Monetizing Podcasts and Newsletters

by Chris Best, Jonathan Gill

Chris Best is the cofounder and CEO of Substack. Substack makes it simple for a writer to start a paid newsletter. They were in the Winter 2018 batch of YC. You can check them out at

Jonathan Gill is the cofounder and CEO of Backtracks. Backtracks is a podcast analytics and hosting platform. You can check them out at

Chris is on Twitter @cjgbest and Jonathan is @jgill333.


00:00 - Intros

00:25 - Paid vs advertising in podcasting

2:55 - Are advertisers overpaying for podcast ads?

5:35 - What percent of the market will ultimately be paid content?

7:35 - Payment mechanisms

9:10 - Price anchoring

11:50 - Individual creators vs brands

16:45 - Deplatforming

18:15 - Spotify

19:45 - Discovery and growth in newsletters

22:05 - Public and private feeds

24:45 - Apple's role

26:00 - Will education be the driver of paid content?

29:45 - Educational podcasters in China

31:45 - How are their newsletter and podcast customers growing?

35:40 - Jack Ryder asks - In 5 years time, are personal newsletters going to

replace social networks like Facebook?

37:35 - Debdut Mukherjee asks - Do podcasts actually work? If so, how do

startups calculate the ROI & the CAC?

43:00 - Measurement

44:45 - Best practices for new podcasters and newsletter creators


Craig Cannon [00:00] - Hey, how's it going? This is Craig Cannon and you're listening to Y Combinator's podcast. Today's episode is with Chris Best and Jonathan Gill. Chris is the co-founder and CEO of Substack. Substack makes it simple for a writer to start a paid newsletter. They were in the winter 2018 batch of YC. You can check them out at Jonathan is a co-founder and CEO of Backtracks. Backtracks is a podcast analytics and hosting platform. You can check them out at Chris is on Twitter @cjgbest, and Jonathan is @jgill333. All right, here we go. Chris, what do you do?

Chris Best [00:39] - I'm the CEO of Substack. We make it simple to start a paid newsletter and also you put audio in it now.

Craig Cannon [00:48] - And Jonathan?

Jonathan Gill [00:49] - I'm Jonathan Gill, co-founder and CEO of Backtracks. We help audio content creators know and grow their audience and their revenue.

Craig Cannon [00:56] - You guys have two different strategies, paid versus advertising.

Jonathan Gill [00:58] - Yes.

Craig Cannon [01:01] - What's your take, Jonathan?

Jonathan Gill [01:03] - From the current state of the podcasting market, ad-supported sponsorship is one way forward when people are used to free products versus television and cable where they're used to different tiers. There is subscription revenue. There is à la carte, but from our view the podcast ecosystem at large is not really ready for subscription content. There's alternate viewpoints of that.

Chris Best [01:29] - That's actually an interesting way to put it. Obviously, we think that paid content, paid relationships even, is sort of the way to go. There's a huge missing force in like the media in general. We started with newsletters. We think the default assumption that everything has to be free is kind of something that's breaking the world in a couple of important ways. It may well be true that with the existing podcasting ecosystem, especially in the US, that it's really hard to do paid stuff in a compelling way, just because of the way it kind of evolved and the way that the people control the ecosystem. The podcast market that can be supported by advertising is small and sad compared to the audio market that could be supported if we had an effective way to pay for it. The kinds of things they're seeing happen in China right now sort of hint at that.

Jonathan Gill [02:22] - In terms of the Chinese market, the Chinese market's a little different than the US and worldwide in that they're used to paying for audio content. Some of it is richer in quality. They pay for educational content. The ecosystem for podcasting and paid-for content in China is much greater than even in the US.

Chris Best [02:39] - It's like 10 times the size.

Jonathan Gill [02:40] - Exactly. It's different historically. There's a good blend of content that works. That's ad supported that's directly attributable and you even see it through Patreon. You see sponsorships where people are paying for that content by being a fan, by being a patron, by the direct payment systems. There can be a mix. In the US market, in the current state, sponsorship is one way. There's private paywalled content. There's the blend of the two. Our viewpoint at Backtracks is on the advertising standpoint people don't like advertising when it doesn't fit with the content and the messaging. Advertising can add value if it's actually in relation to the content, if it's not in the creepy factor that Google and things have. You can basically blend the two for a healthy ecosystem. It doesn't need to be one way or the other.

