The price elasticity of unlimited Substack

We have already seen how to grow the pie for writers, and that future is a hot mess of a payday.

photo by Faruk Canpolat

Jeff Bezos has already shown Chris Best how Substack could bring in more revenue for writers — he’s just gotta take the leap.

Amazon, the online store that started with books but almost seems to have forgotten about them, actually created a massive platform for independent writers that most folks on here would probably disdain to even think about.

But those proletarian scriveners are getting paid, my friends, and Substack could easily follow where Amazon led.

Substack already solved our problem of scaling email and payment management. That was very nice of them. Now let’s see it innovate to grow the pie.

Friends: Let’s talk about Substack Unlimited.

Lies, damn lies and big 5 publishers

Back in 2016 and 2017, writing for the New York Observer, I got a bit obsessed with the Amazon Kindle as a reporting topic. E-readers, cheap publishing and e-ink all looked very good to me.

Yes, there are trade-offs. I get that and I got that then, but Kindles extended the reach of literature, lowered the barrier to entry and kicked-off an indie book subculture.

But back then, mainstream reporters were doing stories every year or so that said, basically, “No one actually buys ebooks.” Which was weird, because Amazon kept putting out new versions of the Kindle and it didn’t seem like that was slowing down — which indicated that it was probably working out.

Something was up!

So, I dug into it, and I figured it out. All those reports were — well — basically lies. At least, they weren’t telling the full story. When the headline read: “People aren’t buying ebooks” what it actually meant was “people aren’t buying ebooks from Big 5 publishers.”

This was a very important distinction!

It wasn’t hard to work out why they weren’t buying those books! Publishers were jacking up the prices on ebooks! Amazon wanted to sell ebooks for $9.99 each but the Big 5 didn’t. After a long court fight, they upped the price, sometimes to the point that an ebook cost more than a paperback.

So the fact that these books weren’t selling that well was just basic economics. Nevermind the fact that — all things being equal — lots of people like a physical object. It was actually even simpler even than that. People Discriminate By Price: News at 11.

Indie in the Amazon

But what those reports didn’t tell you was that there was this buzzing world of independent publishing enabled by Amazon Kindles, through its Kindle Direct Publishing program, that was totally popping off.

Now us smart Substack people have probably never read anything from KDP because we are all much too brilliant for it and we haven’t quite finished Infinite Jest. The kind of writing that moves on there is mostly romance, but also other genre stuff: such as sci-fi, LitRPG, and etc.

Back when I was reporting on it, authors confessed to me off the record that they were making millions of dollars writing on there. I’d ask them if they needed to take jobs teaching writing at Universities like all the New York Times bestselling authors you’ve heard of. They would laugh.

No, the best use of time for them was always going up into the attic, opening the laptop, and banging out the next chapter. Every time.

And what was the secret of all that money being made? It was: Kindle Unlimited.

Unlimit my bags

Now this might sound counter-intuitive, and that’s precisely why I suspect that if Substack tried to follow Amazon’s lead, they’d get rebellion from the big guns on this site. But hear me out.

Kindle Unlimited is a Netflix for books. Readers pay a flat amount each month (right now it is $11.99, in the US) and they get unlimited access to books in the program. Precisely how authors get paid out of this is a bit arcane (because: scammers), but basically it comes out to pages read in their books. It’s not enough for someone to download your tentacle porn urban detective story — they need to actually move through the pages. The more pages they move, the more your share of that $11.99/month is.

Amazon is spreading around more than $60 million per month these days among authors. We don’t really know how much Substack is spreading around, but I’m confident saying it’s significantly smaller.

Here’s the thing: You can still sell your books one-by-one on Amazon Kindle. That’s no problem. That gets you access to the light readers out there, and it works great.

But there’s also hardcore crazy readers out there. These are people who will find one of your books and, if they like it, they will crank through everything else you have written. This has a way of kicking your earnings into gear fast. These folks are all in on Kindle Unlimited.

Have you seen Silo on Apple TV+? That’s based on a self-published novel by Hugh Howey. Howey was one of my sources back when I was working this beat. Back in 2017, Howey told me over repeated conversations that going exclusive with Kindle Unlimited cranked his revenue into very, very high gear.

It seems risky? Why would you go into a shared pool when people are already buying your stuff directly at a pretty nice clip?

Why? Because price-elasticity-of-demand, baby. When it works, it feels so good.

Into the breach, dear friends

There’s a lot of talk about bundling on Substack. That’s fine. I’m all for it, but it seems like amateur hour to me.

Better idea: Mega-bundle. Substack Unlimited.

Substack Unlimited could be an opt-in program that any writer on here could join. You can offer people to subscribe directly to your paid content (like buying one book at a time on an Amazon Kindle) or they can get it if you’re in the Substack Unlimited program.

This could easily work the same way. There’s a big pot of money from all the Unlimited users each month and that gets shared out to everyone via pageviews.

LFG.

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Would this undercut the earnings of the big guns?

We can’t know for sure, but Howey was a big gun on Amazon Kindle Direct Publishing already when he decided to join Kindle Unlimited, and it didn’t undercut him.

But, also, they don’t have to join it if they are nervous. They can keep getting paid directly by users.

How can we know it would grow the pie?

We can’t until Substack tries it, but it worked for ebooks already.

Wouldn’t enabling bundles work better because it’s more thematic?

They aren’t mutually exclusive. I’m all for bundles, but, I submit, that the desire for coherent themes is one of those OCD impulses that makes sense in our heads, with their need for structure and order, but actually doesn’t really help that much.

As the great Jane Jacobs showed: Zoning parts of city as “industrial” or “commercial” seems logical, but by and large, letting chaos reign works out better over time.

Wouldn’t all the big shots eschew Substack Unlimited so it would just fill up with all the lesser writers?

That’s exactly what happened on Kindle Unlimited, yes. Stephen King is not in there. But Stephen King was already rich.

Of the hundreds of writers making mad bank on Kindle Unlimited, those of us who aren’t using may hear about one of them every couple of years. There are many more.

Thousands of minnows swimming around the phat lake of Amazon KDP yielded some... whale-like minnows. Sounds pretty good to me.

But, but... if Substack created an Unlimited program, wouldn’t that mean I’d be in the same pool as people I disagree with?

Buy a helmet, kiddo.

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Look. A lot of us spend a bunch monthly on here, and, while we are glad to support people, comparing the quantity of content our dollars get us access to compared to, say, one subscription to The Atlantic, it’s no contest.

A lot of people out there are more price sensitive than I was when I got into this site. Basic economics says that if there’s a lower cost overall price entry point, more people will come in.

My means are more limited now than they have been for a while. I’m dying to upgrade my subscription to Emma to paid, but I just can’t justify it at the moment. If we had Substack Unlimited, though and she joined? I’d be all over her archive.

At the end of the day, I think more people want Substack’s core product than they want Kindle’s product. There are more readers of topical blogs than there are of indie genre books.

Substack Unlimited could be even bigger than the half-billion dollar behemoth that is Kindle Unlimited.

Substack Unlimited would grow the pool for everyone.

Jeff Bezos showed the way, and he did all right. Have faith.