A chat with Eric Newcomer, the indie scoop machine

Bridging tech vs media, one chat at a time

July 25, 2022

Eric Newcomer was a reporter at The Information and Bloomberg. He was amongst the first wave of tech journalists who launched their own outlets on Substack. 

He is now doing in the venture world with his outlet Newcomer what Ben Smith was known for doing on the media beat at the New York Times : juicy scoops that create industry chatter 

It’s almost been a year since I subscribed to him. I thought it would be nice to chat with him about all things Substack life!

Eric and his co-hosts NYT’s Katie Benner and Insider’s Tom Dotan were speculating a bundle from Substack with Platformer’s Casey Newton on the Dead Cat podcast recently. They made a few points that the tech folks have been making for a while. Here’s a snippet : 

Casey : Maybe eventually, they will go to like the very biggest Substacks and just offer them a great deal and say, you know, you're making a million, we'll pay you a million and a half, if you're part of this bundle, you know, because we know you probably wouldn't make that as part of the bundle, just by the basic math, but you know, we want to incentivize more people subscribing, like, I could see them doing that. But, you know, we've been talking about this from the subject perspective, which is good and fine, but you think about it from the writer's perspective. It's like, they also just have a bunch of writers on their platform now who could leave and just do this sustainably forever? And it's not clear that you actually need to substack to keep the business going. Right. Like, you know, journalists are so cynical and pessimistic about every business model.

Eric : Amen! Now I see that I'm gone…

Casey : [Journalists] they underestimate what a great job this can be. Right? You think about how big the internet is, if you can find 2000 people that pay you 100 bucks a year, you're making more money than almost any media company would pay you for any reason. There's a lot of groups of 2000 people on the internet. So like, to me, the really exciting thing here is, you know, I hope Substack has a long successful run, you know, I have no plans to leave it, it would be inconvenient to do so. But like, also, I'm not terrified about them going out of business, because, to me, the model works like I found my few 1000 people, and I can just do this as long as I want to.

Eric : And we have a direct relationship with Stripe. I mean, part of the reason Substack has been able to recruit everyone has been the fact that you can leave, I don't think they would do a bundle that would infuriate writers, I think they would have to do it in a sort of additive way. And I want to talk about other things, but I do think the long tail issue is going to be a problem for substack have I had to make my business case against them, I think, you know, in anything, you know, influencer economy, sort of celebrities, the top sort of get really rich, and everybody else is sort of screwed. If they can't get the longtail to make good money, then they'll have fewer new Substacks coming in with a shot at being sort of the celebrity writer…

Casey : Let's talk about the longtail. The number one substack publication in tech is a guy that writes about how to manage your career as an engineer, basically, if you pitch is that number one overall. And so if you were to pitch that column to any mainstream publication that said, that's way too niche, Hey, get out of here, our readers would hate this. This guy easily makes 450k-500k bucks a year, right. So if there are more niches like that, then I think the longtail is actually going to be really successful. Now, you know, we could talk about the characteristics that these really successful businesses have. They write for rich people, they tend to be something you can expense, they tend to be something that helps you make more money. If you want to write a poetry diary, it's probably not going to succeed to the same degree. But I think it's much more productive to think about this in terms of like, what sorts of publications could work and who you know, who is the person that could write that publication, and add that I think you'd have a bunch more people making half a million bucks a year.

Sar : This perspective is the thesis behind platforms like Substack. It’s applicable not just in publishing but in any industry specific platform that enables one to start, manage and grow a business. There will always be a power law distribution and the fact that there’s a long tail that will never get as big is not an argument against these platforms! It acknowledges the reality of consumer choice and that not every business has to be huge to be successful on the internet!

Do you agree ?

Eric : I agree to the extent that the long tail is financially sustainable for people who never make it up the exponential curve.

To build a big platform business, you need new creators to continue joining your platform. If you’re enticing those creators to join your platform based on the financial opportunity, then you can sell them based on how the very top creators perform or based on how the middle class creators perform. I’m just saying that to have a healthy platform, you can’t just induce creators to try it out because they’re trying to win the lottery. Winning the lottery is rare and the odds of winning the platform lottery go down over time as early adopters saturate different niches. 

I don’t think platforms should oversell the story of the top 1% of creators on their platforms. If they do, they’re going to have a lot of disappointed new creators. They need to be able to say that some meaningful percentage of people who try to make this thing work, make a real, sustainable amount of money off of it. 

