What your monetization strategy says about your values
Advertising vs. Subscriptions vs. Donations vs. Affiliate Marketing vs. Cross-promotion
Deciding to start a newsletter on Substack was more than a technology decision, and it was more than a business decision. It was a values decision.
In order to explain, we’ll need to do a brief survey of the different models of making money with online content. I’ll give examples of each, and point out the direct line that can be drawn from the choice of platform and its attendant business model, back to the values of the creator, and how those can often be mismatched.
If you choose to make content online (as opposed to using the internet to sell products - that’s a whole different discussion), beware of the mismatch. Online media ecosystems are plagued by model mismatch: the people who are creating content on them care about one thing - but the model forces them into caring about a different thing.
A video creator cares about having personal connection to a highly niche audience - but YouTube rewards him or her with ad revenue based reaching as big an audience as possible.
A writer cares about explaining complex issues of public interest in a nuanced and detailed way - but the ad model of newspapers pushes him or her toward mass market, click-bait headlines that punish nuance.
A podcaster cares about independence, both real and perceived - but the podcast platform matches their content to advertisers on their behalf, with little regard to whether those advertiser create a real or perceived conflict of interest.
Of course, making money online isn’t only about deciding what you value and then choosing the right combination of technology and platforms to get you there. Making money online is primarily about quality: did you create something that other people want to read, watch, or listen to?
But among all the myriad online guides to monetizing content, what is consistently left out of the conversation is values. So, let’s step back for a moment and go to first principles.
Do you want to make money from your content?
For many people, this is the first decision. If you don’t need to make money or don’t care about making money, then you need not concern yourself with which platforms enable which models - or what that says about your values.
All you need to decide is whether you care more about maximum control or about being discovered and growing your audience. This has been the historical tradeoff that most online content creators have had to grapple with, and there are basically only two choices:
Maximum Control: get your own URL, build your own website, and use open source tools to the extent possible. Basically, use Wordpress.
Being Discovered: trade control by choosing a platform that aids in content discovery. E.g., YouTube for video creators, Medium for writers, etc.
Most of the content creators you’ve ever heard of picked number two and figured out how to create enough quality content and game the platform well enough to be discovered. They succeeded by the platform’s rules, although the rules often changed.
The real drawback of choosing option two from a values perspective is that these creators were pawns in an aggregation theory play by big tech companies.
A brief history of Google & Facebook dominance
Facebook and Google have roughly the same business model - and for the past half decade the two companies combined have captured the overwhelming majority of new online ad dollars spent. They did it by aggregating audience and then forcing advertisers to pay dearly to reach that audience. In both cases, the losers were content creators.
Facebook did it by getting 2.4 billion users on its platform and, because it was a social network in which users voluntarily handed over everything about their personal lives, Facebook was then able to sell that personal data to advertisers at an increasing premium.
Google did it by building the best search engine the world, so that in 2018, 90 percent of all searches online went to Google. Since searches were often markers of intent to buy (i.e., “best vacuum cleaner”), advertisers eventually needed Google if they wanted any kind of discoverability for their products.
In both cases, it was content creators left in the dust - the fruit of their creation depended on either Google or Facebook for discovery. For the past five years, headlines like this one have been the norm: Digital Ad Market Soars To $88 Billion, Facebook And Google Contribute 90% Of Growth.
Online ad revenue has grown steadily. In fact, 2019 will be the year that spending on digital advertising finally outpaces print and television. The only problem is that nearly all that growth online - we’re talking 80-90% of it - has gone to two companies alone: Facebook and Google.
The models of making money from online content
The clear losers in all this, again, were content creators. Specifically, newspapers. But we’ll get to that.
As it became more and more clear that Facebook and Google were making most of the money that there was to be made from online content, the Internet began casting about for alternative models of making money online.
So far, those models can be boiled down into five buckets:
Advertising (Google & Facebook): depends on scale and audience size.
Subscriptions: depends on earning loyal, niche audiences.
Donations: depends on audience size, loyalty, and goodwill.
Affiliate marketing: depends on credibility, trust, & quality content.
Cross-promotion: similar to affiliate marketing, but rather than using credibility to sell other people’s products, use credibility to sell your own products.
In the next section, I will go through all of these, give examples of thriving businesses using each one, and connect the models to the values of the people in charge of creating content for each.
