[tinyhouse]

The fact it's a common fee structure that exists across industries doesn't mean it makes sense for Substack. And I wouldn't call 10% standard. Most companies I know of, take Stripe for example, charge much smaller fees percentage wise and rely on high volume transactions.

Maybe a better example I can think of is a referral site. Maybe a site like Kayak can charge Marriott 10% each time they refer someone who books a room. If that room wouldn't be booked otherwise it's probably a good deal for Marriott. Substack does help with discoverability, and that's probably where their main value is (similar to FB, Instagram, etc), but the problem is that unlike the Marriott example, the fee is not a one time payment.

[ThomPete]

This is called value based pricing.

No cure no pay.

They take care of everything for you and will provide more and more tools for you.

Furthermore it's a white label solution which means you aren't on some platform like medium. People pay for removing branding on platforms these day.

I am biased as we are currently launching a similar model for live video 1-1 sessions, classes and events but I believe you will see much more of these types of solutions in the future.

10% + credit card fees isn't a lot to pay and if you become really big you can always pay someone to build your own platform.

[dna_polymerase]

And you think Substack can achieve the same high volume as Stripe does?

> Substack does help with discoverability, and that's probably where their main value is (similar to FB, Instagram, etc), but the problem is that unlike the Marriott example, the fee is not a one time payment.

No, they also provide the platform, the tools, the analytics. They are not just an aggregator. Also, Marriott has to pay for every transaction, just like someone using Substack. You pay per transaction.

[tinyhouse]

> No, they also provide the platform, the tools, the analytics

Maybe I'm in a bubble but I don't see it as their main value for successful users who make money from their newsletter. I've setup a newsletter with analytics a few weeks ago without writing a single line of code and with a fixed cost (and custom domain...). Yes, starting with Substack is cheaper to start with but long term it'll cost you).

> Marriott has to pay for every transaction, just like someone using Substack. You pay per transaction.

I guess I'm not familiar enough with Substack. What does it mean you pay per transaction? It's a newsletter - you make money from paying subscribers who pay monthly let's say. Are you saying Substack users pay per email sent to their paying subscribers?

[tinyhouse]

> No, I was referring to the whole Marriott thing. If you book a Marriott hotel with an aggregator (like Kayak), Marriott has to pay for that booking. If you do it the next week again, Marriott has to pay again.

> Substack fees work the same, you pay a fee to Substack whenever a person renews (transaction).

> So to make the loop back, no the Kayak example works the same way as Substack does.

Replying here since HN doesn't let me reply to the comment directly (probably reached the max number of nested replies).

I now understand your example but I disagree with it. A newsletter, unlike a hotel, relies on a small number of paying users who are likely to renew their membership. Many even pay for annual membership. The main cost is finding a new paying user. Once the user is subscribed it's the newsletter's job to keep that user paying. Marriott pays Kayak only for new users. Next time the user can book a room via the Marriott site. It doesn't need to keep paying Kayak for life every-time that user books a room.

[dna_polymerase]

> Are you saying Substack users pay per email sent to their paying subscribers?

No, I was referring to the whole Marriott thing. If you book a Marriott hotel with an aggregator (like Kayak), Marriott has to pay for that booking. If you do it the next week again, Marriott has to pay again.

Substack fees work the same, you pay a fee to Substack whenever a person renews (transaction).

So to make the loop back, no the Kayak example works the same way as Substack does. It just happens to be the case, that customer retention is higher with Substack (or lower-cost transactions in general)