Even if the platforms make most of their money off the power law winners (which is dangerous because those are the most likely people to build their own infrastructure), they still need to find a winning message to get potential power law winners to give it a try. And I think it’s more credible if you can say, “a fair number of people see meaningful success.” If you’re just saying, “you might win the lottery,” I don’t know if that convinces enough people to give it a try that you can build a massive platform business.

Maybe I’m wrong. I don’t spend that much time theorizing about platforms. But I do wonder in Substack’s case if they’re getting enough new Substacks to really make this thing a homerun. I think features like Recommendations are a good start on that front, but there’s definitely a lot of work to be done.

(For context on Newcomer I don’t really see myself as a middle class creator. I’m the 4th ranked technology Substack and have more than 1,900 paying subscribers at $150 a year. I pay about 13% of that to Substack and stripe and the rest is my revenue.)

Sar : Would you have had the perspective you do now on Substack if you hadn’t decided to go indie? The press coverage of this company has been atrocious. I think it reflects a fundamental misunderstanding and insecurity on the part of the industry. Do you have a theory on why the press is getting this so wrong? The tone of coverage I see is a lot like what we have seen regarding Facebook. Both companies happen to reduce the power of news and opinion gatekeepers.

Eric : I don’t really feel bad for Substack when it comes to media coverage. They get a disproportionate amount of media coverage because journalists are understandably obsessed with the media. The New York Times writing about Substack, positively or negatively, is probably mostly good for Substack’s business.

I agree that some of the coverage of Substack has been pretty thin. I’ve rolled my eyes at some of the articles about it, especially when it comes to how it’s performing as a business. 

But Substack has also inserted itself into the culture war. There is a very live and legitimate debate over platforms’ obligations to moderate content so the media, very understandably, scrutinizes how Facebook and Substack moderate content. I think I disagree with you about what motivates reporters to disproportionately scrutinize content moderation. It’s not so much professional jealousy or the business people at media companies ordering up a war against disruptive platforms. I think that reporters and their editors spend a lot of time thinking about what is and isn’t appropriate to publish and so they’re pretty appalled by companies that just say “we’re going to make a lot of money by abrogating that responsibility to be thoughtful and intentional. And, in fact, we’re going to create the tools that allow the worst content to go super viral and make a ton of money off that.” 

I personally would not want to run a company that made it really easy for anti-vaccine writers to make a ton of money as Substack does. And I certainly think it’s a topic worthy of news coverage. Substack also can’t seem to decide what tone it's striking here. Is it a principled steward of an unmoderated platform or a gleeful host for content that many people find reprehensible? I also think there’s a reality that some moderation inevitably occurs on these platforms and so the posture that you don’t moderate is frustratingly disingenuous. 

So I guess that’s all to say, I think there is a fair substantive critique of Facebook and Substack so it’s not surprising that there are critical articles of them. But do news reporters launder their substantive critiques into purportedly objective stories via framing, tone, and selected quotations? Yes. That is part of the reason I prefer to transparently include my opinion in my pieces. I don’t have to find ways to sneak my opinion into my stories.

Sar : The conventional wisdom in journalism is to keep a wall between the business side and the editorial side. It is a source of pride. Did you share that perspective before you left your traditional job? Has your thinking changed now that you have to actually worry about both making money and writing? Stratechery’s Ben Thompson has written about how this can lead to journalists using their twitter bubbles as a predominant feedback mechanism for their reporting and outlook. And, that can distort the narratives.

Eric : I think it’s probably good that both models exist. There’s a value to being a reporter who becomes a sort of priest: They needn’t concern themselves with worldly things like profits. It’s pretty amazing that media companies were once so profitable and reputation-oriented that they let reporters go where the news led them, even when it meant scrutinizing their own bosses. To the extent that model still exists, that’s good! But I also think those priest-like reporters who are disconnected from their own businesses can become pretty disconnected from how the world works and from what their customers want to read. 

I believe that I have a much more visceral understanding of the risk a startup founder takes to start their own business now that I’m building my own. I also think that my stories are much more closely aligned with what my subscribers want to read than when I was at Bloomberg. That could be bad -- I could pander to my readers. (I don’t think I do. I feel like I’m fortunate enough to have enough subscribers that I could lose a few.) But there’s also a danger that big media companies lose sight of what their readers want. Instead of embracing good principles about what those readers should read, big media companies risk embracing what some bureaucracy thinks they want to read. Ultimately at a big news organization, the best stories are the ones that your bosses like the most.

