Discover more from The Pledge
Why Creators Should Choose Protocols Over Subscriptions
Making a full-time income as a solo creator in the current Web2 landscape is tough.
Platforms like Substack have enabled the best journalists to leave their job, but it’s also put writers on a hamster wheel with a weekly publishing cadence, where they may be making less than they thought. Some commentators have gone as far as calling it a scam.
By having a paid newsletter you have to justify the value to your customers every single week or risk churn.
I felt this strongly when I was building the Website Investing publication. I was publishing three times a week - a free newsletter & podcast (top of funnel) and a paid newsletter - all by myself which was unsustainable and burning me out.
As such, I needed to hire three people to take over the bulk of the work, which had started to become a burden rather than the initial joy.
The publication was pulling in ~ $5K a month from subscriptions (plus advertising on top) which was good enough for a solo creator but after hiring, it was not enough to provide me a full-time income. However, I was building up an asset which I later sold where it became the investing.io community.
the paid newsletter model only works for a certain kind of writing - something regular, consistent, and often a bit shorter. While newsletters are great for many reasons, we also need other business models for writing. Some of the greatest thinkers around are primarily dedicated to something besides publishing their ideas on a regular cadence, and therefore won't be found starting a weekly newsletter. Even those who are dedicated to writing often produce their best work after weeks or months of research, not by writing a new piece every few days.
I relate to the bold section above even with my free Revue newsletter, where last week’s had to be a brief summary due to me working on this piece (which to be honest could have used another week).
Unfortunately, these kinds of writers face a tough choice today: adapt their work to a newsletter format, or write without being paid. Even for writers running successful newsletters, there's an inherent tradeoff in the subscription format: in order to monetize their content, writers must hide some, if not all of their work, behind a paywall, reserved for those who pay to subscribe. With each new piece is a choice between rewarding those who pay and sharing ideas widely.
I’ve been focused on recurring monthly revenue since promoting software companies as an affiliate, who pay out as much as 50% of their revenue every month.
As long as the companies retain the customer, you continue to get paid every month and it is a real asset.
Indeed, I sold a website for six figures that promoted sales funnel software, and the only changes I ever saw the buyer make was to tweak the homepage and throw some links at it - the MRR engine would likely carry on for years.
Subscriptions are great for software companies, but I do not think they are optimal for creators.
As a solo creator with a paid subscription offering, whether that’s a newsletter, podcast, or community, you have to personally keep showing up otherwise your audience will churn.
And with subscriptions, you end up with a smaller audience due to the paywall.
Jarrod Dicker in his post A Media Ownership Model: Why Subscribe When You Can Invest states that:
Premium subscription tiers aren’t new, in fact, most legacy publications leverage this. But the problem is, 90% of the value is tied to more content….
He believes that the ownership economy is the future where:
This new media structure will be wholly owned by the creators, operators and consumers themselves. It will be a product of both the public and its producers and will not limit participants to a single company. These media companies can be looked at as collectives, with their own identities, where creators and consumers are encouraged to flow interdependently throughout various collectives. All of which results in everyone investing in both the development of each collective and sharing in the value of the collective’s upside.
I think that if you are a solo creator, you would do better by creating or joining a collective such as Every by Nathan Baschez, or Alternative Assets by Stefan von Imhof who have a revenue share agreement with author / analysts.
Creator collectives share the burden of publishing and backend duties (accounting, admin, customer support), but do not solve for churn.
What solves for churn is enabling your readers to benefit financially as the collective grows.
Traditional equity crowdfunding from the community is one way of aligning incentives, however that doesn’t offer liquidity if people want to step off your journey and cash out.
The ultimate monetization is tokenization - replacing credit card-based subscriptions in Stripe with NFTs and social tokens.
These tokens transform collectives into communities and communities into economies.
What I’ve come to realize is that (to use a poker phrase) you value-cut yourself by being a solo creator.
Most creators have their own newsletter and community and struggle to scale. It’s very hard to get your first 1000 subscribers or members.
There is way more value you can unlock by starting or contributing to existing communities and DAOs that are leveraging their own token.
$WHALE is a social currency and community that is backed by tangible and rare NFT assets. It is designed to build wealth over time and limit the manipulation that whales (OGs and now institutions) have in pumping and rug pulling non-backed crypto assets such as Bitcoin.
I recently heard on the Outliers Ventures podcast that the $WHALE team of 10 people receives 15,000 $WHALE (tokens) per month. At the current fiat price (which is rising over time), that’s ~ $150K a month between the community lead and moderators.
That’s doing better than any Substack publisher I know.
Forefront, by Carlos, is an aggregator across the social token landscape. It has a social token leaderboard, currently led by WHALE above, followed by the Bankless DAO (a media DAO I’m a member of and wrote about in a previous newsletter).
Forefront created its $FF token to transition it to community ownership.
I bought 1000 $FF tokens to get access to governance and curation channels, but anyone has the opportunity to earn $FF instead through:
Writers Program - accepted content on social tokens will earn 400 $FF
Creative Challenge - earn 4500 $FF for top submissions
Bounties - such as data-driven analysis on social tokens
The page introducing the Community Incentives Program states:
Social tokens dramatically lower the cost of implementing community ownership. Their flexibility means they can leverage that ownership to align communities to long-term value of all kinds… We believe that a key opportunity for social tokens is to allow communities to collaboratively build and own content platforms.
They go on to say that:
Content production, such as editing, is undervalued in traditional Web 2.0 models. I certainly lucked out when Juliet, who now runs the investing.io newsletter, agreed to work with me as not only is she an incredible curator and writer (what I thought I needed), but also editor (what I really needed).
The best content lasts over time - another issue with the weekly newsletter model is that the value drops steeply over time no matter how incredible it is.
Core contributors are responsible for the stewardship of the community.
I've done a lot of guest posting in the past, some of which has been paid, such as my series on the Flippa blog which was great. But now that the content has been published, I no longer benefit as I do not have upside in Flippa in terms of a stake.
Instead, it makes more sense for me now to write for an existing tokenized Web3 community I belong to.
Forefront has created an internal economy where contributors get paid (immediately) in the token, which should accrue value over time as the community around the website grows.
And Bankless DAO is in the process of creating a bounty board, where you can claim a bounty and get paid in $BANK tokens.
Patrick works at Mirror.xyz who are building tools for creators to use smart contracts to fund their work and create their own economies that are owned and governed by the community. He states:
Creator-focused protocols will have community-led committees, native protocol tokens for governance, value capture, and utility, decentralized grant programs, universal creator income, an open developer ecosystem, pseudonymous collectives, degen investment clubs, protocol politicians, and more.
In Web2, creators monetize their work via a SaaS model, where they’re paid for a newsletter, artwork, or craft on a regular basis. In Web3, creators monetize through the issuance of a social token or NFTs, with non-fungible tokens acting as digital media ownership...
Monetization becomes non-linear, meaning the derivative value of tokens are often multiples of the value created from recurring revenue streams...While Web2 is passive, web3 makes it active, thus turning communities into functioning micro-economies.
And Tom Critchlow writes on his blog that you should leverage protocols rather than platforms such as Substack:
Creators can bundle not at the platform layer (i.e. publishing at the same place) but at the protocol layer (i.e. by selling their works on the same token).
Token-backed communities align incentives so much better than any other medium or monetization I've seen. And all the ones I'm involved with use ERC20 tokens on the Ethereum blockchain, to issue, reward and vote.