Substack fights Elon Musk [Finance Fridays]

The implications of this move are more interesting than you realize.

Apr 15, 2023

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In case you didn’t hear, Substack (the platform hosting this newsletter amongst others) just pushed a new feature, Substack Notes.

Through Notes, writers can publish short bits of text (notes) that are shared with the larger Substack community. Many people have drawn similarities with the Micro-Blogging platform Twitter, with users speculating that Substack is trying to get into the social media market. Twitter itself reacted very aggressively, blocking links pointing to Substack, and not allowing people to engage with any Tweets that have a Substack link.

However, there is a lot more to this situation than meets the eye. There are a few interesting reasons that Substack pulled this move, and what the implications of such a decision are. In this article, I will be breaking them down in more detail. If you’d like to take part in the discussion around Elon’s beef with Substack- I’d love to hear your thoughts here.

magazines displayed on a rack — Photo by Markus Spiske on Unsplash

Key Highlights

What are Notes- In case any of you visual learners want a quick introduction to notes, this short video is a great introduction to them. Aesthetically, it looks very similar to Twitter, but with no character limit. I’ve played around a bit with it, and the ability to interact with people is much stronger than Twitter.
Why Notes are Different from social media- From a product sense, Notes might seem like an attempt to replicate social media. However, this is a very superficial look. Substack makes money from paid subscribers, not ads. Furthermore, a majority of people interact with Substack mostly through the emails they receive- not the app or website (how many of you actually open the app/website to view my posts). So investing in a crowded and cut-throat field like traditional Social Media is not a smart play. So why did they do this?
Notes are for the writers- This might come as a surprise to you, but my conjecture is that Notes is a feature created to increase the stickiness of the platform for writers. Here is why-
- Competition for Newsletters is growing- We have seen more and more people try to get into the email-newsletter game. LinkedIn has its own and Substack competitors are popping up by the dozen. I’ve had a few reach out to me, asking me to migrate my newsletters over onto their platforms.
- Substack is built different- Much more so than other platforms, Substack lives and dies by the creators. As I mentioned earlier, a significant number of users only interact with it through emails- without ever logging onto the platform directly. A loss of creators is thus far more damaging to them than to other social media, where users will interact with the platform even beyond the original creator/reason they joined.
- Notes increase stickiness- Stickiness is the ability of a product or service to retain customers. Notes keep writers around by providing access to a valuable resource- other writers. In the last 3 days, I’ve had more Substack writers reach out with collab requests than before. Some are from very different niches, people I might never have run into otherwise. To me, it behaves similarly to the other Substack feature- recommendations- where we recommend other Substacks we like. This is another feature that helps writers a lot and one that other platforms don’t yet provide.
Why you should care- So, why does this matter to you? Substack was created as a way to fight big media houses and provide independent writers a platform. Elon’s extreme reaction and Substack’s investments are indications that this movement is gaining steam, and people are noticing. I now it’s a cliche amongst self-help folk to say, “Stop Consuming, Start Creating”. However, this is very true in a world fighting for every second of your attention. Given an increase in Tech Advocacy and Dev Relations roles, now is a great time to start brushing up on your communication and presentation skills. It will pay dividends. If not through direct income, it will bring you a lot of practice in these crucial skills.

Elon’s extreme reaction is a fairly big deal imo. Just as social media shook up traditional media, it seems like platforms like Substack are now eating at social media. How this plays out will be very interesting going forward. If any of you would like to discuss this in more detail, I’d love to hear from you.

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