Chris Best [03:30] - Can I ask a question that I'm genuinely curious about is, are advertisers today overpaying or underpaying or paying about the right amount for podcast ads in general?

Jonathan Gill [03:41] - It depends on the particular piece of content and the particular advertiser. One of the problems in the industry is measurement and how to uniquely measure a listener and how do you know engagement.

Chris Best [03:51] - It feels a little bit like podcast downloads are almost like the banner ad impressions of the early Internet.

Jonathan Gill [03:56] - They are. We have a spec and technology that's around measuring the actual engagement. Should you base your advertising spend on a metric like downloads, or more engagement, or other... If you're doing advertising? In terms of the industry, the metrics aren't there in the same way video and text are. That's part of the tech stack that we have is that you can directly measure how long someone listened to a podcast in certain cases.

Craig Cannon [04:22] - We saw that change a few years ago with the biggest podcast anyways because a lot of these companies are using affiliate codes now.

Jonathan Gill [04:28] - Exactly.

Craig Cannon [04:30] - That's how they actually track it, right? Because if you're just like, I'm going to sponsor Joe Rogan. Are you willing to pay for like whatever 10 million downloads and I don't know how many of--

Jonathan Gill [04:39] - Those direct response codes, there's certain types of advertising and sponsorships that doesn't apply to everything. Some things maybe from your viewpoint are... Advertising may not be the way forward for that, but there's also brand awareness campaigns that are harder to do if you can't measure the metrics. Podcasting in general, despite its popularity still has a lot of growing up to do that people like us can help make the way forward a little bit different than some of the problems of previous industries.

Chris Best [05:09] - Do you encounter any resistance from people who are have ads today and are sort of charging based on a downward metric that if they had more accurate measurement they might not be able to charge as much?

Jonathan Gill [05:20] - We have people not use us because we detect fraud. We remove things like that. But in the ecosystem it's healthier, in this biased viewpoint, if you can actually have a ecosystem where the advertisers, the publishers, and the audience are better off because you're not doing things the same way as before in terms of that measurement statistic. People don't like that our numbers in general are lower. I will say that, but for the long-term health of ecosystem some parts of it are the quality of the content which you can have in various ways whether it's behind a pay wall, how it's paid for can be various mechanisms, as well as just getting accurate measurement for the ecosystem. It's one of the core tenets of our business. You need to know that audience in a way that's not there where you're not selling on download metrics, you may be selling on other metrics.

Craig Cannon [06:12] - On the paid side, Chris, what percentage of the market do you think it's going to end up being? The obvious answer to this question is, it's going to be a blend.

Chris Best [06:21] - Yup.

Craig Cannon [06:21] - There's just going to be a bunch of mass-market stuff. Then just what happened with cable, people are going to want to pay for HBO, and they'll go that route too I assume. Where do you think it's going to ultimately fall?

Chris Best [06:33] - It's a really interesting question. It's sort of the, gets at the root hypothesis of Substack. We have this kind of radical idea that in the future people are going to pay a lot more for a lot more content overall. One of our core hypotheses is that if you look at the amount of culture in the world and the amount that we're investing in it as a proportion of our overall GDP and what we're paying for it, is that too low, too high or just right? We think it's way too low. We think there's basically a market failure where all of society would be richer if there was more efficient mechanisms to allocate more resources to creative people that are making kind of culture writ large whether that's writing, whether that's podcast or other audio content, whether that's videos, whether it's lectures or entertainment or whatever. We think there's kind of like a few places where the business model really works and you see a flourishing of like serial TV and stuff. But overall, we're paying basically way too little. There's a massive market failure. People would feel richer in their lives if they could pay and have more better stuff. Whatever the proportion of it, we think there's going to be kind of this massive area of culture that people are paying for. It's especially interesting in podcasts, because of the amount of time you invest in podcasts. Podcasts tend be hours long. It's like a book in this way. If you think of how much of your life

Chris Best [07:59] - you're investing in a podcast and how much money you ought to invest if you could like make that relatively better, you'd almost be really irrational to not want to spend money to make it better if there were a way to do that.

Jonathan Gill [08:10] - In terms of the payment mechanisms and how that exists in other parts of the world that are not the US, there's micro-payments, there's ways to facilitate that sort of ecosystem. How do you view that just in the current infrastructure for direct payments to the creators and/or subscriptions that aggregate that? How would you solve that in the US market? Not trying to be US-centric, but some parts of our way of consuming content are may be reversed to the rest of the world.

