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Replying to
I’m ignoring substack and Stripe commissions above. This is basically short-term debt from readers. You take $50 today, pay back $60 in 52 weekly installments of 1 newsletter each. You can work out the interest rate. This isn’t theoretical. It’s your actual walk-away price tag.
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If you decide to stop writing, this is what you’ll owe in pro-rata refunds. I did this last year with my Art of Gig newsletter and paid about $4300 in refunds. It was enough of a sudden cash flow hit that I wondered if I could mess with it somehow in my surviving newsletter.
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If you could get to a 100% monthly subscriber base, it would be a 15-day average commitment horizon and a $1,250 average debt. Your walk-away cost is 18% the other case. Much better. If you’re curious, the expected walk-away cost for 100% annual is $12,500 in the sample case.
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Obvious answer: stop offering a discount for annual. Make it $5/$60. Or better yet, actively disincentivize it, since people value fewer transactions for various reasons. Which is what I did. A while ago I made it $5/$61. What do you think happened?
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Answer: basically nothing. People seem to sign up for annual at the same rate, though I don’t yet have a lot of data. This means value of annual convenience is >$1. Substack doesn’t allow you to just turn annual off, so an interesting question is how high is effectively “off”?
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Btw, this anecdata means that for me at least, it’s not a price competition, and discounts don’t actually make sense. Demanded discount is apparently negative. Writers in competitive niches may experience more commodity price dynamics for their writing, where discounts matter.
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You could of course just set it ludicrously high, like $5/$1000 so even someone math-challenged and blindly clicking “subscribe” and entering card info would notice. But there’s interesting data to be discovered in discovering the actual cliff. It’s like a bond yield curve thing.
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As an aside you never want customers in any business overpaying by accident, unintentionally. Anymore than you want them underpaying. Ideally you want them paying what they think it’s worth to them.
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I’m guessing somewhere before $5/$100 you’ll get 90% drop off in annuals. There’s also always people acting by other motives, like wanting to support the writer financially by paying more than the rational minimum price, or having an independent higher “valuation” of the content.
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But a broader question is… can you design better payment models with more flexibility using crypto? Tradeable paywall ticket tokens (buy 52, burn 1 per article you want to read) or tradeable subscription bond tokens with 1-ticket face value and 1-ticket/week coupon…
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This would give writers a much more powerful way to manage what is essentially bond debt against writing future. At 500 subscribers/$6,875 it’s already at my limit for sudden cash flow dip. At say 5000 subscribers you’d have to suddenly come up with $68,750. That’s…not trivial.
Replying to
I’m currently at ~700 subscribers for ribbonfarm studio btw so this is already a non-trivial concern. I’m effectively carrying a rolling $10k debt. Possibly higher. Which is more than I want to.
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Subscription newsletters are a bond market, just as income-share agreements are a stock market. They can be designed better to manage leverage risks.
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Incidentally I mainly manage commitment risk by messing with time. I frequently use the pause button to take breaks, effectively interpolating zero-interest weeks and unilaterally tweaking the term of the loan. I could just pause-abuse by taking off for a year without refunding.
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The principled way to do this would be to pay interest on breaks. Like if I take 6 months off, everybody gets a free month added to their subscription as compensation for renting me their capital. There’s no mechanism for this though.
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And don’t expect reader goodwill to forgive the debt in an emergency. If you’re suddenly disabled, even if half the readers decide to forgive the debt or think of it as a recovery GoFundMe donation, it’s a big hit to refund the rest. And there’s no mechanism for this either btw.
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I’m personally highly temperamentally averse to carrying *any* unsecured debt. I strongly prefer being paid *after* I’ve done work. I avoid taking advances on consulting gigs unless I’m forced to due to client budgets. I definitely don’t want unmanaged newsletter debt bondage.
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Anyhow, tldr the creator economy stack is acquiring all the complexity of Wall Street. Expect to see analogs of QE, yield curve inversion, etc etc. As the amounts in play go up, so will the seriousness and rationality. Right now, we’re still in the goodwill/gift economy.
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And yes, crypto (but not Bitcoin) can solve all this very elegantly if we let it. It’s still solvable but harder with tradfi payment models.
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Btw this is a big reason I like NFTs. They convert a bond market into a product market. It’s early days yet on things like DRM and token gates, but that’s where this is all headed. Consumers of creative work tend to underestimate the producer value of freedom to walk away.
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Readers sincerely think creators want steady reliable guaranteed income over a long horizon. Some do, but many don’t. Even in an apparently no-strings-attached explicit patronage model like Patreon, you feel the burden of “committing to create” and guilt/shame if you flake.
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Unlike in uncreative work, this is a psychological damper. I’ll take a contracted retainer for years if it’s mostly uncreative work with people I like. But creative work is best done when you’re *sneaking off*from “work” commitments. A sense of drawing on abundant leisure is key.
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I think my best stuff emerged from low-value time that I had the option to just waste entirely. It’s wonderfully liberating when your only goal is to have more fun than doing nothing at all, and you’re just feeding free time/energy into imagination and seeing what comes out.
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It’s really hard to design incentives for this. Oddly even having fuck-you money is the wrong incentive. You do want the frisson of danger that comes from using scarce income-generating time for risk-taking.
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