How Newsletters Make Money for Writers with Hamish McKenzie of Substack

Hamish McKenzie - Headshot
Hamish McKenzie

The internet is a noisy place for writers. If you want to build a relationship with readers and earn more from your creative work, consider starting a newsletter.

Substack is an example of a popular service that you can try.

I recently interviewed co-founder and COO Hamish McKenzie. In this interview, he explains:

  • Why newsletters are a great way of earning more money as a writer (Find out more about this in my Forbes article here)
  • Why your first newsletter starts with an ideal reader
  • How to build a relationship with readers and fans
  • What it takes to grow a newsletter that people will pay for

And lots more.

I start by asking McKenzie to explain what Substack is and why he set it up in 2017.


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Bryan Collins: Okay, so nice to talk to you today. My first question is about why you decided to set up Substack in the first place. So, I was reading about the story of the product and you were saying you wanted to simplify how creators can build a relationship with their readers.

Hamish McKenzie: Yeah, that’s right. We were very frustrated by the existing media structure and how increasingly we as a society were finding ourselves kind of trapped in an attention economy where what you had to do to get ahead was kind of shout the loudest. And so the people who do well on Twitter, on Facebook, which is a large chunk of how people 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 got to this position where these social media platforms had become so compelling, so effective that it is becoming harder for other media organisations to succeed. So newspapers are shutting down, journalists are leaving their jobs and we’ll get into this terrible situation where society is tearing itself apart and continues to because we find out how to have reasonable conversations online and to find a kind of trustworthy storytelling and the information sources.

Hamish McKenzie: 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 the revenue mix. We wanted to provide an alternative to that where readers pay writers who they trust directly. Subscriptions 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 to accept payments from their readers in the forms of subscriptions. That is basically what Substack is.

Bryan Collins: 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 McKenzie: Well, we just say thousands of writers and millions of readers.

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

Hamish McKenzie: 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 just like, 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 being 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 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 you know a hundred people paying $100 a year works out to be about $10,000 a year, which can be good money and build up from there.

Bryan Collins: 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 or 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 McKenzie: Social media is pretty central to helping people grow their lists and 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 they will find out on Substack they can sign up to your mailing list because they trust the content so much and they trust the writers 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 on social media. Or people 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 the growth of your mailing list when you have a piece that does the rounds like that.

Bryan Collins: At what point should somebody who set up a Substack blog consider monetising this, or Substack newsletter?

Hamish McKenzie: Yeah. It kind of depends on the writer and their expectations and their kind of goals, how much money they want to make or how they see 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 that in the metrics, like your emails are being opened at a good rate, like 50% or higher, or 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 then can see yourself doing it for a long time. Then you know, if you’ve got more than a thousand people on your lists, you could consider turning on payments. 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 if you have a thousand people on your list, you can think that a hundred people might pay you.

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

Hamish McKenzie: Yeah. If you’re writing for a professional audience where the people can justify the price of subscription because it helps them with professional development or the house and they 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, a general consumer audience. Then we say closer to $5 a month or $50 a year is the right range to think about.

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

Hamish McKenzie: Yeah, really there are 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 Subtack are ranging from, a talent and 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 Collins: 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 have some of those started from scratch.

Hamish McKenzie: In a lot of cases they have some kind of a platform or audience gathered somewhere else like on a mailing list that they import into Substack or they’ve been writing a 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 sort of the highest form of flattery for a writer that someone allows you into the inbox. But we have also plenty of people who are starting from scratch and have started from scratch and go on to great success within the Substack environment too.

Bryan Collins: I was also struck by how easy it is to use, 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. In terms of the actual content that people put into the newsletter what makes for a good newsletter?

Hamish McKenzie: What makes for a good single post?

Bryan Collins: Yeah.

Hamish McKenzie: 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 it’s 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 there might be surprising in some way perhaps contrarian or just deeply insightful. And so the posts that are roundups over 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 kind of think, 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 can just mail out. Just as much as it is like a newsletter or what people might traditionally think of a newsletter as being.

Bryan Collins: So I could see somebody who was running a company like an entrepreneur, could use Substack for thought 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 tips that you could offer somebody who wants to set up a newsletter, but it’s a struggle to fit it into their week or month?

Hamish McKenzie: Yeah, I think you have to think about it as an investment in yourself. So you’re investing in your independence, like an independent of whatever job you might have. And so it’s a decision about how can you best use your energy 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 monetised through subscriptions at some point. So even if you’re just starting out and you’re working full time and 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, you start building up an audience, you get a style on that main list and you start opening up options for yourself. So you know, 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 Collins: I like that, I like that. I noticed you said write, but Substack actually supports audio and podcasts as well.

Hamish McKenzie: That’s 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 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 Collins: Yeah, that’s a good way to approach distribution. So how do you decide 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 are not many distractions when you use this. So how’d you avoid scope creep I guess?

Hamish McKenzie: 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. 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 that’s really important. Often it’s not just like I’m the expert on skiing. It’s like I’m the expert on skiing and something else. So at the intersection of skiing and age for instance, 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 you know 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 Collins: So it sounds like they’ve narrowed down to their ideal reader or subscriber.

Hamish McKenzie: Yeah, and you shouldn’t be going for something that you think is going to have an audience of millions necessarily. You could be going for an audience, they might be smaller, but more devoted. And so even if there are only a hundred thousand people in the entire world who even care remotely about these esoteric interests you have, that’s still a good enough audience to 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 quite wealthy from it.

Bryan Collins: Yeah, that’s good advice. And what about just to return to what we talked about a few minutes ago about social media, it can be quite noisy, you know, some people say that email is on the way out. I’m presuming that’s something you don’t believe in. But is that something you’re actually seeing in terms of engagement with people who are running newsletters?

Hamish McKenzie: I think, well I’m studying it and being sort of focused on covering the 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 post 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. You don’t have to convince one to go download your app to read your publication, the list sort of piggybacks on this incredibly dominant probative media platform that people already use.

Bryan Collins: 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 McKenzie: I didn’t start on Substack until I finished the book.

Bryan Collins: Okay.

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

Bryan Collins: Are there many employees at Substack? I think I read that there’s three perhaps it’s changed since then.

Hamish McKenzie: Yeah. Our headcount has skyrocketed and we’re now at four people.

Hamish McKenzie: 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 the subsequent payment. There’s so many opportunities to go after. So we’re starting to build a team of amazing engineers and people who are writers.

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

Hamish McKenzie: Yeah. The fellowship is, 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 showing great promise with the subscription publishing model, writing about important things and have good talent and we want to help them just do the best applications they possibly can that we’re giving them access to; historical expertise, legal support, how to build a community design and social media strategy, publicity, all the sorts of things that you need to run a really first-class publication. Also, giving them a little bit of money and flying them out to San Francisco and hosting them here for an all-day event that includes a nice dinner and a hotel and needs coaching sessions. But the idea here is to not just think that building some software and finding the writers is going to be enough to make a meaningful impact there, that we want to be part of that system that support writers generally and gives them some way to learn and grow as they work on their publications.

Bryan Collins: That’s a good idea. It’s definitely, something I think would appeal to perhaps people who are new to you know, marketing their work online or at least positioning it to an ideal audience. There’s also a lot of journalists on Substack as well. Is it weighted towards journalists or other