Chris Best [08:38] - Some of the sort of laws of nature are different, right? In China everyone has payment like WePay in all this stuff. The friction for payment is much lower. The thing that we've been doing with newsletters to sort of a shocking degree of success from our perspective is charging subscriptions. Saying, "Hey this going to five bucks a month," or whatever. The unit of value that you're subscribing to is the individual sort of creator, the culture creator. I'm saying I really like Craig Cannon's viewpoint of the world. I get a lot of value out of his podcasts. I want him to be independent and be able to make the best kind if possible and so I'm willing to go and fork out five bucks a month for that relationship basically. Subscriptions are kind of magical, because they both feel a little bit less expensive than they are. If you ask someone to pay five bucks a month or pay like $20 flat fee, more people would pay five bucks a month. But then they wouldn't actually quit it, they'd keep doing it, so they'd end up paying a lot more.

Craig Cannon [09:45] - Are there like a weird perverse anchoring issues around you know Netflix being 10 bucks a month and my newsletter being 15 or something like that?

Jonathan Gill [09:53] - It depends on the content. You'll see more technical content, more niche content that people will pay for, not just in podcasting, but just in general. I'm sure on the newsletter angle that if you have a very particular niche content that is not widely covered, but is of extreme interest to you, people would in general pay more. That basket of collection in terms of anchoring, it can be hard depending on how you judge the quality of the content. Some part is do you want the long tail of any content and you want as much of it as possible? Or do you want a curated experience that could be subscriptions that you're picking and choosing. It can be podcasting, in large part is people picking and choosing what they listen to. And that's part of the power and the magic of it. It's not someone leaving YouTube on and just auto-playing video to video. They've chosen the podcast that they're listening to and they're very engaged. You can do it without a screen. You can do in all these ways. Just when you hear someone talk about a podcast and even in the advertising side of it, they can remember the ads. It's not just the repetition, it's the connection with the audience and the voice. Sometimes the host will read an ad, and it's what the sponsor exactly wanted, but that's part of the magic of it. Then people remember just the storytelling aspect which I'm sure is the same from newsletters and writing where that deeper connection, it's more direct where the creator to the audience

Jonathan Gill [11:17] - there's less middlemen involved. However you can support that ecosystem, a blend of ads and subscriptions or however it's done is healthy. To your point, we do underpay for content however it's paid for. When you think of the time and value people get from the business of culture. People, the advertiser, as well as direct consumers would in general pay more if they think about the value they derive from all that content.

Chris Best [11:43] - Especially if you take a long view, even if you know today we pay the right amount for culture, if we're moving to a future where more and more of the physical economy gets automated over time and there's sort of an ever-increasing number of things that are the things that are people's jobs now that can be automated. Surely in the future if the things we're not automating are our culture creation, assuming that's true, surely we would hope that we would spend a larger and larger percentage on the kinds of things that people are then unlocked to do. If we insist that sort of cultural output can't be monetized directly, we break the future economy in an important way.

Craig Cannon [12:20] - I'd buy that. Do you feel that it's going to be more of these individual, individual brands, individual people, who are striking out on their own who are making a sizable income? Are there going to be YC-type things where the YC podcast is paid for, whatever, and it turns into its own business?

Chris Best [12:39] - I'm sort of biased on this. We will see what feels like a shocking increase in the number of people who are kind of atomized and unbundled. This idea that almost, this is a part of this whole thing that kind of is new, is for the first time you can effectively subscribe to a person where there's been paid subscription publication. That's not a new thing. That's been around forever, yada, yada, yada. Because we have this internet technology and all this stuff now, it's a relatively new thing that it's I'm a person. I'm going to write this newsletter. I'm going to produce this podcast. I'm going have this, I guess it's a brand, but the brand is a very direct expression of who I am and people can pay to subscribe to that as a human-to-human, very direct relationship. That is very valuable to people, people love that, both the audiences that feel like they have this direct human connection, and the creators that feel like they have this sort of unmediated thing where they're answerable directly to their audience, where they get to have intellectual freedom, where they get to be as weird as they want. That thing is very powerful and there's a huge amount of pent-up energy of people that want that. There hasn't been a great mechanism in the past. I'm not saying that everything's going to be individuals and there's not going to be any big sort of media things. It's going to look like

Chris Best [14:05] - there's a meteoric rise of individual creation.

Craig Cannon [14:09] - Well because I'm curious about that hypothesis, because if you look at YouTube and who's actually earning on YouTube, a living, it's not that many people, right?

