Patreon vs. Substack
Meanwhile Microsoft is Building a Synthetic Creator Economy from LinkedIn
The main difference between Substack and Patreon is that Substack is a platform that helps to publish an independent newsletter for their creators/writers.
Patreon is a platform which provides business tools for content creators, and they run with the help of subscription. Patreon thus has more overlap with video creators and vloggers intersecting with YouTube and even Vimeo, who recently jacked their prices hurting Creators.
Substack has more celebrity journalists and political personalities, thereby intersecting well with Twitter.
Patreon in mid 2022, seems to be worth around $4 Billion dollars. In April, 2021 Patreon, a platform that lets “artists seek financial patronage” from their fans, said it was valued at $4 billion in its latest funding round, more than tripling from September last year.
In the previous funding round, Patreon had raised $90 million, which reportedly valued it at $1.2 billion then.
So Patreon is quite a ways ahead of Substack in its growth cycle and funding.
In November, 2021 Substack said it reached 1 million paid subscriptions.
That’s one million subscriptions — not subscribers — so how many people are we talking about? Out of millions of active readers, more than 500,000 pay for at least one Substack, said Helen Tobin, the company’s new communications lead.
Payments
From what I understand, Patreon charges creators a 2.5% currency conversion fee on all patron payments made in a currency other than the creator's payout currency. Substack takes 10% plus 3% from Stripe.
The Patreon fee is calculated on the total gross earnings, not after other adjustments like credit card fees. Therefore actual fees from Patreon can end up being much higher, pretty similar to that 13% deduction from Substack and its payment processor, Stripe.
One year ago on March 31st, 2021 Substack raised $65 million in new venture capital funding that would value the company at around $650 million. Existing investor Andreessen Horowitz led the round.
A year ago it was clear what was in store from the now Series B-backed company? Product work. And that did definately take place in 2021 and early 2022 so far.
Landscape
Twitter appears to have in late 2020 been interested in acquiring Substack but instead acquired Revue. Twitter may have once been interested in acquiring Substack, the subscription newsletter platform that’s become the go-to spot for several prominent reporters around 2020, but Substack didn’t seem as intrigued by the possibility.
Twitter acquired Revue in January, 2021.
Patreon also has launched Memberful, a Patreon Subsidiary, that’s Newsletter focused in October, 2021.
In June, 2021 then Facebook launched its alpha trial for Bulletin, its own Newsletter service. Meta’s supposed building of a Creator Economy hasn’t really materialized in 2022.
LinkedIn has in 2022 opened Newsletters to the general public in its Synthetic Creator Economy plan. By synthetic I mean LinkedIn has enjoyed a post algorithmic feed like #TikTok training creators its pay $15,000 in a 6 week program to use emojis, champion causes like inclusion and tag other people in the program while using exclusive #hashtags. Several journalists who became editors (in LinkedIn’s Pulse days) are now “creator managers” in 2022.
So even in Newsletters, there are multiple potential Newsletter services helping Creators Monetize in the Creator Economy. However Bulletin is not open to the general public yet, and LinkedIn does not monetize its Newsletters, while asking its members to turn on Creator Mode. It recently rolled out new analytics (where Newsletter analytics didn’t actually work for me).
Will Microsoft Create a Synthetic Creator Program?
LinkedIn’s Synthetic Creator Program are all about vanity posts, that are actually short-form mobile attention grabbing text messages (basically like a popularity contest in high school, and resemble more of a MMO of trying to game user sentiment, than anything remotely creative. LinkedIn does pay its select creators who get training though, and pair them up with a “Creator Manager”. (Some of these accounts could actually be synthetic deepfake accounts masquerading as real people). On LinkedIn, you just do not know. LinkedIn News is no longer viewable on mobile, which means they are in the process of phasing it out.
A Creator mode without actually enabling users to monetize is the very definition of a Synthetic Creator ecosystem, which is somewhat fake. Furthermore Linkedin’s feed, post and newsletter algorithm is highly unstable and variable. Features arrive and pop out of existence, never to be seen again. That’s not a product-market fit that gives any sense of stability to your personal brand. LinkedIn removed stories in August, 2021.
Companies like Facebook and Microsoft could in theory create a deepfake Creator Economy where we are following manufactured personal brands, much in the same way in Japan and Asia, brand ambassadors can be digital AI bots. Then there is the echo bubble Medium partner ecosystem, full of writers who write for other writers who do not experiment with Newsletter formats. Medium fired its staff (in its latest pivot) after not reaching a goal its VC and founder had set for it.
This was in March, 2021, and here is an article written by Casey Newton, who later went to Substack. His Platformer publication on Substack remains a popular if struggling brand.
While YouTube and TikTok are massive Creator Economy drivers, along with Snap and dozens of Chinese companies, Patreon and Substack are recognizable startups that are maturing.
