Twitter gets into the newsletter business—should Substack be worried?

Note: This was originally published as the daily newsletter for the Columbia Journalism Review, where I am the chief digital writer

It’s been awhile since Twitter did something that got everyone talking and didn’t involve the former president of the United States. On Tuesday, the social network managed to do just that when it announced that it has acquired a company called Revue, which specializes in helping journalists and other writers set up their own email subscription newsletters. If this sounds familiar, that’s because it’s the exact same business model as Substack, which has become a darling of both venture-capital investors and journalists for its ability to turn newsletters into cold, hard cash. As Ben Smith, the New York Times media writer, pointed out in a recent column, Substack has helped Heather Cox Richardson turn her knowledge of US political history into a subscription business that is said to be worth about $1 million in annual revenue, and a number of leading journalists with various publications have quit recently to set up shop on the Substack platform, including former Intercept writer Glenn Greenwald, Andrew Sullivan, Matt Yglesias, Anne Helen Peterson, and Casey Newton.

Does this mean Twitter is going to be competing head-to-head with Substack? Yes, in the sense that every company that offers subscription email newsletter services is a competitor, including MailChimp, TinyLetter, and others. And according to a Times report, Twitter tried to acquire Substack at some point last year, but was rebuffed—which suggests that it very much wants to be in that business. Whether Substack should be worried or not is harder to answer. On the one hand, it is much larger than Revue, a small Dutch company with just six employees: Substack has raised more than $17 million and says it has more than 250,000 subscribers generating more than $7 million in revenue (of which Substack takes 10 percent). Attracting writers like Yglesias and sociologist Zeynep Tufekci has also given it a lot of brand recognition. For his part, Substack co-founder Hamish McKenzie tweeted: “General Motors announces the Bolt” following the Twitter announcement, referring to the automaker’s attempt to compete with the much sexier and more popular Tesla electric vehicle.

Bravado aside, Twitter has even more resources than Substack could ever hope to have: the company is worth $38 billion in terms of stock-market value, and its sister company Square (which is also run by Twitter chief executive Jack Dorsey) is a payment-processing service that would probably come in very handy when dealing with subscription revenue and payment. In addition, Twitter says in the blog post announcing the Revue acquisition that it has a lot of plans for things it can offer to boost the service and make it more appealing to Twitter users—including allowing people to sign up for newsletters from those they follow, and even paying writers with newsletters in return for converting Twitter users to subscribers. As an additional sweetener right out of the gate, the company dropped the amount the service charges from 6 percent of subscription revenue to 5 percent, half what Substack takes.

Ben Thompson, an independent analyst who writes a subscription newsletter called Stratechery (which he publishes and distributes himself, not through Substack) said that the acquisition of Revue is “the smartest thing that Twitter has done in ages — the acquisition may be small, but the vision it potentially represents is massive, if Twitter can execute.” As he points out, the single biggest factor in whether a subscription newsletter works or not is user acquisition—getting people to read it, and hopefully eventually pay you for it. In most cases, journalists and other writers do this through Twitter, because that’s where their colleagues and potential audiences spend a lot of time. In other words, Twitter has a massive audience funnel built in, which it can easily direct towards newsletters, handling the authentication and payment processing behind the scenes with all of the information it has on its users.

The only thing that could get in the way of Twitter’s success with subscription newsletters, as analysts like Thompson and Gigaom founder Om Malik point out, is that the company has a history of making acquisitions or starting new services that seem to have a bright future, only to fail on the follow through. Malik mentioned Vine, the video-sharing service that theoretically could have become as successful as TikTok if Twitter hadn’t neglected it. Despite his enthusiasm for the deal, Thompson said, “I am wary of declaring Twitter the winner of the newsletter wars. Buying a company is easy; actually realizing that company’s potential requires vision and execution.

Here’s more on newsletters:

Old flaws: In a piece she wrote for CJR, Clio Chang wrote about the rise of Substack and asked whether the company had actually created a more equitable media system, or merely replicated the flaws of the old one, since many of the “star” journalists invited —and in some cases paid—to join the platform are male, white, and were already in positions of power within the industry. When you look at the list of top newsletters, she says, “something becomes clear: the most successful people on Substack are those who have already been well-served by existing media power structures. Most are white and male; several are conservative.”

Free speech: On a New York Times podcast with Kara Swisher, Substack co-founder Chris Best was asked about whether the service would host or distribute newsletters written by Trump or other right-wing elements. “Our general approach is we’re kind of strongly free speech and free press,” he said. “We have a strong default towards allowing people to say what they want to say.” But he added that the company has a content policy that prohibits a variety of material. “We definitely would kick someone off if they violated those things. You can’t do porn on Substack. You can’t do hate. You can’t incite people to violence. You can’t do illegal stuff.”