Chris Best [14:17] - YouTube is terrible for... This is the whole thing. This is where this energy comes from. YouTube is terrible for making money as a person that's more famous than Brad Pitt to young people.

Craig Cannon [14:26] - Right. I mean like Casey Neistat does okay. Some other people, not so much. Like if you say he's number 10, like somebody's who's number 1,000 is not earning a living.

Chris Best [14:35] - Especially if the shape of it. If you're someone that has a lot of people that are like a little bit into you, that's great. But if you're someone that has, let's say 10,000 fans that find you completely irreplaceable and wouldn't want to go on living without you, because you're the most amazing thing in their life, but there's only 10,000 of them, you're never going to make money on YouTube. Whereas if you could charge subscriptions, it's easy. If you charge five bucks a month times 10,000 like that, it works.

Jonathan Gill [15:00] - There's an alternate model. Sometimes in advertising, in podcast specifically, it's not the size of the audience, it's the quality of the audience. If you are selling something to a very niche audience and you're sponsoring a show about particular content, you may disregard the numbers in terms of absolute size of the audience, but you know the quality of the audience for your fit, the right message, the right time, the right audience. You're not going to pay correlated to the audience size, you're going to pay correlated to the audience quality where if you sell one of your widget or one your thing, or even just the connection of your brand with that content is worth far more than the audience.

Chris Best [15:36] - That's definitely true and that's true even to the point where big podcasting studios will tailor their shows. We're going to make this show, because the show's going to attract this audience of people that's very valuable to advertisers. If you're in a demographic where like the things you like are like valuable to advertisers, that's a great deal. If you're someone that isn't in that or doesn't want that arrangement, you're kind of out of luck, because if you have 10,000 really dedicated fans that have some money but they're like aren't, you know, aren't good for this kind of like whatever, you're just not connecting those dots. There's no way to bring that content into the world, and I think there's a lot of that.

Jonathan Gill [16:15] - We see people using the data that Backtracks provides in ways that they're producing very on-topic trendy content for that particular purpose, and it doesn't age well in terms of evergreen useful content. You can be so data-driven that the creativity is removed from the process. Part of the magic of newsletters (podcasts), of direct relationships between a maker and the audience is that you can make things they didn't foresee they would enjoy. Then the data doesn't afford us the magic of that creation process..

Chris Best [16:47] - And there's a philosophical thing like who should be choosing what podcasts get made? Should we be making the podcasts that advertisers want? Or should we be making the podcasts that people want? And I think there's a big difference there.

Jonathan Gill [17:00] - There can be. Sometimes people are the advertisers. They are one in the same.

Chris Best [17:02] - Sometimes you get... There's times when it works.

Craig Cannon [17:05] - Our philosophy is if you make what people want, everything else falls in place.

Chris Best [17:10] - And that's basically the YC philosophy as well.

Craig Cannon [17:12] - You can treat product and content in the same way, absolutely. There are people who have been pushed off platforms who are making something people want, but the platform doesn't necessarily align with them.

Jonathan Gill [17:24] - That's the problem with the centralization or the perceived centralization of things. YouTube is absolutely centralized and controlled by the big G, and then podcasting is still largely decentralized. Ehile it appears centralized through the view of a listener, how do you maintain the control of your means of monetization, that connection while the phone or device people think about it as, it's coming from Apple, it's coming from a certain podcatcher. It's all these independent brands and creators getting their voices into the world, and how do you have the, maintain that health to where a strangle on the ecosystem doesn't boot people from their freedom? Some people will tell us that podcasting and even probably say newsletters, it's one of the last ways to get direct free speech from someone's mind out into the world. People will say things in a podcast they couldn't print or they can do something in a newsletter they couldn't do in a certain publication, and your independence and your control of your means of monetization whether it's through sponsorship or subscription basis...

Jonathan Gill [18:26] - How you can maintain that, the strength of you as a brand and you as a company going forward, however you can do that is in your best interest.

Chris Best [18:37] - And it's way less mediated by other people's algorithms. When somebody subscribes to your podcast, if you make another episode, they're going to get it in most good podcast players. Whereas if someone follows you on Twitter, are they going to get your next tweet? You never know. How freaked out are you about Spotify? I'm curious.

Jonathan Gill [18:55] - Well, we're an official partner with Spotify.

Chris Best [18:57] - Okay, so not at all freaked out, and everything's perfect and nothing could go wrong.

