Substack raises more money, but is that a good thing?

Note: This was originally published as part of the daily newsletter at the Columbia Journalism Review, where I’m the chief digital writer

Axios reported on Tuesday that Substack is raising another $65 million in venture financing, which will give the newsletter-publishing platform a theoretical market value of $650 million. That’s more than ten times what Substack was reportedly worth when it raised its first $15-million round of financing in 2019, which — like the latest round — was led by Silicon Valley investment firm Andreessen Horowitz. In a blog post, the company said that it is going to use the money to expand its program of giving writers and journalists advances (which have to be earned back from their subscription revenues) to allow them to quit their jobs and join the platform, as well as more fellowships, grants, mentorship programs, and other resources. The company said it also wants to invest in initiatives to support local news, in “an effort to kickstart the development of a news ecosystem that thrives on direct support from readers.” Ultimately, Substack says the goal of the new funding is the same as the original round it raised, which is to “build an alternative media economy that unlocks the full potential of the internet and gives more power to writers and readers.”

Although the company doesn’t mention it in its blog post, the extra cash might also come in handy as a war chest, given that both Facebook and Twitter have said they are getting into the newsletter business and would like to eat some of Substack’s lunch. Facebook recently said it will allow writers and journalists to create their own subscription newsletters with the platform’s help, as well as landing pages, and that it will be paying some of the writers in a pilot program — and it won’t charge them anything for its services, unlike Substack, which takes a 10-percent cut of any revenue its authors bring in. Twitter has also shown signs of wanting to move in on Substack’s turf: the company acquired a newsletter platform called Revue recently, and says it plans to help users sign up subscribers, and it only plans to charge a 5-percent fee. “At the end of the day, can Substack create a community or platform or tool which is far and away better than anything Facebook and Twitter can build… or copy?” one observer asked following the news.

Competing with Twitter and Facebook is just one challenge that Substack will have to meet with its newfound cash. The other is just as large, if not larger: namely, meeting the demands and expectations of its funders. Venture capitalists don’t just hand over tens of millions of dollars because they like you, or because they want to dismantle the traditional media — although there is some evidence that Andreessen Horowitz has aspirations towards the latter. Not only has the firm talked about creating its own media entity, but it has also invested in a number of services like the audio-chat platform Clubhouse, which the founders of Andreessen Horowitz have used as an alternative to traditional interviews. But apart from that, VC lenders tend to have very specific expectations about the financial returns they get from their investments, and they are not above pressuring the companies they fund to change the way they do business in order to produce these returns.

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New updates: Life in a time of COVID-19

April 2021 update: It’s been over a year now since COVID became a reality for most of us in North America. We came back from our vacation in Florida on March 17th or so to a changed world, and it has continued to change rapidly ever since. My 85-year-old mother got COVID in December — as did about 120 people in her retirement home — but it was a relatively mild case and she turned out to be fine after a couple of weeks in hospital. Vaccines are being rolled out (with varying degrees of success) in most countries. After a rocky start, President Joe Biden seems to have gotten things moving in the US and more than 100 million people have gotten their first shot of one of the vaccines. In Canada, supply constraints held things back, but they are rolling out now — my wife Becky and I have gotten our first shot of the Pfizer mRNA vaccine because we are caregivers for my mother, and our second shot has been pushed out several months in order to give others the chance to get a first one (Pfizer appears to be about 80 percent effective after one shot).

The US has agreed to give Canada a bunch of Astra-Zeneca doses because it hasn’t been approved in the US yet and they will expire before it does. There have also been a number of countries that have paused or held back on providing A-Z vaccine because of about 20 cases of abnormal clotting, including some deaths — despite the fact that studies show the number of cases (plus or minus 20 out of 17 million) is well below the normal incidence of fatal blood clots. Pfizer and Moderna look to be about 90 percent effective in the real world against contracting a symptomatic case of COVID, and 100 percent effective against hospitalization or death. What remains unknown is how effective the various vaccines are against the new variants, the worst of which seems to be the British one, B117, which is significantly more contagious than the original, and also more lethal, and seems to be infecting more younger people than the previous one.

Covid-19's Third Wave Is The Worst Wave Yet - Bloomberg

In Ontario, more than 65 percent of cases are now the British variant, and the ICUs are filling up. After a decline in the early part of the year, we and others are now well into the third wave, with case numbers rising sharply and more people being hospitalized. Ontario just went into a month-long lockdown, even though Toronto, Hamilton, Peel and other regions were already in the “grey” zone, meaning they were supposed to be locked down already. As in a number of other places, Ontario in particular seems to have struggled to find a balance between locking down quickly to prevent spread (the way countries like South Korea and New Zealand have) and keeping things open to help restaurants and other small businesses, and to keep schools open as a way of helping both kids and parents. “I’m going to pause here. I’m going to lose the script, and I’m going to reflect on the recurring feeling I have of impending doom,” CDC director Rochelle Walensky said recently.

