Why I've Decided to Become a Shareholder of Substack

I'm doing something today I've never done before in my long writing career—and I want to tell you my reasons

I’ve been writing for publication since I was 14.

I’ve wasted a lot of ink along the way, and put some serious wear and tear on the old keyboard. So I thought I’d seen and done everything imaginable in publishing.

But today I’m doing something I’ve never before.

My publishing platform Substack is inviting writers to become shareholders. And I’ve decided to participate.

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The Honest Broker is a reader-supported guide to music, books, media & culture. Both free and paid subscriptions are available. If you want to support my work, the best way is by taking out a paid subscription.

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I’ll tell you more about this below. You may want to know my reasons. But first I need to make some disclaimers.

Here’s the first disclaimer:

I do not give financial advice here. You might be misled by my nickname The Honest Broker. I am not a real broker. I don’t even play one on TV.

It’s just a nickname, folks.

So nothing I say here should be interpreted as advice to buy or sell securities—or any other investment products. You shouldn’t even trade used vinyl or baseball cards based on my opinions.

I also need to provide a second disclaimer. Here’s some important legal language provided by the folks at Substack, who are taking this bold step of turning writers into shareholders:

Substack is “testing the waters” to gauge investor interest in an offering under Regulation Crowdfunding. No money or other consideration is being solicited. If sent, it will not be accepted. No offer to buy securities will be accepted. No part of the purchase price will be received until a Form C is filed and only through Wefunder’s platform. Any indication of interest involves no obligation or commitment of any kind.

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Okay, we got that out of the way. Now let’s get down to brass tacks.

In some careers, this kind of thing is very common. Look around and you see it everywhere: employee stock ownership, co-ops, stock options, profit-sharing, etc.

But not in the writing business. I’ve published a dozen books and thousands of articles, and I’ve never been invited to become an owner of the business.

When you think about it, that’s a little odd. Why shouldn’t writers—or musicians or photographers or workers on a film crew, etc.—also be owners of their creative enterprises? Wouldn’t that be a good thing?

Substack is trying to turn that into a reality, and I’m excited to be part of it. But I do need emphasize that investing my cold hard cash in Substack is not a financial decision.

I’m doing it as a matter of principle.

“I’d love to live in a world in which the major record labels were owned by musicians. Or the Hollywood film studios by cast and crew. Or those five huge publishing businesses were controlled by writers.”

I’ve said as much to the folks at Substack. A few months ago, I got a chance to meet the founders of the company while they were visiting Austin. Since that time I’ve come to know them and trust them. But even at that first meeting I said that if they ever listed Substack on the stock exchange, I would buy shares.

I meant it. What I never anticipated was the possibility of becoming a shareholder even before a public listing. But today the company announced a new program that will let writers invest in Substack and own a piece of the company. 

Here’s what they say in the announcement:

We are serious about building Substack with writers, and this community round is one way to concretize that ideal. We’re doing this because the dynamics of a platform like Substack change if the people who are building their businesses on it are owners of it too. And we’re doing it because it not only provides something good for our company but also presents an opportunity for the people who use Substack to participate in the benefits that come from building this network—including the financial upside.

I especially like the fact that Substack is accepting commitments as low as $100. This tells me that they want to make ownership by writers as easy as possible. This program isn’t just for fatcats and heavy hitters—but a real grassroots initiative.

Below are some revealing charts. The first one shows where your subscription money goes—and you can see that almost all of it benefits writers and creators. This is almost the exact opposite of traditional publishing economics.

Where the cash goes at Substack

The next chart shows the growth in active subscriptions—an impressive validation of the core concept behind Substack.

Here’s a graph of the cumulative payouts to writers on Substack. That number has now reached $300 million.

Finally, I want to show the career-changing impact Substack has had on me. I’ve always sought direct contact with my reader, but that’s not easy to achieve in the publishing business. For a long time I relied on Twitter to give me those connections—but Twitter has many limitations and isn’t a flexible publishing platform. Then Substack came along and changed the rules, for me and so many other writers.

This chart traces the growth of my connections on these platforms. You can see how both trendlines were turbocharged after I got on Substack on April 21, 2021.

I can hardly believe these numbers myself. I’ve never participated in any venture with that kind of steep growth trajectory.

So I made an early commitment to become a shareholder. I used that as a chance to make a speech to the Substackians. (I’m prone to impromptu exhortations of this sort—and my friends have learned to forgive me for these outbursts.)

My speech went something like this:

I would support Substack even if were a charity or non-profit. I would make a donation without expecting any financial return. That’s because I believe in what you’re doing.

You’re supporting writers and other creative people, and letting them keep almost all of the cash flow. You’re also providing rich alternatives in a culture where institutional media are mostly dying or declining. You’re actually changing the rules of journalism—who even thought that was possible just a few months ago?—and in the best possible way.

Finally, if I ask my subscribers to support me, it’s only fair that I support others in turn, and the platform as a whole.

But letting me participate as a shareholder is even better than asking for a donation. It confirms my sense of the positive values behind Substack. Even without seeing any financial statements or projections, I’m agreeing to this.

Honestly, I wish other cultural organizations would do the same.

I’d love to live in a world in which the major record labels were owned by musicians. Or the Hollywood film studios by cast and crew. Or those five huge publishing businesses were controlled by writers.

I’m still hoping that the exploitative streaming platforms dominating our music ecosystem, like insatiable killer sharks, will one day be replaced by artist cooperatives. Things would be so much better if musicians owned these platforms.

That could happen. It should happen. Some people have even tried to make it happen—but without much success. But that still should be the goal.

I can’t even begin to tell you how sad I was when Bandcamp got  acquired by Epic Games. My dream was that Bandcamp would do something similar to what Substack is now doing. That’s probably not possible now.

Just imagine if the New York Times had relied on employee stock ownership starting back in the 1930s. You would now have the newspaper of record owned by three or four generations of journalists and their families.

That would be beautiful.

But to really make this happen, you need to start early. That’s why Substack especially earns my praise for inviting writers to become shareholders at almost the start—even while the company is still privately held and only five years old.

I wanted to do that years ago when I ran a jazz record label. My label was funded by some wealthy Silicon Valley entrepreneurs, and I got them all to agree to give jazz musicians stock options. Our company changed ownership before I could implement this, and I was no longer able to pursue this plan. But in each recording contract there was a clause stating the desire to provide these stock options at a future date.

Because I lived in Silicon Valley for so many years, I’m familiar with this way of doing business. And I like it. But once again, it’s the principle I support even more than the profits.

You may think I’m blowing smoke when I say this, but I don’t really care about making money from Substack stock. To generate a profit, I would need to sell these shares some day. But my intention is to hold ‘em, not trade ‘em.

That makes it almost a symbolic gesture. But symbols are important too. Maybe they’re even more important than profits. And that’s especially true if the symbols involve—as they do here—empowering writers and creators.

I believe deeply in those things, and I’m glad to have a chance to demonstrate my commitment. We should all seek out opportunities to put our values into active, tangible practice.

Substack is providing many of us with that chance, and I plan to take full advantage of it. By the way, making this public statement of my intention is also part of that same commitment to supporting a healthy publishing ecosystem.