Jonathan Gill [19:01] - Yes, but in terms of freaked out from the general idea of public strategy of people that have consumers' attention and that can window that down and that can create content similar to other content. The Netflixication of podcasting can be good or bad depending on how you view it. From a personal standpoint I like niche topics, I like the freedom of podcasting that you can literally be in an office podcasting about anything you want, be at home. What I don't know from the consumer standpoint is, will people want fairly highly produced content all the time meant to meet certain metrics because metric driven content production, that's very professionally done sometimes loses the magic of podcasting.

Craig Cannon [19:52] - I think that's why YouTube's in many ways become really shitty unlike the popular side. Oftentimes I think that people don't even know why they're doing certain things and it's just the algorithm has like favored one thumbnail style or one titling style, and then it becomes a trend across all of YouTube. I could see that very much happening with Spotify podcasts where like, we know the show is popular, we're not really sure why so we're just going to keep knocking it out. But on the podcaster side, like the discovery is so valuable for us, that's why we do YouTube.

Jonathan Gill [20:23] - One of the problems that people constantly bring up is discovery in podcasting--

Craig Cannon [20:29] - And newsletters I'm sure it's even, I mean more difficult.

Jonathan Gill [20:32] - How do people discover newsletters in a better way or discover podcast? It's a very hard problem both ways but I'm curious here.

Chris Best [20:38] - Newsletters are a lot easier kind of weirdly. I mean just a) because text is really easy to like, if you have a webpage you can share it and if you get an email you can forward it. We often see, this is something you don't see in podcasting but if you have a newsletter that people are consistently reading 'cause they like it, if you do nothing it kind of will grow at some rate. Because people will tell their friends word of mouth but then also like they'll forward an issue. Or they'll like, there's a share button they can link to that on the webpage or tweet about it or whatever. There's kind of like a built in sort of mechanism by which people who want to share something can in a really low friction way where you can do the same thing about podcasts. Like people meetup and they're like, "Oh, I'm listening to this podcast, you've got to listen to it." The amount of time I'd have to have in my life to try the podcast you're recommending to me is so much higher than like oh you just tweeted this link and I clicked it and now I'm reading and I love it and--

Jonathan Gill [21:30] - We have a solution for that.

Chris Best [21:32] - All right. I'm thrilled to hear about it. I do think it's different and I think it's something that we have to do even more. Obviously discovery is kind of like the biggest thing and if you're charging for it, it's like, "Well, how many people discovered it?" Then how many like it and then how many of those people pay?

Craig Cannon [21:45] - It's tricky.

Chris Best [21:46] - You have to have that whole funnel.

Craig Cannon [21:48] - What do you advise writers? They have all this private content, how do they build their newsletter?

Chris Best [21:54] - The way that Substack works is every time you choose to publish something, you either can make it subscribers only or you can make it public. It's kind of like the Ben Thompson model where you have some stuff that's free and some stuff that's paid. The advice we give people is basically take your best most accessible, most focused stuff and make that free, right? Make your sort of like your very thoughtful essay on a specific topic free because that's how people are going to share, that's how people are going to find out about it and learn that they like your stuff and want more from your brain. Then you can take your sort of more inside baseball stuff or your wonkier stuff or your like less filtered more raw stuff and send that to subscribers because those are the people that love you the most and they're happy to get the unfiltered unpolished stuff.

Craig Cannon [22:40] - Do you have people running multiple feeds on Backtracks?

Jonathan Gill [22:42] - Yes. Basically if you're a brand, you have multiple podcast, you can see all your data together and separate it and you can do private and public content--

Craig Cannon [22:53] - How many people, yeah, how common is private? I don't think I subscribed to any private feeds.

Jonathan Gill [22:56] - Private in terms of Backtracks terms you can be behind a paywall for like a traditional publication which is not so traditional that it's online. Imagine you log in to a newspaper, the same concepts are present there and that there's public content, private content but who has access to the private audio, the same and you will see public and private feeds or within the same feed, content that's pulled out, that becomes private. That means the monetization is subscription and it's a mix and a blend of what do you allow into the public ecosystem of podcast discovery, what do you want behind your paywall or your login and some of those same decisions come in of well do I want the incendiary content behind the paywall because I know someone's going to share it and then come back in. Then everybody wants to get access to this content that they need to pay for, or do you want it public to grow the audience to engage the funnel size?

Craig Cannon [23:50] - How common is it, the private feed?

