When the news broke Monday that Paramount Skydance had acquired The Free Press for $150 million, Substack cofounders Hamish McKenzie and Chris Best took to a livestream to celebrate. The Free Press, perhaps more than any other multiauthor publication on the platform, is a quintessential Substack success story, with more than a hundred thousand paying subscribers and millions of monthly readers. The duo wanted to toast the moment, which marked the biggest exit of any creator on its platform. The celebration comes with a sense of caution, as it raises questions about what could happen if The Free Press inevitably left the newsletter platform. Substack had invested heavily into the publication and its founder, Bari Weiss. But since Substack doesn’t have equity in its publications, the $150 million payday represents a success for its incubator, but not for its business model. After Weiss’s high-profile resignation from The New York Times in 2020 over ideological differences, it exclusively hosted her newsletter, Common Sense. As the newsletter grew and rebranded to The Free Press, the platform offered even more services, partnering last year with the publication on a venture designed to help the platform develop an enterprise product. Given its stated aim of serving as a media incubator, Substack wanted to build out the kind of feature set that a more robust publication would need in order to thrive on the platform. The Free Press fit that description, so the two began collaborating, with Weiss and the publisher’s chief growth officer, Daniel Hallac, telling Substack what tooling they needed, and Substack summarily shipping it. The partnership was structured as a one-year pilot, and its trial period ended several months ago, McKenzie told me. Outside of mutual goodwill, there is no formal contract obligating The Free Press to remain on Substack. A Sizable Chunk of Revenue This practice of holding on loosely to its creators is a key element of the Substack ethos. Writers on the platform famously own their email lists and can leave whenever they so choose—a protocol that applies equally to The Free Press as it does to others. The set-up is meant to entice prospective creators to join the platform, as well as to incentivize Substack to offer such compelling value to its creators that they choose to remain on it. “We shouldn’t be allowed to succeed just because we trap people in a system that they can’t properly escape,” McKenzie said. Depending on whom you ask, the policy is either brilliant or foolish. The argument in favor is that it lowers the barrier to entry and aligns incentives. The argument against it holds that Substack does all the hard work, incubating fledgling creators into mature operations, only to see them leave the platform when they reach a certain size. In recent years, Substack-native publications including The Dispatch, Mill Media, and Every have left the platform after reaching escape velocity, as have a host of individual contributors, including Casey Newton’s Platformer and Brian Morrissey’s The Rebooting, for both economic and ideological reasons. And given that Substack only makes money by taking 10% of the subscription fees its creators generate, every time a lucrative publisher leaves the platform, a chunk of revenue disappears from the Substack balance sheet. (The standard tax is 10%. Due to its unique situation, The Free Press could have owed more, although neither party would confirm this.) The Free Press, for example, has around 170,000 subscribers, with a subscription price of $120 per year. That means it takes in as much as $20 million, not counting discounted or complimentary subscriptions. (A source familiar with the company’s finances also told me its annual revenue is around $20 million.) If Substack took just 10% of that subscription revenue, then around $2 million of revenue would be tied to the publication. Substack generates around $45 million in recurring revenue, according to Newcomer. That means that if The Free Press decided to leave Substack, it would take around 5% of Substack’s total revenue with it. Such a departure would also deal a blow to the theory that offering an enterprise product, replete with tools to help creators mature and thrive on the platform, would help successfully retain those creators. If The Free Press, which received white glove service from Substack, still left the platform, what exactly would it take to get such outlets to stay? The questions, for now, are hypothetical: The Free Press remains on Substack, although sources close to the publication declined to elaborate on its plans for the future. And Substack, true to form, seems content to let The Free Press decide its fate. “We’re working under the assumption that they’re going to stay on,” McKenzie said. “And we haven’t heard anything to the contrary.” The Free-to-Go Press There are ample reasons for The Free Press to