January 2021 update: It’s now been a year since a brave Chinese researcher released the genome of the COVID-19 virus, against the wishes of his government, which allowed vaccine makers to get to work on new mRNA or modified RNA vaccines even before the first case was identified in the United States. Two of those vaccines — from Moderna and Pfizer — started rolling out in November (see below), although the rollout in both the US and Canada has been slow, for a variety of reasons, one of which is the fact that both vaccines need to be kept at extremely cold temperatures and plenty of places don’t have those kinds of facilities. A new Johnson & Johnson vaccine is supposed to be available soon, and it is a traditional vaccine that uses part of the virus itself as the delivery vehicle, and therefore doesn’t need special storage requirements.

That’s the good news. The bad news (in addition to the recent riot in which armed goons stormed the US Capitol, breaching its security for the first time since the 1950s, in what seemed to be an attempt to reverse the results of the election) is that there are at least two new strains of the virus that are causing concern, one that was first identified in the UK and one first identified in South Africa. They are both believed by some researchers to be more infectious than the original strain — up to 70 percent more infectious. Epidemiologists and other researchers note that viruses like COVID always evolve over time, and sometimes rapidly — measles mutates very slowly, so shots are good for years, but the regular flu mutates quickly, so you need a different shot every year. It’s still not clear which of these COVID will be more like. There is some evidence that the current vaccines may be effective against the new variants.

More bad news: A number of countries are seeing outbreaks and uncontrolled spread as bad or worse as the original outbreak in March of 2020, either because of a lack of stringent controls, a lack of desire on the part of people to wear masks, etc. and/or cases of the newer, more infectious variants. In the UK, authorities confirmed more than 62,000 cases in just 24 hours; according to a number of observers, both Sweden and Japan are paying the price for having been too lenient with their lockdowns and other measures early on. The US, meanwhile, has been the victim of a combination of the Trump government’s incompetence and American “every man for himself” individualism: roughly 400,000 people have now died of COVID, and the country has about 25 percent of the cases worldwide, despite only having 4 percent of the world’s population. The death rate in the US is now the equivalent of six fully-loaded 747 jumbo jets crashing and killing everyone on board, every single day.

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Facebook goes after Substack

Note: This was originally published in the daily newsletter at the Columbia Journalism Review, where I’m the chief digital writer

If you’re an independent writer or journalist, Facebook would like you to know that it wants to help you. With what? Just about everything: it wants to give you easy to use writing and publishing tools, so you can create websites and newsletters, and publish them in multiple places (including on Facebook, of course), and it wants to help you connect those sites and newsletters you create to groups that it will also help you create (on Facebook, naturally). And it wants to give you tools to attract subscribers to your writing, and other ways of generating revenue (i.e., ads), and all kinds of other non-specific helpful advice. We know all this because Campbell Brown, Facebook’s head of news partnerships, and Anthea Watson Strong, the company’s product manager for news, wrote a blog post in which they described all of these features and the ways in which they want to “empower independent writers, helping them reach new audiences and grow their businesses.” But the part that really caught the attention of those in the media is that Facebook says it is going to jump-start this new program by paying a “small subset” of independent writers.

Nowhere in this long statement of intent does anyone mention the name Substack, which is probably not surprising, because what Facebook is offering sounds like a carbon copy of what Substack provides to independent writers and journalists: a platform for their posts and newsletters, one in which Substack not only provides back-office support for subscriptions, but also doles out cash to a select group of writers in order to convince them to try out the platform. This “Substack Pro” program has been the source of some controversy recently, due to the fact that some of the writers the company has chosen to fund have expressed a range of what some find to be offensive opinions. For example, Scott Alexander, who writes a blog known as Astral Codex Ten (and was the subject of a controversial New York Times profile), has written positively about the idea of “human biodiversity,” which is often a code word for pseudo-scientific racism and/or eugenics. The list of others on the Substack Pro list (which the company has not made public) reportedly include Frederik de Boer, who promised he would retreat from public writing after he falsely accused another journalist of rape, but has since restarted his political blog.

While he isn’t being paid by Substack, Glenn Greenwald — the former Intercept writer — has used Substack to write about about New York Times journalist Taylor Lorenz, making it clear that he doesn’t think the harassment she has faced is as important as the harassment he has faced. And Graham Linehan has reportedly used his Substack newsletter to mock, mis-gender, and harass trans women. Substack co-founder Hamish Mackenzie said in a blog post that who they decide to pay isn’t based on the content of what they write, but merely on whether they will be successful (i.e., generate revenue) and that therefore these are not editorial decisions, but critics have pointed out that these are exactly the kinds of editorial decisions traditional media outlets often make. In any event, several writers and journalists have said they are leaving Substack, because they don’t want the revenue they generate from subscriptions to be used to fund opinions they disagree with. In response, Substack co-founder Chris Best tweeted “defund the thought police” (Substack’s founders have since tried to clarify that the Pro program supports a wide range of writers).

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