Business

Substack’s Growth Spurt Brings Growing Pains

Published

3 years ago

April 13, 2022

Substack’s Growth Spurt Brings Growing Pains

There are issues that the publication author Kirsten Han misses about Substack. They only aren’t sufficient to outweigh the downsides.

She disliked how the platform portrayed itself as a haven for unbiased writers with fewer sources whereas providing six-figure advances to a number of distinguished white males. The hands-off content material moderation coverage, which allowed transphobic and anti-vaccine language, didn’t sit nicely together with her. She additionally didn’t like incomes $20,000 in subscription income, after which giving up $2,600 in charges to Substack and its cost processor.

So final yr, Ms. Han moved her publication, We, The Residents, to a competing service. She now pays $780 a yr to publish by means of Ghost, however stated she nonetheless made roughly the identical in subscriptions.

“It wasn’t too laborious,” she stated. “I checked out a couple of choices that individuals had been speaking about.”

Not way back, Substack haunted mainstream media executives, poaching their star writers, luring their readers and, they feared, threatening their viability. Flush with enterprise cash, the start-up was stated to be “the media future.”

However now, Substack finds itself not a wunderkind however an organization going through a bunch of challenges. Relying on whom you speak to, these challenges are both commonplace start-up rising pains or threats to the corporate’s future.

Tech giants, information retailers and different corporations have launched competing publication platforms previously yr. Customers who loaded up on newsletters in the course of the pandemic started to cut back. And lots of in style writers left, such because the affiliate English professor Grace Lavery and the local weather journalists Mary Annaïse Heglar and Amy Westervelt, usually complaining concerning the firm’s moderation coverage or the strain to always ship.

“Substack is at a pivot level the place it wants to consider what it’s going to be when it grows up,” stated Nikki Usher, an affiliate journalism professor on the College of Illinois Urbana-Champaign.

The excellent news for the corporate, 5 years outdated this summer season, is that it’s nonetheless rising. Paid subscriptions to its tons of of hundreds of newsletters exploded to a couple of million late final yr from 50,000 in mid-2019. (The corporate gained’t disclose the variety of free subscribers.) A hiring spree hopes to internet greater than a dozen engineers, product managers and different specialists. Executives hope to ultimately take the corporate — which has raised greater than $82 million and is alleged to be valued at $650 million — public.

However to keep up that development, Substack executives say, the corporate should provide greater than newsletters.

In an interview at Substack’s workplace in downtown San Francisco, its co-founders spoke in sweeping statements concerning the “grand Substack principle” and “grasp plan.” Chris Finest, the chief government, described a want to “shift how we expertise tradition on the web” and to convey “artwork into the world.”

“Substack in its fullest ambition is form of this alternate universe on the web” he stated.

In apply, meaning Substack might be not only a supply channel for written newsletters however extra of a multimedia group. Executives need customers to create “private media empires” utilizing textual content, video and audio, and talk with subscribers by means of expanded comments that would characteristic GIF photos and profiles for readers. This week, Substack will announce new instruments for writers to advocate different newsletters.

Jairaj Sethi, a co-founder and the chief expertise officer, described a imaginative and prescient of subscribers assembling round writers like followers at a live performance.

“For those who simply give them a spot to congregate and to work together with one another, there’s some fairly cool sorts of bonding,” he stated.

In March, Substack launched an app that consolidates subscriptions in a single place reasonably than dispersing them individually through e mail. This month, the corporate introduced a podcasting enlargement.

“Proper from the beginning, we’ve been intending for the corporate to do extra than simply present subscription publishing instruments,” Hamish McKenzie, a co-founder and the chief working officer, wrote concerning the app.

However as Substack evolves past newsletters, it dangers wanting like one other social community or information writer — which might make it much less interesting for writers.

Ben Thompson, whose tech-focused Stratechery publication impressed Substack, wrote final month that Substack has gone from being a “Faceless Writer” behind the scenes to making an attempt to place “the Substack model front-and-center,” increase its app as a vacation spot on the backs of writers.

“It is a method for Substack to draft off of their recognition to construct an alternate income mannequin that entails readers paying for Substack first, and publishers second, as a substitute of the opposite method round,” Mr. Thompson wrote.

Publishing on Substack is free, however writers who cost for subscriptions pay 10 p.c of their income to Substack and three p.c to its cost processor, Stripe. The corporate additionally provides hefty advances to a small group of writers, whose identities it refuses to expose.

Substack has one key distinction from most different media corporations: It refuses to chase promoting {dollars}. “Over my dead body,” Mr. McKenzie as soon as wrote. “The antithesis of what Substack needs to be,” Mr. Finest stated.

“If we, by means of greed or error, acquired into that recreation, we’d successfully be competing with the TikToks and the Twitters and the Facebooks of the world, which is simply not the competitors that we need to be in” Mr. Finest added.