Google, Facebook, & newspapers
I won’t dwell on advertising too much because I’ve already described how it works above, and pointed out that Facebook and Google own the space. But I will say a little something about newspapers, because I used to work for one. In fact, I covered politics for The Albuquerque Journal from 2004 - 2006 just as the biggest revenue-destroying changes were beginning to hollow out the industry.
In the old days, newspapers derived most of their revenue from advertising, and supplemented that with subscriptions and classifieds. The Internet, then, destroyed newspaper revenue in three steps.
First, Craigslist all but destroyed the approximately 10 percent of newspaper revenue that came from classifieds, and it did it in approximately seven years, from 2000 to 2007. Second, during those same years, Facebook and Google began to siphon advertising revenue because newspapers no longer had a monopoly on reaching readers within their particular geographic area. Third, because readers no longer needed a newspaper to get their news (now they had the whole Internet), subscriptions also declined.
Today, the only newspapers really thriving are the very large ones with very strong brands. The New York Times and the Wall Street Journal, both of which are more than a hundred years old, are the poster children for successful newspapering in the age of the Internet.
There is one other example of successful advertising-based online content: television.
It’s easy to draw a line in the TV and film industry between traditional and online, broadcast and streaming, but I prefer a different distinction: advertising vs. subscription.
So: traditional broadcast television for years operated on a pure advertising model. The idea, just like Google and Facebook, was to get as many viewers as possible in order to charge the highest possible fees to advertisers. This model is still alive and kicking: major sports events, big reality television shows, and the CSI franchise all fall into this model.
In contrast, you have cable television and streaming - both of which are subscription models (and thus covered below).
The values associated with an advertising model
By now it should be crystal clear that if you go with an advertising-based model, you care about audience size. You want to reach the largest number of people possible.
In my humble opinion, making especially unique or transformative content is extremely difficult in this model. Disney its epitome: all their movies adhere to a formula, and all their brands are proven to have mass-audience appeal. Disney is a juggernaut. They own Star Wars, Marvel, and Pixar, besides having their own extremely large catalogue of home-grown formulaic fairytales.
With Disney +, the company is finally jumping in to a new, subscription-based model, in order to compete with Netflix, HBO, and the like. But they are doing so having built an empire on mass market appeal and the advertising dollars that come with that.
Since ad-based models depend on audience size, they also, by extension, depend on number of views and time spent on platform. Those two types of engagement metrics are what drive YouTube and Facebook. They are, arguably, bad for your health and bad for society at large.
The longer you watch, the more you watch, or the longer you scroll, the more minutes of advertising content they can sell. The business models of broadcast television, Facebook, and Google, all depend on your eyes being glued to their platform for as long as possible, as often as possible.
What does that mean for content creators? It means that if this is your model - if you are a YouTuber who is dependent on the meager revenue splits that Google deems you worthy of receiving, at its complete discretion and subject to change at its whim and without notice - than you are signing up to produce content designed to get users/watchers/readers glued to your content as often as possible for as long as possible.
It’s not a good way to go for society as a whole, and rarely for you as an individual.
Cable & Streaming
Cable TV is a subscription model: one flat monthly fee gets you the premium channels. But cable companies were developed pre-Internet, so they flexed their market power in the same way that newspapers did - by aggregating users in a particular geographic area. In order for a content creator, for example AMC, to reach the cable company’s customers, it had to accept the conditions of the cable company as far as revenue split.
Eventually, channels like AMC learned they could extract higher revenue splits from cable companies if they could demonstrate an incredibly loyal audience. That’s why shows like Breaking Bad, The Walking Dead, and Mad Men made AMC so much money, and why shows like The Sopranos made HBO so much money. Audiences loved the shows so much that they would subscribe to an entire cable bundle just to get those shows. Thus, AMC or HBO could extract higher prices from cable companies for being included in the bundle.
Netflix, Hulu, HBO Now (and recently Disney+) all have the same essential model as AMC does: build loyal audiences willing to pay the monthly subscription fees just for their content. The only difference is that the streaming networks use the Internet to stand alone from cable bundling, instead building a direct relationship with their respective audiences.
Patreon & Substack
Patreon and Substack (which powers this newsletter) are two newer examples of the subscription model applied to individuals who create content online. Creators on Patreon charge a fee per thing created, whether it’s a video, a podcast, or an article. Substack - and a host of other relatively new entrants - allows its users to charge monthly subscriptions.
