Substack shows publishers the value of journalists


When the American newspaper was in its prime, there was a rule of thumb for newsroom size: one staff member for every 1,000 print copies sold. What would its equivalent be today?

The implosion of print advertising has transformed the economics of journalism, from the go-it-alone newsletter writer on Substack to subscription-first publishers such as the New York Times or Washington Post. The internet brought huge potential audiences.

But, strangely enough, the modern journalist-to-reader ratio for subscription news might not be so different from the money-spinning, ad-reliant US newspapers of old. At $10 a month, 1,000 or 2,000 paying subscribers per staffer is enough to earn a decent living for a Substack writer, and potentially to turn a profit in a digital newsroom.

The bigger problem for traditional publishers is the transition. Still carrying baggage from print with old costs and with their eye on what is left of the ad money, some executives are understandably reluctant to act on the full implications of subscription economics for their staffing and strategy.

The Substack flotilla is less a direct threat to these established news brands than an important reminder of what the subscription business boils down to in essence. A handful of star writers have shown that newsletters can generate six or seven-figure pay cheques, far in excess of most newsroom salaries.

Noah Smith, a Bloomberg opinion writer on economics, started his newsletter only four months ago and has amassed 1,100 subscribers. It is early days, but at the monthly subscription rate that would make in excess of $100,000 a year after Substack’s 10 per cent fee and online payments processor Stripe’s 3 per cent for transactions.

More established newsletter writers such as the historian Heather Cox Richardson or Matt Taibi, a contributor to Rolling Stone, earn many multiples of that. But there is the unforgiving reality of being a journalist-cum-entrepreneur: most Substack writers flop.

Even so, the simplicity of the newsletter model should be a sit-up moment for traditional publishers — not just over the competition for top talent, but in terms of how newsrooms are conceived within their businesses.

The not-so-surprising headline is that the subscription news model depends on convincing people to pay for good journalism, rather than selling an audience to advertisers. Talent and quality matter.

The harder-to-grasp consequence is that the model elevates newsrooms into being the news company’s main investment, scaled up or down to fit its ambition, rather than a cost-centre to be managed in the context of dwindling ad revenue.

Which brings us back to ratios. Even in the glory days of print, the staffer per 1,000 copies yardstick was inexact, and mainly related to local titles (one academic study found the average staff ratio to be 1.04 in 1995). But it distilled the commercial potential of the audience (to advertisers) and the amount of journalists needed to sustain its attention.

When the Washington Post’s legendary editor Ben Bradlee retired in 1991, his newsroom was 600 strong and the paper’s circulation stood at around 800,000, a ratio of approximately one staffer to every 1,300 copies sold.

Under the ownership of Amazon founder Jeff Bezos, the newsroom has grown to more than 1,000. Print circulation is just 200,000, but the Post has an impressive 3m paying online readers — roughly one staffer to every 3,000 subscribers. It has enjoyed a bump from Trump, and some economies of scale.

If the average subscribers paid anywhere near the $10-a-month headline subscription price (the Post does not disclose such figures), in theory it makes for a tidy business.

Revenues of $360m would cover the costs of a Post newsroom three times over if wages and expenses averaged around $100,000 for an editorial staffer. Old-print newspapers typically spent a quarter of revenues on running the editorial side. Well-run digital publications should do much better.

In the words of Marty Baron, the Post’s former executive editor, Bezos gave the Post an investment “runway” to a digital future for news. It remains to be seen whether the newsroom is big enough to keep building the 3m subscriber base, especially outside America.

How many journalists are needed to reach the target audience of subscribers? That should be a question all news publishers are constantly asking of themselves.

alex.barker@ft.com





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Substack shows publishers the value of journalists

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