Which means that Substack continues to depend on subscription income. Subscribers pay greater than $20 million a yr to learn Substack’s high 10 writers. Essentially the most profitable is the historical past professor Heather Cox Richardson, who has greater than 1,000,000 subscribers. Different notable writers embody the knighted novelist Salman Rushdie, the punk poet laureate Patti Smith and the Eisner-winning comedian e-book author James Tynion IV.

Emily Oster, an writer and economics professor at Brown College who has provided divisive recommendation on dealing with the pandemic with kids, joined Substack in 2020 after Mr. McKenzie recruited her. Her publication, ParentData, has greater than 100,000 subscribers, together with greater than 1,000 paying readers.

“Substack has turn into actually an even bigger a part of the media panorama than I had ever thought it might be,” she stated.

However Dr. Oster’s main sources of revenue stay her instructing and her books; a lot of her publication income goes towards modifying and help companies. Most customers have struggled to help themselves by writing completely on the platform and as a substitute use their earnings to complement different paychecks.

Elizabeth Spiers, a Democratic digital strategist and journalist, stated she gave up her Substack final yr as a result of she didn’t have sufficient time or paying readers to justify her lengthy weekly essays.

“Additionally, I began getting extra paid assignments elsewhere, and it didn’t make quite a lot of sense to maintain placing stuff on Substack,” she stated.

However Substack’s largest battle has been over content material moderation.

Mr. McKenzie, a former journalist, describes Substack as an antidote to the eye economic system, a “nicer place” the place writers are “rewarded for various issues, not throwing tomatoes at their opponents.”

Critics say the platform recruits (and subsequently endorses) tradition struggle provocateurs and is a hotbed for hate speech and misinformation. Final yr, many writers deserted Substack over its inaction on transphobic content material. This yr, The Heart for Countering Digital Hate stated anti-vaccine newsletters on Substack generate no less than $2.5 million in annual income. The expertise author Charlie Warzel, who left a job at The New York Occasions to write down a Substack publication, described the platform as a spot for “internecine web beefs.”

Substack has resisted strain to be extra selective about what it permits on its platform. Staff of Twitter who apprehensive that its content material moderation insurance policies can be relaxed by Elon Musk, the world’s richest man and the platform’s largest shareholder, had been informed to not bother applying for jobs at Substack.

“We don’t aspire to be the arbiter of claiming, ‘Eat your greens,’” Mr. Finest stated. “If we agree with or like every little thing on Substack, that may be falling in need of what a wholesome mental local weather seems like.”

Substack makes it straightforward for writers to interrupt away, and defectors have a fast-growing assortment of rivals ready to welcome them.

Previously yr, publication choices debuted from Twitter, LinkedIn, Fb, Axios, Forbes and a former Condé Nast editor. The Occasions made a number of newsletters out there solely to subscribers final yr. Mr. Warzel moved his Galaxy Mind from Substack to The Atlantic as a part of its newsletters push in November.

The media platform Ghost, billed as “the unbiased Substack various,” has a concierge service to assist Substack customers transition their work. Medium pared again its editorial publications to pursue a extra Substackian mannequin of “supporting unbiased voices.” Zestworld, a brand new subscription-based comics platform, has been referred to as “Substack with out the transphobia.”

Mr. Finest stated he welcomed the rivalry.

“The one factor worse than being copied will not be being copied,” he stated.

Business

As Delta Reports Profits, Airlines Are Optimistic About 2025

Published

49 minutes ago

January 11, 2025

Press Room

As Delta Reports Profits, Airlines Are Optimistic About 2025

This year just got started, but it is already shaping up nicely for U.S. airlines.

After several setbacks, the industry ended 2024 in a fairly strong position because of healthy demand for tickets and the ability of several airlines to control costs and raise fares, experts said. Barring any big problems, airlines — especially the largest ones — should enjoy a great year, analysts said.

“I think it’s going to be pretty blue skies,” said Tom Fitzgerald, an airline industry analyst for the investment bank TD Cowen.

In recent weeks, many major airlines upgraded forecasts for the all-important last three months of the year. And on Friday, Delta Air Lines said it collected more than $15.5 billion in revenue in the fourth quarter of 2024, a record.

“As we move into 2025, we expect strong demand for travel to continue,” Delta’s chief executive, Ed Bastian, said in a statement. That put the airline on track to “deliver the best financial year in Delta’s 100-year history,” he said.

The airline also beat analysts’ profit estimates and said it expected earnings per share, a measure of profitability, to rise more than 10 percent this year.

Delta’s upbeat report offers a preview of what are expected to be similarly rosy updates from other carriers that will report earnings in the next few weeks. That should come as welcome news to an industry that has been stifled by various challenges even as demand for travel has rocketed back after the pandemic.