Some individual content creators are using the subscription model independently of particular platforms. The epitome of this is Ben Thompson’s Stratechery, which releases free, weekly long-form analysis of the technology industry, but charges a monthly subscription for additional daily posts.
As Thompson has repeatedly said: the model scales very well. In the beginning, he worked a lot and only had a handful subscribers. Now, he works the same amount, still hard, but he has thousands of subscribers.
The values associated with a subscription model
Like the creators of Breaking Bad, who earned money from the intense loyalty of fans who subscribed to cable just so they could get the next episode of Walter White building his meth empire, content creators who rely on a subscription model are aiming to build a loyal audience in a particular niche.
Even at the height of its popularity, Breaking Bad viewership was dwarfed by the latest bland iteration of CSI. Ben Thompson and Stratechery will likely never earn a paid subscriber base as high as the readership of a free, ad-based tech website. But then, maximizing eyeballs is not the point. Promoting a unique, individual voice is.
If you pay for something, you value it. If you get something free, you inherently devalue it. This is why so many people have argued that the early decision of newspapers to put their content online for free was a tragic strategic error, because it conditioned readers to expect that they should get the news for free. In fact, many an argument was had in the newsroom of The Albuquerque Journal circa 2006 about whether the newspaper’s website should be totally free or have a paywall (the paper’s farsighted publishers, to their credit, always maintained a paywall).
Thus, making money from content online via a subscription model continually forces the content creator to think: how do I deliver real value to the subscribers? Not how do I get as many people glued to this as possible, but how do I get the people who value this to continue valuing it.
The subscription model drives content creators toward niche, and away from mass market. This is why most of the “brave,” or subversive, or risky shows are on a handful of channels: HBO, Netflix, etc. It’s because those channels thrive on loyal niche audiences who pay, not casual viewers to tune in in order to tune out.
As you may have noticed, I like this model. It’s the one I have chosen for myself, not just with this publication, but with Healthpolity, in which I cover healthcare & policy. That said, there are still a few other models to cover, each of which is interesting in its own right.
Maria Popova’s Brian Pickings & Sam Harris’ Making Sense
Maria Popova and Sam Harris (I wonder if those two have ever been mentioned in one sentence together?) both produce content that is free for all. All of it. They make money by asking people to donate.
Popova has a weekly newsletter called Brain Pickings. Her website has a prominent sidebar that says “donating = loving,” and allows readers to donate on a monthly or one-time basis. Harris, meanwhile hosts a podcast called Making Sense (formerly called Waking Up).
The values associated with a donation model
Harris has expounded at length about he chose the donation model. For him it all comes down to two things: independence and reaching as wide an audience as possible.
Harris is out to change culture. That’s his goal, his mission, and the reason he picked the particular medium and model that he did. That’s why he redirected his primary effort from writing books to hosting a podcast. Because a new book, even a bestselling one, is likely to only reach tens of thousands of people or for the really successful ones hundreds of thousands, over a few months. Meanwhile, last year Harris noted that each one of his podcasts is downloaded by more than two million people.
In terms of reach and influence, it’s not even a close competition.
Secondly, Harris values being independent. He routinely delves into topics that are highly politically charged, and Harris speaks often about his unwillingness to be beholden to advertisers - any advertisers.
On the other hand, Harris does welcome donations from his listeners. For a time, Harris used Patreon to solicit donations, but even being associated with Patreon’s content policies eventually led Harris to quit the platform and develop his own system to accept payments.
Content creators who follow the example of Popova and Harris value reaching as many people as possible, but not in order to sell them ads. They value this because they value influence as an end in itself.
This kind of scale is necessary to make the donation model work - Harris says only about 1 percent of listeners ever donate. So unless you’re among the very few who can reach that scale, a donation model is unlikely to pay the bills. On top of that, you have the problem mentioned above that when content is free, users inherently devalue it. Popova’s supposition that “donating = loving” is a tenuous assertion on which to base your business.
4. Affiliate Marketing
Personal Blogs, Amazon, & The Wirecutter
Many personal bloggers have taken to using a “Recommendations” page in order to monetize their content. My favorite personal finance blogger, Mr. Money Mustache, does this with a Mr. Money Mustache Recommends page. The idea is to use your website to link to other products with a special kind of affiliate link that tracks whether the reader buys or not. Then a percentage of that sale goes back to you the original referrer.