Jonathan Gill [23:53] - For us it's not very common. In podcasting, currently it's not that common.

Chris Best [23:57] - Yeah, in podcasting in general, there's kind of like this pent-up, we wish we had other monetization mechanisms but because of the historical context. We call it podcasting because we used to download it to our iPods when we connected it to our computers, right? It's this very like legacy kind of a thing and the world that it's in now is kind of a tough place. It's hard to create a good consistent user experience for subscription podcast even if you do it really well which I'm sure you guys do, and we probably will at some point do more of the actual podcast feed stuff. It's just like, not that many people are doing it yet in general even if it would be a good idea for them.

Jonathan Gill [24:35] - There's even simple problems/solutions of I'm interested in this topic of podcast. I don't care what series it's in or what show.

Craig Cannon [24:44] - Exactly.

Jonathan Gill [24:45] - Give me topics about this that are curated to my tastes, and based on some criteria I think I will like this, send that to me. That's a discovery problem but it's harder than people realize but I would say, find someone that loves podcasts that wouldn't want that solved and then it's, "Give me my feed that's personalized for all the content but not in an algorithmic big company way."

Craig Cannon [25:09] - Right, well even just in the beginning, listen notes was so valuable because you could just do search. It's weird to think about but like Apple released their product without any kind of search, right?

Chris Best [25:21] - Well, for a long time they had like three people on that team or something.

Craig Cannon [25:22] - Literally? I didn't know that.

Chris Best [25:25] - Don't quote me on that. I don't know if that's the exact number but for, I think it's a little bigger now but for a long time it was shockingly small.

Jonathan Gill [25:32] - The way that as outsiders we viewed it was, podcasting was a way to sell devices and then the way they viewed the market despite that Microsoft lost that name, Blogcast could have been what we're talking about. That team was highly effective but they were small and then depending on how its viewed within Apple maybe that's changing but it's also, people have their gripes with every interface to every piece of content.

Craig Cannon [25:58] - Right, but it's still 60% of podcast plays, something like that, Apple?

Jonathan Gill [26:02] - It's very high. Then kind of the view into that can change depending on if you have your own podcatcher, but a lot of people use defaults and then Google podcast exists now but largely is catching up on feature set and what needs to be there. Feature parity is what people are going for. Apple controls a large part of the end distribution to the listener.

Craig Cannon [26:23] - Have you used Himalaya yet? The Chinese podcasting app.

Jonathan Gill [26:25] - I've not.

Craig Cannon [26:25] - It's wild, and so it's a big, you know about the company?

Chris Best [26:29] - It's a huge company. They've grown through a lot of educational content which has got me wondering like is that maybe the angle people start taking, right? For this paid small, I'm wondering about, even the content is for your average paid newsletter. Is much of it paid and is that the path forward for a lot of people? It's just educational.

Jonathan Gill [26:50] - I think education is a big area that people are willing to pay for. People paying for like sort of, people won't pay for videos but they'll pay for online courses which are just like a couple videos.

Craig Cannon [27:00] - Right. Masterclass or whatever.

Chris Best [27:02] - In general people are more willing to pay for something that they think is going to make them better in some way. Bby having this in my life, I'm going to be a better person for whatever value of better I care about, that's something that makes me automatically more willing to pay. Education is obviously a big piece of that for a lot of people. I don't think it's the only thing, but it's definitely like that. We see that instinct being very powerful.

Jonathan Gill [27:27] - We see that as well. Hearkening back to the Chinese market, one of the reasons it's so big is they value educational content at a higher price point than maybe other parts of the world.

Chris Best [27:39] - That's some distrust free content I've heard. There's a sense of like, "Oh if it's free, it must be like for the rubes," which they're not necessarily wrong about. If it's paid, it must be good kind of thing. And again, there's some truth to that.

Jonathan Gill [27:51] - Part of the kind of marketing aspect of it, of that is marketing, getting people to want a better version of themselves or to improve themselves. Whether that's done with paid for content, content you listen to. A lot of podcast consumption is for learning purposes which is odd when you think about people still consider podcast entertainment but it's learning entertainment. Even on the narrative podcast, kind of the highbrow lowbrow dividing line, people place podcast a lot higher in how they view it in their entertainment and media consumption versus what they listened to in podcast and what they watch on television or movies, they tend to not be that closely correlated but there is some overlap. In general, the educational content and you'll see it with Audible with Great Courses, podcasts can actually get longer. Joe Rogan maybe three hours and you can actually get longer, more well produced content that people will consume in chunks because they don't need to consume it in the same day. And then it becomes well, is it actually worth hundreds of dollars for this piece of content? And how will I pay the hundreds of dollars? Will it be there's grades of tears of entry of how you consume it? Is it released on a course that happens every week? Is it released all at once binge style? Is it that I can pay a mix of I get some advertising and then I get a reduced cost on the subscription? Is it a try before you buy sort of scenario of, and then all of that still wild wild West in a lot of ways.