“For the last five years, it’s felt like every bird in the sky was a black swan,” said Ravi Shanker, an analyst focused on airlines at Morgan Stanley. “But it appears that this industry does have its ducks in a row.”

That is, of course, if everything goes according to plan, which it rarely does. Geopolitics, terrorist attacks, air safety problems and, perhaps most important, an economic downturn could tank demand for travel. Rising costs, particularly for jet fuel, could erode profits. Or the industry could face problems like a supply chain disruption that limits availability of new planes or makes it harder to repair older ones.

Early last year, a panel blew off a Boeing 737 Max during an Alaska Airlines flight, resurfacing concerns about the safety of the manufacturer’s planes, which are used on most flights operated by U.S. airlines, according to Cirium, an aviation data firm.

The incident forced Boeing to slow production and delay deliveries of jets. That disrupted the plans of some airlines that had hoped to carry more passengers. And there was little airlines could do to adjust because the world’s largest jet manufacturer, Airbus, didn’t have the capacity to pick up the slack — both it and Boeing have long order backlogs. In addition, some Airbus planes were afflicted by an engine problem that has forced carriers to pull the jets out of service for inspections.

There was other tumult, too. Spirit Airlines filed for bankruptcy. A brief technology outage wreaked havoc on many airlines, disrupting travel and resulting in thousands of canceled flights in the heart of the busy summer season. And during the summer, smaller airlines flooded popular domestic routes with seats, squeezing profits during what is normally the most lucrative time of year.

But the industry’s financial position started improving when airlines reduced the number of flights and seats. While that was bad for travelers, it lifted fares and profits for airlines.

“You’re in a demand-over-supply imbalance, which gives the industry pricing power,” said Andrew Didora, an analyst at the Bank of America.

At the same time, airlines have been trying to improve their businesses. American Airlines overhauled a sales strategy that had frustrated corporate customers, helping it win back some travelers. Southwest Airlines made changes aimed at lowering costs and increasing profits after a push by the hedge fund Elliott Management. And JetBlue Airways unveiled a strategy with similar aims, after a less contentious battle with the investor Carl C. Icahn.

Those improvements and industry trends, along with the stabilization of fuel, labor and other costs, have created the conditions for what could be a banner 2025. “All of this is the best setup we’ve had in decades,” Mr. Shanker said.

That won’t materialize right away, though. Travel demand tends to be subdued in the winter. But business trips pick up somewhat, driven by events like this week’s Consumer Electronics Show in Las Vegas.

The positive outlook for 2025 is probably strongest for the largest U.S. airlines — Delta, United and American. All three are well positioned to take advantage of buoyant trends, including steadily rebounding business travel and customers who are eager to spend more on better seats and international flights.

But some smaller airlines may do well, too. JetBlue, Alaska Airlines and others have been adding more premium seats, which should help lift profits.

While he is optimistic overall, Mr. Shanker acknowledged that the industry was vulnerable to a host of potential problems.

“I mean, this time last year you were talking about doors falling off planes,” he said. “So who knows what might happen.”

Business

Insurance commissioner issues moratorium on home policy cancellations in fire zones

Published

2 hours ago

January 11, 2025

Press Room

Insurance commissioner issues moratorium on home policy cancellations in fire zones

California Insurance Commissioner Ricardo Lara has issued a moratorium that bars insurers from canceling or non-renewing home policies in the Pacific Palisades and the San Gabriel Valley’s Eaton fire zones.

The moratorium, issued Thursday, protects homeowners living within the perimeter of the fire and in adjoining ZIP codes from losing their policies for one year, starting from when Gov. Gavin Newsom declared a state of emergency on Wednesday.

The moratoriums, provided for under state law, are typically issued after large fires and apply to all policyholders regardless of whether they have suffered a loss.

Lara also urged insurers to pause for six months any pending non-renewals or cancellations that were issued up to 90 days before Jan. 7 that were to take effect after the start of the fires — something he does not have authority to prohibit.

“I call upon all property insurance companies to halt these non-renewals and cancellations and provide essential stability for our communities, allowing consumers to focus on what’s important at the moment — their safety and recovery,” said Lara on Friday during a press conference in downtown Los Angeles.

Insurance companies in California have wide latitude to not renew home policies after they expire, though they must provide at least 75 days’ notice. However, policies in force can be canceled only for reasons such as non-payment and fraud.

Insurers have dropped hundreds of thousands of policyholders across California in recent years citing the increasing risk and severity of wind-driven wildfires attributed to climate change. The insurance department said residents living in fire zones can be subject to sudden non-renewals, prompting the need for the moratoriums.