Patreon
Discord
Substack
Reddit
Twitch (owned by Amazon)
OnlyFans
Medium
Will BigTech Consolidate the Creator Economy?
While BigTech could easily consolidate the Creator Economy under their control of centralization, there’s yet more Web 3.0 startups that are seeking to decentralize its future to empower Creators. The more lucrative ecosystems for Creators remain YouTube and TikTok, but also more competitive and for vlogging.
For writers, developing a personal brand, Newsletter and following from scratch organically is nearly impossible in 2022.
However the morality around startups like Substack (no censorship), Reddit and even Discord, remain quite distinct from what Microsoft, Twitter or Facebook would do with these ecosystems. After criticizing the brand, Elon Musk took a significant stake in Twitter recently of around 9%.
Another way Substack could be acquired is by a News outlet that already uses subscriptions that could better sync with Substack’s free-speech edict. Substack on its App page in iOS is in the “lifestyle” category and not like Medium in the “news” category, this despite Medium not having news-noteworthy content any longer. It’s more likely for instance that News organizations will acquire Podcasting ecosystem startups, than Newsletter platforms.
Video and vlogging
Audio and podcasts
Social and short-form text
Newsletters and niche articles
Last Words on Patreon vs. Substack
Patreon was founded in 2013 and Substack in 2017, so in theory Patreon is four years more mature than Substack. Both ecosystem seem to be more geared towards Millennials rather than GenZ, who are you more likely to find on TikTok, Snap or Twitch.
Patreon launched in 2013 with a mission to help creatives monetize their content.
Within 18 months, 125,000 “patrons” were using the platform to make recurring payments to creators. And total monthly payments hit the $1 million landmark.
Substack launched in 2017 as a tool for starting paid email newsletters.
Within a year, the company had turned a mission to help writers reach audiences that value them into a platform with 25,000 paying subscribers.
Because Patreon intersects more with video, it scaled better and likely faster than Substack did initially.
However Substack has invested in Substack Pro to lure what it considers top-tier Creators with existing audiences that could migrate along with them. The $100,000 sounds generous, until you realize they have to pay 85% of their earnings back to Substack in the first year. Substack in some cases could even break-even while attracting and promoting their chosen top creators of the leaderboards.
Patreon creators could be doing anything on the internet, and get their followers to tip them. Substack relies more on traditional subscriptions (often which end up to be yearly payouts) for regular defined Newsletter. On Substack, usually the writing is front and center over the personal brand of the Creator. (I’m only speaking from personal experience here).
Comparing Medium, Substack, Patreon or any other ecosystem with each other is obviously like comparing apples and oranges. While Medium thinks an audience should access an algorithmic paywall with $5, some Substack Creators charge huge fees for the information they provide in their Newsletters.
For instance the top earning Crypto creator on Substack, charges $100 a month. The leaderboard seems to indicate he has “thousands” of subscribers. Which is at least 1,000. So his creator is making at least $100,000 on Substack per month.
Part of the reason the Creator Economy is so beautiful in 2022 is because the ecosystem isn’t consolidated yet even if you could argue that YouTube, Instagram and TikTok have a “monopoly” on how influencer marketing works to some extent. That there exists niches like Patreon, OnlyFans, Substack, Discord, Medium and other platforms is pretty incredible. Not to mention the dozens of Creator platforms and apps in China that have much more scale with E-commerce than is possible in the West.
While Patreon could be worth an adjusted $3.5 Billion in mid 2022, how much Substack’s market cap might is more difficult to decipher. I would personally place it at around $1 Billion as of April, 2022. But this is just my personal estimate.
Patreon has continued to grow and now boasts more than 6 million active patrons. The platform supports a network of more than 210,000 creators. I would optimistically say that Substack has about 800,000 (paying subscribers as of April, 2022) active users who support writers here with a paid subscription. Together they likely create about 1.2 million total paid subscriptions. But I have not seen the latest data.
I would be more interested to know how many Newsletters or Creators Substack has. But the metric that I could find seems to be more on total paid subscriptions. It seems to indicate that the Covid-19 pandemic gave Substack an audience bump boost.
Substack launched in October 2017.
It is claimed the top 10 authors on Substack collectively make over $20 million per year.
How Many Total Visitors / Readers
In terms of visits over-time you can use Similar Web chrome-extension:
As of February, 2022 there were 30.81 million viewers. (peaking at 35.02 million in January, 2022 - where Patreon has 95.60 million, nearly 3x Substack).
SimilarWeb data shows that Substack generated 24.57 million visits in September 2021, up from 18 million in April 2021. So that’s a decent trajectory of an increase in total audience.
Substack, that’s not even five years old, has time to grow but has many problems and competitors to overcome. Some of which I cover in this Newsletter.