Sar: How do you label yourself? Is it still a journalist? Or, is it something more broader like a writer? You still play the scoop game (which I love, btw) in your writing but are more of an analyst and a commentator on your podcast. Would that be a correct read? How much of this is intentional? 

Eric : That’s a super interesting observation. I think that’s correct, especially about the roles I slip into in the newsletter and the podcast. I definitely still see myself as a journalist and reporter but I also call myself a writer to be self-indulgent. I’m modeling myself after Ben Smith’s now-defunct column in the New York Times. So I can happily have opinions but it should be very obvious to the reader that the number one god that I serve is figuring out the facts and trying to organize them into a compelling narrative. 

I’m more interested in chasing a good story than writing a pure opinion piece. (Readers also care much more about what you have to say if you have exclusive reporting.) 

I do think that as a journalist I am pretty close to the action and have accumulated a lot of unarticulated reporting. The worldview and sensibility that I’ve cobbled together from that experience, I want to think, is valuable and interesting. So I think the podcast is a good vehicle to express what’s not making it into the polished stories. As a reporter, I find that exposing your opinion and why you hold it is reflective of reporting that you haven’t really put out into the world or that you’ve framed poorly. Also there are big important headline concerns that go in the newsletter and then there are weird, insider, meta debates that go on the podcast. 

This is all a post-hoc justification of things that are really just emergent features of my newsletter and podcast. And I still do want to do journalism on the podcast. (Fun interview coming up!) I think it’s a less refined product at the moment and is still growing into itself. I’ve written publicly for many years but I’m just starting to talk at any great length in podcast form.

Sar : When you hang with your friends working at other outlets, how much of their thinking about these topics or just the job of a traditional journalist feels increasingly alien to you?

Eric : It’s just amazing to me that I used to be very concerned about a big corporate bureaucracy and what a billion different colleagues thought of things and now I don’t have any of those concerns. There’s a lot that I miss about having colleagues. Now that I’m independent, I’m like ‘wait they paid me AND they paid for someone to edit me.’ These days I beg friends and family to give me feedback or I would need to pay someone out of my own pocket if I wanted an editor. I also miss the sense that I could just walk along the Embarcadero with a colleague and shoot the shit and call that work. My problems these days are mostly focused on publishing good work on a regular basis. So I mostly feel the disconnect between being totally accountable to myself and my readers vs. most reporters who are still very invested in what their bosses, colleagues, etc think and feel. It’s hard to put yourself back in the headspace where you’re very internally oriented even when your work product is meant for people outside that organization. 

Sar : You have chosen the business model of your previous employer. Did you actively decide against the other model or was it just familiarity bias? Does the style of your reporting and writing get influenced by how you make money? Outside of writing and reporting, how much of your time is spent on the business stuff? There’s a school of thought that says “Ads are evil! Subscriptions fix all ills! Subscription media results in less polarizing stuff, less clickbaits ”. I find that stupid. I think you can have all the “bad things” no matter what model you pick. But, as far as incentives go, I think subscription sets up the incentive to play to an audience in a polarizing way while ads force you to serve the widest possible audience. 

Eric : I’m a pretty strong believer in subscription media businesses. I was the first employee at The Information and Jessica Lessin has been one of the biggest advocates for subscription media businesses. I definitely think she got that very right. 

I don’t have some moral objection to ads and maybe I’d run some ads someday. I honestly just don’t have the bandwidth to sell ads and the offers I’ve gotten so far haven’t felt like the right fit. I would want to work with a sponsor who really feels additive to my brand. 

Time is obviously my scarcest resource. Given that I am the machine that produces my product, I mostly focus on reporting, writing, and podcasting. When it comes to working on the business, I feel like there are a lot of levers that I still need to pull on driving subscription revenue before I spend time on advertising. But if someone who is making something that’s legitimately great wants to pay me money to remind my subscribers that they’re making something great, I’m happy to make more money. 

There is something pure about a subscription business. Seeing what people will pay you for is a very direct and satisfying way to think about value creation. So I’m very happy that it’s the business model that I’ve chosen. I will say that recurring subscriptions can be a bit guilt inducing. It’s not just like I sold you a thing and then maybe you’ll pay me for the next thing if it’s good. You’re paying me on the expectation that I continue to deliver stories of the same or better quality and that’s certainly a lot of pressure. And I take that commitment very seriously. It’s good motivation to keep doing work that’s worth paying for.