter.

In today’s newsletter:

• Discover data on the brutal dynamics of the new media creator economy.

• Review the business case for The Edinburgh Minute on Substack.

• Learn why Axel Springer’s CEO believes the future newsroom will be like a record label.

If you have questions or suggestions, e-mail me at greg.piechota@inma.org.

The brave and brutal world of media creators

Journalism stars leave newsrooms to join the new media creator economy. The financial success of a few obscures the brutal dynamics of this sector.

When the last local daily newspaper in London, the Evening Standard, switched to a weekly in 2024, a number of start-ups launched to fill the void in local journalism in the nine-million-people capital of the United Kingdom.

Many of those — The London Centric, The Minute,the Spy, and others — started as e-mail newsletters by individual journalists on the Substack platform.

By March 2024, they collectively attracted 50,000 free subscribers, per my estimate. Compare this to 275,000 copies the Standard used to print and give away daily.

Since 2017, 50,000 creators have joined Substack, including veteran TV journalists like Jim Acosta, ex-CNN; Joy Reid, ex-MSNBC; and Dan Rather, ex-CBS News. 

Substack’s co-founder Hamish McKenzie compares traditional media to crumbling temples replaced by a media garden of thousands of independent voices.

One in five Americans — including a higher share of younger adults (37%) — told Pew Research Center they regularly get news from influencers on social media.

The brave new world of creators: The top 10 publishers on Substack collectively had hundreds of thousands paid subscriptions and earned more than US$40 million a year. 

In the Politics and News categories, more than 30 publications make at least US$1 million a year.

The financial success of this lot is remarkable, and it attracts more journalists and other creators to join Substack. 

There are now more than five million paid subscriptions on Substack, which makes the platform a bigger subscription brand than The Wall Street Journal or The Washington Post. 

But with 50,000 writers, the average Substack counts only 100 paid subscriptions.

Brutal facts about creator economics: The success in this new creator economy is actually rare, similar to other media sectors driven by network effects and positive feedback loops, such as online video, or music, or podcasts. 

The distribution of creators’ popularity, and revenue, usually follows a power law pattern.

For example, in 2024, Spotify paid out US$10 billion to artists, but there were 12 million of them competing for listeners on the platform. 

While the top 10,000 generated US$100,000 or more per year, most artists didn’t earn a living wage on the platform. They earned it through live performances, merchandise, and brand partnerships.

On YouTube, there may be 100 million channels, but the top 3% channels get 85% of all video views and associated revenue.

The host of the biggest YouTube channel, Mr Beast with 383+ million subscribers, made more money in 2024 from selling a new show to Amazon Prime than from advertising revenue shared by YouTube. 

Media was actually a loss maker for its biggest new star. Mr Beast made all profit and most revenue from selling chocolate (US$251 million) rather than from his videos (US$246 million). 

No wonder the most important source of revenue for independent media creators, per a 2023 survey, was marketing off-platform products and services, e.g., books, courses, or events.

Join me for an interview with Substack’s Hamish McKenzie in the INMA Subscription Masters series next Wednesday, April 16, at 10:00 a.m. New York time. E-mail me your questions: greg.piechota@inma.org.

One-minute case study: The Edinburgh Minute

Former journalist and social media manager Michael MacLeod shared his Substack success story at the INMA Media Subscriptions Summit in Amsterdam in March.  

His newsletters, The London Minute and the earlier endeavour The Edinburgh Minute, compress news of the day into one or two minutes of reading. 

MacLeod wakes up every work day at 5 a.m., skims 500+ news and social feeds, and curates an e-mail sent by 7 a.m. 

Open rates as high as 58% suggest engaged readership. Half of the recommendations come from this community.

Since 2023, The Edinburgh Minute has amassed 20,000 free and 2,700 paid subscribers. The subscription costs £5 per month or £45 per year. 

This translates into £148,000 in annualised gross revenue or almost five times an average salary of a local reporter in the United Kingdom. Substack and the payment processor take a 13% cut. 

The Edinburgh Minute inspired dozens of local newsletters across the world.

Discover more case studies in our blog from the INMA Media Subscriptions Summit in Amsterdam.

A newsroom of the future? More like a record label or an investment bank

When asked about the future newsroom, Axel Springer CEO Matthias Döpfner was blunt: “My role model is more like a record label.”

I interviewed Döpfner in Berlin last year during Axel Springer’s Paid Content Summit in front of executives of Bild, Welt, and dozens of other newsrooms from around the world.

“You attract the best talent, you attract the best creators, and you create the best artists,” Döpfner envisioned. 

“And you create an environment where they feel well treated, where they see opportunities that they don’t have on a standalone basis.”

Why would any creator join a legacy media firm instead of going independent?

What record labels do: Similarly to other media sectors, the Internet changed the way people create, distribute, and enjoy music. 

Technology platforms such as Spotify or YouTube democratised access to audiences and lowered cost of content production, distribution, promotion, and sales. This helped creators gain more autonomy and new opportunities to form relationships with audiences and to monetise them. 

However, this freedom requires them to shoulder increased risks, responsibilities, and administrative burdens traditionally absorbed by media firms.

In the music industry, record labels: 

• Discover talent, educate, and plan their careers.

• Negotiate and manage contracts and licenses.

• Cover the cost of content production and marketing.

• Coordinate distribution, promotion, sales, and publicity.

Banks for content renaissance: Of all the jobs of record labels, early funding is perhaps the most important.

“Record companies play a capital allocation role,” explained Alex Connock in Media Management and Artificial Intelligence (Routledge, 2022). 

“They aim to earn returns through their ability to select which talent and material to invest in, and bring that to market based on their long-term understanding of both demand and talent.”

In Rolling Stone magazine, Milan Kordestani compared record labels to Roman Catholic popes and other wealthy patrons commissioning art from Michelangelo or Raphael during the Italian Renaissance. 

In modern times, Amazon paid YouTuber Mr Beast about US$100 million to produce the first season of Beast Games, one of the most expensive deals in the history of reality TV.

Other deals followed, and Netflix debuted a children show by another popular YouTuber, Ms. Rachel. 

In interviews, CEO Ted Sarandos called YouTube and TikTok “training grounds” for creators and suggested they will ultimately come to Netflix to make real money.

So why would any creator join a legacy media firm instead of staying independent? What about an advance?

Next in the Readers First Initiative

• Subscription Masters online series: On April 16, watch my interview with Substack Co-Founder Hamish McKenzie. On May 14, join the live discussion with Liz Wynn, chief supporter revenue officer at The Guardian. E-mail me your questions: greg.piechota@inma.org.

• INMA World Congress of News Media: On May 23, I will be hosting the Subscriptions Seminar in New York with top innovators from The Atlantic, Condé Nast, Neue Zürcher Zeitung, Piano, Schibsted, and Stampen. Register now.

• Media Innovation podcast: While in Amsterdam, I met DPG Media’s Lars Anderson and Philippe Remarque and chatted about the media industry’s challenges and opportunities. Listen on Apple Podcasts. 

About this newsletter

Today’s newsletter is written by Grzegorz (Greg) Piechota, INMA’s researcher-in-residence and lead for the Readers First Initiative and Subscription Benchmarks.

E-mail Greg at greg.piechota@inma.org, message him on Slack, meet him in New York in May at INMA’s World Congress of News Media.

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