Amazon likely has the largest affiliate marketing program in the world, so that if you have a large enough audience and you want to start recommending products to them, Amazon will pay you for confirmed purchases. My favorite website that does this is The Wirecutter, which was acquired in 2016 by The New York Times.
The values associated with an affiliate marketing model
Because The Wirecutter’s entire business model is recommendations of products, their most valuable asset is authority. That’s why each product recommendation they have begins with a long section on why the reader should trust the recommendation, and from whence their authority on that particular product derives.
Mr. Money Mustache’s authority to recommend financial products such as credit cards and books on personal finance derives from the articles he wrote over years that birthed the FIRE (Financial Independence, Retire Early) movement. His readers trusted his authority and opinion of the products, so affiliate marketing was a natural fit.
Content creators who choose this model value their independence - but affiliate marketing is still a tricky balance. Content creators make money from their recommendations, but readers must still trust that those recommendations are not financially motivated. That takes a size-able store of accumulated expertise and goodwill to pull off.
Examine.com, for example, has made a business off providing objective, science-based reviews of nutritional supplements. But unlike Mr. Money and The Wirecutter, they take pains to disconnect their financial incentive from the recommendations itself. Instead, Examine.com makes money by selling additional in-depth products of research. Which brings us to the final, last way to make money from content online.
Examine.com, Scriptnotes & David Perell
The final way to make money online is to use the content to sell something else. This is a classic “top of the funnel” marketing technique: your content draws people in, builds a relationship and builds trust, so that when you have something to sell you now have a captive audience of potential buyers.
This method is championed by David Perell, whose writing I really admire. I’ve mentioned his “Ultimate Guide to Writing Online” in the past. In it, Perell writes:
Each article is a sales pitch for your knowledge on that topic. It’s an always-on broadcast of who you are, and an open invitation for other people to create personal and career opportunities for you.
Accordingly, Perell has been selling an online course called Write of Passage on how to get started writing online.
As already mentioned, Examine.com uses this model to sell additional research. Another personal shoutout should go to the Scriptnotes podcast, which is hosted by screenwriters John August and Craig Mazin. August and Mazin like to joke that their podcast doesn’t make money and never has - still, they make some money. Enough to pay their costs as well as a producer. They do this in two ways: selling scriptnotes t-shirts (I have one), and selling USB sticks with the entire back catalogue of podcasts.
The values associated with the cross-selling model
This final category is tricky because while cross-selling is one way to make money using online content, it can just as well be described as a marketing strategy for selling anything. In other words: Content Marketing.
The most visible proponent of this strategy is probably Gary Vaynerchuk. He is, quite simply, a content machine. He does long Instagram posts, Tweets relentlessly, distributes a prolific Podcast (The GaryVee Audio Experience), records every talk he’s ever given for YouTube, and has a team of content creators following him around seemingly 24/7 to transform what he says and does into audio, video, and written content. All this on top of actually running a creative marketing agency.
Every piece of business advice I’ve ever heard Vaynerchuk give boils down to the following: create great content about the thing you’re selling.
Gary’s values are hustle, hard work, passion. He has a particular gift for merging concise, insightful straight-talk about business goals with aspirational, made-for-social-media soundbites about how to capture your passion, stay motivated, and succeed in life (I had my fill after the first ten hours or so of listening).
Still, if you plan to use online content to cross-sell, go listen to Vaynerchuk for a while. The values you embrace will be as diverse as the products or services that content marketers are selling. In fact - it’s most likely that the product or service came first, and the content to help sell it second.
Choosing your model is about choosing your values
All these examples and all of this background is ultimately to make a simple point: deciding where to host your blog or your podcast or your videos isn’t just a technology decision: it’s a values decision.
When I moved my personal blog to Substack, I first had to do some pretty serious thinking about the purpose of writing in my life. Was I writing just for my personal edification, or did I want to do it professionally? Was I seeking to influence people, or did I want to prioritize making a living?
But the questions apply to anyone making anything online. I’ve seen too many people look at the models out there and begin creating content to fit the model. I say, rather than conforming your content to the values of platforms already in existence, decide what you value first, and then find the platform and the financial model that matches those values.