leave, according to media experts. In situations where a larger media company buys a smaller outlet, the acquiring party typically migrates the smaller party onto its technology stack, according to Inbox Collective founder Dan Oshinksky. This allows for the two organizations to move in lockstep, using the same service providers, freely exchanging data, spinning up subscription bundles, and reducing operational costs. In most tie-ups, this integration process is often painful and complex but nearly inevitable. Given the circumstances of this particular situation, Paramount might not make migrating The Free Press its first priority, but it seems certain that it would move eventually, Oshinksky said. “If the goal is to monetize in as many ways as possible as quickly as possible, you would want to move off of Substack as soon as possible,” Oshinsky said. “It would feel funny for a multibillion-dollar company like Paramount to use the same tech stack that your mom uses to write her newsletter.” From a monetization standpoint, there is another glaring reason to migrate, according to 1440 founder Tim Huelskamp: advertising. The Free Press generates the overwhelming majority of its revenue through subscriptions—it has only begun offering brand sponsorships in recent months, as evidenced by the Fox One promos running in some of its newsletter offerings. But Substack lacks a native infrastructure for advertising, meaning that The Free Press only monetizes a tiny percentage of its total readership. The publisher claims to have 1.5 million overall readers, meaning roughly 1.3 million of them do not contribute a cent to its bottom line. By moving in-house, The Free Press would immediately be able to monetize that audience, Huelskamp said. That effort would be further accelerated thanks to the connections Paramount could provide, as the pedigreed news network already works with a stable of blue-chip brands. Plus, these monetization efforts are not at odds with the growth of The Free Press. The two concepts are sometimes pitted as contrary to one another—growth or monetization—but that is a false binary in this case. According to Huelskamp, adding advertising to The Free Press could in fact fuel its growth. “They have more than 1 million people not being monetized,” he said. “If I had that list tomorrow, we could make $10 million in revenue from advertising against it, then turn around and buy 300,000 new subscribers a month.” Indeed, one of the core appeals of remaining in the Substack ecosystem is its growth engine. The platform is a great source of prospective readership, and the recommendation tools that Substack has built are powerful. Its app now drives 50% of all subscriptions and 30% of paid subscriptions, according to McKenzie. But the value of those tools begins to wane once a publication reaches a certain size, according to Huelskamp. Smaller newsletters benefit disproportionately from the growth engine Substack provides, but once they top 1 million readers, the math stops working. “The value you receive from monetizing outweighs the value of discovery at a certain point,” Huelskamp said. Of course, the mystery in all of this is just what Paramount has planned for The Free Press. The news and entertainment giant has gone through some drastic changes and financial whiplash this last year. Its acquisition by David Ellison’s Skydance Media was officially approved by the FCC in July, and financed in part by Ellison’s father, Larry Ellison, the co-founder of tech giant Oracle. A few weeks earlier, Paramount paid $16 million to settle a lawsuit brought against it by Donald Trump. The Free Press’s price tag is, critically, a drop in the bucket for Paramount, which last year reported a $5.3 billion operating loss on nearly $30 billion in revenue. Insiders told me earlier this week that Ellison’s purchase is more an investment in a growing media brand than expectation it needs to generate windfall profits anytime soon. Paramount will likely pay Tony Romo and Tom Cruise more in the coming years than it did to buy The Free Press. But what for Paramount is a pittance is for Substack a crown jewel. The Free Press is one of its most popular, lucrative publishers, and it received tailored support and outsize deference. If there is any reason for The Free Press to stay, according to one media executive, it is that Substack would likely bend over backward to make it happy. If The Free Press leaves, though, the Substack model might receive its biggest blow yet. The company, which raised $100 million in July at a $1.1 billion valuation, has endeavored to build a broad coalition of creators, such that losing any single contributor doesn’t hobble it. That axiom of creator autonomy might be running up against its imperative to find a return for its investors. If the publisher leaves the platform, it could puncture a key thesis and take a chunk of revenue with it.