In addition, Lara asked insurers to extend to policyholders affected by the fires time to pay their premiums that go beyond the existing 60-day grace period that is mandatory under state law.

It’s not clear how many homeowners in Pacific Palisades and elsewhere might not have had coverage, but many homeowners reported that insurers had not renewed their policies before the disaster struck. State Farm last year told the Department of Insurance it would not renew 1,626 policies in Pacific Palisades when they expired, starting last July.

Residents can visit the Department of Insurance website at insurance.ca.gov to see if their ZIP codes are included in the moratorium. They can also contact the department at (800) 927-4357 or via chat or email if they think their insurer is in violation of the law.

The Pacific Palisades fire, the most destructive fire in Los Angeles history, as of Friday morning had grown to more than 20,000 acres, burning more than 5,000 homes, businesses and other buildings. It was 6% contained.

The Eaton fire, which has burned many structures in Altadena and Pasadena, has spread to nearly 14,000 acres and was 3% contained as of early Friday. Ten people have died in the fires.

Business

In Los Angeles, Hotels Become a Refuge for Fire Evacuees

Published

13 hours ago

January 10, 2025

Press Room

In Los Angeles, Hotels Become a Refuge for Fire Evacuees

The lobby of Shutters on the Beach, the luxury oceanfront hotel in Santa Monica that is usually abuzz with tourists and entertainment professionals, had by Thursday transformed into a refuge for Los Angeles residents displaced by the raging wildfires that have ripped through thousands of acres and leveled entire neighborhoods to ash.

In the middle of one table sat something that has probably never been in the lobby of Shutters before: a portable plastic goldfish tank. “It’s my daughter’s,” said Kevin Fossee, 48. Mr. Fossee and his wife, Olivia Barth, 45, had evacuated to the hotel on Tuesday evening shortly after the fire in the Los Angeles Pacific Palisades area flared up near their home in Malibu.

Suddenly, an evacuation alert came in. Every phone in the lobby wailed at once, scaring young children who began to cry inconsolably. People put away their phones a second later when they realized it was a false alarm.

Similar scenes have been unfolding across other Los Angeles hotels as the fires spread and the number of people under evacuation orders soars above 100,000. IHG, which includes the Intercontinental, Regent and Holiday Inn chains, said 19 of its hotels across the Los Angeles and Pasadena areas were accommodating evacuees.

The Palisades fire, which has been raging since Tuesday and has become the most destructive in the history of Los Angeles, struck neighborhoods filled with mansions owned by the wealthy, as well as the homes of middle-class families who have owned them for generations. Now they all need places to stay.

Many evacuees turned to a Palisades WhatsApp group that in just a few days has grown from a few hundred to over 1,000 members. Photos, news, tips on where to evacuate, hotel discount codes and pet policies were being posted with increasing rapidity as the fires spread.

At the midcentury modern Beverly Hilton hotel, which looms over the lawns and gardens of Beverly Hills, seven miles and a world away from the ash-strewed Pacific Palisades, parking ran out on Wednesday as evacuees piled in. Guests had to park in another lot a mile south and take a shuttle back.

In the lobby of the hotel, which regularly hosts glamorous events like the recent Golden Globe Awards, guests in workout clothes wrestled with children, pets and hastily packed roll-aboards.

Many of the guests were already familiar with each other from their neighborhoods, and there was a resigned intimacy as they traded stories. “You can tell right away if someone is a fire evacuee by whether they are wearing sweats or have a dog with them,” said Sasha Young, 34, a photographer. “Everyone I’ve spoken with says the same thing: We didn’t take enough.”

The Hotel June, a boutique hotel with a 1950s hipster vibe a mile north of Los Angeles International Airport, was offering evacuees rooms for $125 per night.

“We were heading home to the Palisades from the airport when we found out about the evacuations,” said Julia Morandi, 73, a retired science educator who lives in the Palisades Highlands neighborhood. “When we checked in, they could see we were stressed, so the manager gave us drinks tickets and told us, ‘We take care of our neighbors.’”

Hotels are also assisting tourists caught up in the chaos, helping them make arrangements to fly home (as of Friday, the airport was operating normally) and waiving cancellation fees. A spokeswoman for Shutters said its guests included domestic and international tourists, but on Thursday, few could be spotted among the displaced Angelenos. The heated outdoor pool that overlooks the ocean and is usually surrounded by sunbathers was completely deserted because of the dangerous air quality.

“I think I’m one of the only tourists here,” said Pavel Francouz, 34, a hockey scout who came to Los Angeles from the Czech Republic for a meeting on Tuesday before the fires ignited.

“It’s weird to be a tourist,” he said, describing the eerily empty beaches and the hotel lobby packed with crying children, families, dogs and suitcases. “I can’t imagine what it would feel like to be these people,” he said, adding, “I’m ready to go home.”

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