Jonathan Gill [29:22] - But the educational content angle, it's that same marketing, the same angle, same content presented a different way lets people think about it in a whole different light.

Craig Cannon [29:31] - I've just been so fascinated by the Dan Carlin phenomenon like, you've listened to Hardcore History before?

Chris Best [29:39] - He does it windowed, right? Where it's like they're all free but if you, beyond a certain period you have to pay to get the back catalog.

Craig Cannon [29:44] - Right. Every time I break my phone I lose all the old ones and I have to buy them again but--

Chris Best [29:49] - That's a business model.

Craig Cannon [29:50] - That's my, Apple's real business model is, me breaking my phone but... I've just been so curious and wondering, as colleges change, things like Lambda School start, where are all these professors going to end up? It feels like there should be way more Dan Carlins yet there aren't. I'm wondering if you guys are noticing these people kind of come out of the woodwork and build audiences.

Jonathan Gill [30:14] - Not to push too much on China, but there's been basically professors that have quit their teaching positions to be full-time podcasters, because they quite literally make millions of dollars podcasting. When you think in the US market to make millions of dollars podcasting requires a certain style content, a certain size audience, and then to say that for educational content in the US that you could make close to double-digit millions a year would be pretty hard to foresee right now. In a future with multiple modes of monetization where it's really a brand and then maybe it's educational content, imagine professors as the sports stars of the future where, "Oh yeah, what are you wearing? What are you sponsored by?" That sort of means of monetization and where it's going for educational content, we think that that personal brand will become more important and whether that's your own site or you band together and essentially, you're a group of professors that have started your own mini university as a brand.

Chris Best [31:15] - It has to be paid in that world or for almost all of it I think it has to be paid. There's some stuff that's may be mass-market enough but that's just the value that you can give to a small number of people. The best way to get, capture some of that value is to just ask them to pay you. This is something that used to be the case that we had this weird cultural moment where everything on the internet has to be free. A huge sort of cultural misstep with the early days of the internet was, "Let's not bring effective ways to monetize into this." The pendulum is really heavily swinging the other way now. People that were sort of like my generation were the least likely to want to pay for stuff and we are getting increasingly more likely to want to pay. Younger generations are even more likely still and there's kind of this rising idea that it's okay and even smart and desirable to pay for like high-quality education and cultural output, all the stuff that we kind of care about. As soon as you have that cultural shift, there's huge swathes of content that could not otherwise exist that become not just possible but massively profitable and the world gets richer and everything's happy.

Craig Cannon [32:19] - I was curious about you guys in terms of where you're seeing growth happen. How are your newsletter writers and podcasters getting growth? Especially in the context where maybe they aren't that big so they can't do paid campaigns.

Chris Best [32:36] - Newsletter growth, make good stuff free and make it easy for that to share on the web. We send emails, every time you publish a free thing we'll send an email to everybody but there's also like a version on the website that's searchable, that's got the right share metadata for everything so that if people do want to like share it on social media or on wherever, they can kind of like make the rounds. Then just have effective calls to action when someone shows up. Let them see the content they're there to see that they like but then also ask them for their email in a good way. Okay. And then the other thing that we're doing, a lot of newsletters grow by is by some sort of referral program, right? So having some explicit way in which people that are like your super fans of this newsletter can easily and effectively share it with other people, this is how like the skim and stuff grew, had a really cool referral program. We're trialing something very similar but on the paid side. With some newsletters we're doing a trial where if you're a paying subscriber,

Chris Best [33:32] - not only do you get to have all of the paid content and you get a member of this community yada yada, but you also get a certain number of free gifts that you can give out, that's like a couple months of subscription which is actually quite valuable. Sometimes it's like worth 20, 30 bucks. You can give that to your friends who they might not have like gone from zero to subscribe but they'll like, "Yeah, sure, if you're giving me something it's worth something, it's free, you're saying it's good, I'll give it a shot." Then those people subscribe and some of them are like, "I really love this and I'm happy and I'm going to subscribe and then I'm going to give the gifts to my friends too."

