Substack this week announced a plan to spend $1 million to start local news publications on its email newsletter platform. It's a worthwhile
experiment amid growing concern about "news deserts" left in the wake of thousands of newspaper closures.
The 4-year-old startup, which two weeks ago raised $65 million in venture
capital, is seeking independent writers to participate in Substack Local. The
idea is to create paid newsletters that focus on local news and generate enough subscription revenue to be self-sustaining.
“We are strong believers in the importance of local
news as a bedrock for healthy communities and societies and are deeply concerned by the industry’s ongoing collapse," Substack said
in a blog post announcing the local news plan. "However, we are optimistic about the potential of the Substack
model for local news.”
The local news industry could use some optimism, considering the United States has lost one-fourth of its newspapers -- or 2,100
publications -- since 2004, according to a study by Hussman School of Journalism and Media at University of North Carolina. Readers and advertisers have migrated to digital media, draining revenue out
of local news.
Substack has gained attention in the past couple of years as journalists including Andrew Sullivan, Glenn Greenwald, Matt Yglesias and most recently, New
York Times columnist Charlie Warzel decamp for the platform. The startup not only lets writers keep 90% of their subscription revenue, but it also offers first-year advances as an incentive to
start a newsletter. Substack's growth has led Facebook, Twitter and nonprofit Ghost to get into newsletter publishing.
Substack sees reason for optimism over local news,
citing startups that publish on its platform, including The Mill in Manchester, U.K.; The Rover in Montreal; City Hall Watcher in Toronto and The Charlotte Ledger
in North Carolina.
Writers who are interested in Substack Local can fill out an online form
that asks them to explain their qualifications for starting a newsletter.
The company will offer cash advances of as much as $100,000 to writers, along with 15% of their first-year subscription revenue. As many as 30 writers will be selected among the candidates, who have
until 8 p.m. ET on April 29 to apply.
It will be interesting to see what kind of business models emerge from Substack Local, and whether writers will make enough money to run
a local newsletter as a full-time gig.
Tech website Recode interviewed several writers, including Matt Elliott, who covers Toronto politics with his City Hall
Watcher newsletter that Substack cited as an example of a successful local publication. Elliot has 900 subscribers who pay $5 a month or $50 a year -- which suggests pretax income of $54,000
tops. The money supplements what he makes as a newspaper columnist and journalism professor.
There is an opportunity to cover local news, which has a bigger effect on people than
what happens in Washington, Silicon Valley, Hollywood or on Wall Street. However, there are a lot of variables that determine whether a paid newsletter about local news can survive, including market
size, consumer demand, type of news coverage (such as politics, business or real estate) and median household income.
, as one example, looks for communities with at least 30,000 people to support
its local news sites, which generate revenue from advertising. It also offers emailed newsletters that are free to readers.
Still, Substack has the financial resources to
spend $1 million testing the paid subscription model, and possibly develop a winning formula for local news that could be replicated in news deserts.