Is Substack actually *bad* at paid newsletters?

I’ve talked to a few Substack journalists and they have reported ABYSMAL conversion rates of free to paid subscribers (2-5%).

These anecdotes combined with Casey Newton’s comment that churn went down 30% when they moved away from Substack got me thinking something might be up here.

We know Substack is great for free email list growth but I wonder if that buzz has covered up the story that they’re tanking their own publications’ revenue potential.

I looked into Substack’s claims of “growth on autopilot” and I have three theories about what’s going on. Read more below.

The Mystery of the Missing Substack Money

Lenny Rachitsky writes one of the most popular Substacks in their 7 year history. It’s called “Lenny’s Newsletter” and it’s about building tech companies.

I’ve been closely following his growth trajectory from 2020 til now. Lenny’s famously made more than a good living off the newsletter—somewhere in the low millions. He now has a team, a podcast, and a conference too.

Last April, Chenell Basilio of Growth in Reverse shared that Lenny had 18k paying subscribers on Substack (3 years after his launch). That meant 5% of his total audience was paying.

But wait a minute…isn’t this the number 1 business newsletter on Substack?

Shouldn’t it be converting at the high end closer to the 10% Substack claims should be your target?

Substack themselves say 5% is not good! “If your conversion rate is significantly below 10%, use tried-and-true tactics from other writers to improve it.”

With now close to 1 million readers, Lenny is most definitely top of the newsletter game.

Sounds to me like Substack might be the problem.

Issue 1: World’s saddest calls to action

Substack pioneered the most lackluster upsell blocks of all time. They look like this:

When you send out your newsletter, they’ll automatically insert this call to action (GOOD) but they use the least convincing language possible (BAD) and they never change up timing or location.

You, the writer, can override this and some people do, but Substack set a precedent here where their publishers believe this is sufficient upselling. Publishers have reason to believe that because Substack claims their “benevolent robots…help you make money” and that, basically, they’ve got it covered.

But they don’t. In the last two years, these upsell blocks have stayed exactly the same.

So much for “growth can happen magically in the background.”

Issue 2: Discounts are their only move

Two years ago, Substack launched Boosts. Another feature that promised “growth on autopilot.”

But what is Boosts?

It’s actually just a bunch of discounts.

You have little control over them (just toggles if you want them on or off). The only piece you can customize is the upsell email which includes (you guessed it) a discount.

Are discounts a lever you can pull to get more subscribers?

Absolutely.

Are they the only one?

Absolutely not.

This is an incredibly lame implementation of “growth on autopilot” and it really makes me question how much Substack understands about why readers upgrade.

Your readers are motivated by different aspects of your work.

• 404 Media recently shared that specific stories triggered more upgrades.

• LA TACO has members who want access to their coveted food guides.

• Millennials Are Killing Capitalism has driven subscribes with their study groups.

Not all readers are the same. Not all publications are the same.

Boosts needs a ton of work to actually be the proclaimed growth engine Substack is touting.

Issue 3: No custom automations

The more you ask, the more you receive.

Every publication I have talked to that’s sending dedicated emails about their subscription offers is seeing big gains in new subscribers and existing subscribers upgrading to higher tiers.

Ideally, we want that work to be automated or more automated so your publication really is selling in the background while you focus on the reporting.

Substack does not allow their publishers to do this.

[Related: The 5 email sequences you need to earn more paying subscribers]

You can set up welcome and expiration emails but that’s it.

Most of your readers won’t convert right away. A few will but many more will need time to think about whether they want a subscription.

That’s why you need an automation like 404 Media has 7 weeks into joining their list for free. Hey, maybe it’s time to subscribe? Here’s why you should!

(404 used Ghost-plugin Outpost to set that up by the way.)

Without those automation options, you’d have to manually segment your readers by date joined and manually send all the promotions. An unreasonable waste of your time.

If Substack’s going to do such a bad job of “growth on autopilot” the least they could do is give you more control over your automations and upsells!

Our Takeaway

Writers grow their email lists quickly on Substack. Substack often gets accolades for their acquisition tools and features like “Recommend other Substacks” have been copied newsletter industry wide.

But I wonder if all that is hiding the fact that they really don’t know how to help more of their writers make money.

They are not fulfilling the promise of driving upgrades on your behalf if even their most successful Substacks are not reaching the 10% benchmark they themselves claim is standard.

If Substack really wants to put “growth on autopilot” for their publishers, they’d better hit the gas on these upgrade tests and start showing us the money.

Are you on Substack? Is your free to paid conversion better? Reply and let me know!

P.S. I finally broke down and started using AI in my daily work. I explained why on Lenfest’s blog.