Predatory: Media entrepreneur Rafat Ali said that buying Revue and lowering the cut to 5 percent was a “such a smart, predatory-ish move” for Twitter to make. Newsletter services, he predicts, “will become generic, low-margin. So much for Substack valuations.” John Gruber, author of the Apple-focused Daring Fireball blog, said that it would make sense for Twitter to sell access to newsletter content inside Twitter’s app. “See a tweet with a link to an article from a subscriber-only newsletter? Subscribe to the newsletter in two taps, right in the app, just like buying apps from the App Store. This seems rather obvious, and a good idea, so I’m sure Twitter won’t do it.”

Other notable stories:

Jennifer Barnett, a former staffer at The Atlantic magazine, wrote about her experiences in a Medium post that she titled: “I Left My Career in Prestige Media Because of the Shitty Men in Charge and They Are Still In Charge and Still Fucking Up.” She describes how she left her job at the top of the magazine’s masthead “because I blew the whistle on my boss for doing something unethical then abusing the staff and undermining the editorial process during which time I was assured he would be fired but instead he was promoted and after threatening me privately in his office, he marginalized me to the point of being completely invisible. My career was over.”

In the wake of Marty Baron’s recent announcement that he is stepping down as executive editor of the Washington Post, the rumor mill about his potential successor is going into overdrive. Sources tell Axios that The Post has eyed both internal and external candidates, including Steven Ginsberg (the Post‘s national editor during the Trump administration), former Post managing editor Kevin Merida (now at ESPN) and National Geographic Editor in Chief Susan Goldberg (who helped lead that newsroom’s successful digital transformation).

Gabriel Snyder, CJR’s public editor for the New York Times, writes about a recent incident in which Lauren Wolfe, a freelance journalist working for the online version of the paper, was told she would not be getting any more work from the Times after a tweet she posted about Joe Biden’s inauguration drew criticism. The union representing staff at the Times is negotiating on behalf of Wolfe. She says: ““I don’t want to be hired back. What I want is for them to retract this bullshit statement that makes me sound like some shitty employee that they used this as a final excuse for.”

After pushing up the share price of GameStop, a video-game retail chain, as part of a war with short sellers of the stock (who sell shares that they don’t own, hoping that the price goes down) the members of the Reddit community known as WallStreetBets are pushing up other stocks, including the AMC movie-theater chain. Alex Stamos, former Facebook security chief, said on Twitter: “I don’t know if any laws were broken this time, but Reddit now has a problem: it is the home for a community of hundreds of thousands of people who have demonstrated the ability to move billions of dollars based upon the urging of, at most, a couple dozen anonymous accounts.”

Will Oremus writes for the technology publication One Zero about how NextDoor, a popular app that lets homeowners connect with others in their neighborhood, is replacing many of the functions that were once performed by local newspapers. “Anecdotally, Nextdoor has gone from being kind of sub-Facebook to actually being the main platform you hear people discussing as a vector for local news and events and discussions,” said Emily Bell, director of the Tow Center for Digital Journalism at Columbia University. The company now operates in some 268,000 neighborhoods globally and has reportedly eyed going public at a valuation of $5 billion.

Federal authorities in New York City arrested a California man on Tuesday and charged him with sending threatening messages to a family member of George Stephanopoulos, the ABC News anchor and former White House communications director under President Bill Clinton. The man texted the relative to say that the journalist’s “words are putting you and your family at risk. We are nearby armed and ready.” The same man also sent similar threatening texts to the brother of Representative Hakeem Jeffries.

Right-wing outlets remained the fastest-growing news websites globally in December, according to an analysis of web traffic by Press Gazette. In an updated global ranking of the top 50 English-language news sites prepared for the magazine, pro-Trump right-wing title The Epoch Times made it into the ranking for the first time after seeing 421 percent growth since December of 2019 – more than any other site in the top 50. Reportedly backed by the Falun Gong religious sect, Epoch Times has become a home for anti-China conspiracy theories around coronavirus.

The Myrtle Beach Post & Courier wrote about Joshua Dawsey, a member of the Washington Post‘s investigative team and a former White House correspondent who grew up in the small town of Aynor and became editor-in-chief of a South Carolina weekly newspaper while he was still in high school. “I’m not someone from New York or Washington. I’m back in touch pretty regularly with the salt-of-the-earth people who are hardworking, care about their country and see things a lot differently than Washington, for better or worse,” Dawsey said. “Many of my colleagues who grew up in different places were really stunned the first time they went to a Trump rally. I was not.”

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