The Disconnect between Attention and Value: How Substack is Changing the Media Landscape

The Disconnect between Attention and Value: How Substack is Changing the Media Landscape

In today's digital age, attention has become a scarce resource. With the rise of social media and online platforms, our attention is constantly being pulled in different directions. This shift in how we value attention has had a significant impact on the media industry. The algorithms that power these platforms are highly effective at keeping users engaged and spending more time on the app. However, this has resulted in a flood of content that is often shallow and lacking in substance.

Substack, a platform for paid newsletters, was built on the hypothesis that the current state of media can be fixed by changing the business model. Instead of optimizing for users' time, Substack aims to optimize for their money. They recognized that there is a significant number of people willing to pay for niche content that caters to their specific interests. Whether it's podcasts about war history, YouTube shows about video game critiques, or in-depth reporting on NASCAR, there is a market for specialized content.

A fundamental principle of competitive advantage strategy is that new products compete on either differentiation or cost. Substack made the bet that media businesses can compete on differentiation by offering unique and high-quality content. Unlike ad-driven media publications, Substack focuses on minimizing distribution costs rather than maximizing article views. This approach allows writers to create more value and build a loyal audience.

To maximize value creation for each writer, Substack took a unique approach. They started by building the product exclusively for one person: Bill Bishop, the author of Sinocism. This narrow scope allowed them to discover and build features that may have otherwise been overlooked. For example, they introduced group subscriptions in the first version of the product. By recruiting established writers and solving their specific publication needs, Substack created a platform that catered to the unique requirements of each writer.

What sets Substack apart from other platforms is the trust they have built with both writers and readers. Unlike platforms with writer lock-in, Substack allows writers to maintain control over their content and audience. This high degree of trust makes readers more likely to subscribe to multiple Substack publications. Substack's moat lies in the trust they have established, rather than in any technological or platform-based advantage.

In contrast to the commonly misunderstood notions of product management, Substack's success lies in their ability to understand and cater to the needs of their users. Product management is not about defining business cases or market requirements. Instead, it is about directly engaging with people and understanding their needs. The product manager's responsibility is to discover a product that is useful, usable, and feasible. By focusing on these aspects, Substack has created a platform that delivers value to both writers and readers.

To navigate the rapidly changing media landscape, here are three actionable pieces of advice:

1. Focus on differentiation: Instead of competing solely on cost, strive to offer unique and high-quality content. Find your niche and cater to the specific interests of your audience. This will help you stand out in a crowded market.

2. Build trust: Trust is crucial in today's digital landscape. Establish a strong relationship with your audience by delivering consistent and valuable content. Transparency and authenticity go a long way in building trust.

3. Understand your users: Take the time to engage directly with your audience and understand their needs. Conduct user research, gather feedback, and iterate based on their input. By putting your users at the center of your product development process, you can create a product that truly meets their needs.

In conclusion, Substack's success is a result of their unique approach to the media industry. By shifting the focus from optimizing for users' time to optimizing for their money, Substack has created a platform that delivers value to both writers and readers. Through trust, differentiation, and a deep understanding of their users, Substack is changing the way we consume and value media content.