Jonathan Gill [34:04] - From our perspective, it echoes that. Don't forget your other channels and means of distribution that it may be outside of the podcast. If that's newsletters, that's tweeting, that is that whole cycle of how you interrelate and then how you share your actual content. The ability to preview the quality of the content, and one aspect that people forget in all content creation is there is large amounts of copycats in content creation but also quantity is not always as good as quality. And don't forget that if you drop on quality, people will notice. One way to grow your audience is to actually spend time designing your content, designing your show, producing it. Well, it's not always buy the most expensive equipment, have the most expensive way of doing something. At the end of the day, there's many great stories that are very simple, very low to produce and podcasting as a medium is a storytelling medium. Don't forget to have a good story. That's in everything, from startups to podcasting to all content what's the actual story? Is it good enough for someone to tell someone else about? When you get there and you can find a way to summarize that... Part of it for us is, a lot of podcasts just start and there's no lead-in and you're not someone that does that but in particular, actually having a quotable, shareable, summarizable content that people can share, that's very useful.

Craig Cannon [35:25] - Oh, you mean like the little clip it in the beginning?

Jonathan Gill [35:27] - The little clip in the beginning, the intro summarizes the entire show. That intro and lead in depends on the style of content but it's very useful for shareability, for just people remembering the story and just from our standpoint, people actually do remember what they hear, 36 to 39% longer than what they see and what they read which is actually a video advertiser hidden piece of research. That auditory component of storytelling is very powerful and don't forget that even when you're a content creator, quality can really trump a lot of quantity for sure. And then don't forget where your audience is. They don't live in one app, they don't live, no one uses the internet by pulling up 500 different websites and different browser tabs.

Chris Best [36:11] - Well, I do but most people do not do that.

Jonathan Gill [36:13] - Okay, I have to find how you're controlling your tabs.

Craig Cannon [36:16] - Chris, Jack Ryder asked you a question. This might be a softball but he says, "In five years time, are personal newsletters going to replace social networks like Facebook?"

Chris Best [36:30] - That's a great question I actually think no. He probably was like maybe Chris will think yes. The answer is, it won't replace the social network aspect of it. The thing that Facebook and the social networks are great at is having the relationship between you and the people you know in real life and having those sort of rewarding real world relationships mirrored, that's the thing that really works there, that's the grain of truth that makes Facebook what it is. The part of it that should absolutely be replaced is where we're conducting our culture in there. The idea that the place where not only do I get my updates of baby pictures, but I'm going to get my news from Facebook, that should 100% be replaced. Because it's a disaster for the world and it's I think increasingly a disaster for individual people that kind of feel bad about it. The number of writers are Twitter power users and the number of writers I talked to that's like I'm addicted to Twitter and it's actually really bad for my life. I'm not joking, it's I actually, like I use it too much and then I feel terrible, like there's a lot. That's a real thing that happens. Yes, the way that it's yes is it will replace how people consume a lot of cultural content. That's news, that's public intellectual thought, that's storytelling, that's entertainment that's sort of a culture level rather than like hey I know you because you're in my family level, that is what should be replaced and what I think newsletters and things that have this aspect

Chris Best [38:04] - of a direct personal connection will replace it.

Craig Cannon [38:09] - We have a question about advertising, and actually advertising spend. Debutte Mukerji asks, "Do podcasts actually work?" And this is in the context of advertising? If so, "Gow to startups calculate the ROI and the CAC?" I guess that also means a startup potentially doing a podcast like you guys have done. Maybe you can shed some light in that as well, Chris.

Chris Best [38:31] - Yeah, so podcasts do actually work for all those reasons. But I don't have a biased answer at all. How they generate the ROI and the CAC, so if you have a direct response. Dnter offer code XYZ at checkout, that enables people to track the effectiveness without measurement like Backtracks has in place. You can also tie things together, and depending on what you want to do, brand awareness, the same way that you would for a radio campaign, you can actually measure how your overall conversion is growing based on what you're doing in your marketing and your ad spend. In a radio corollary, people may not be able to directly attribute that radio advertisement corresponded with the increase in sales, but stop your radio advertisement and then see what happens which is a dangerous game to play. One way to calculate it is to eliminate the variable from your current ad spend if you can do it. If you know what your mix of marketing is in podcast is a branded piece of content for you as a startup in the terms of this question, if you stop doing it and you eliminate it there's a risk to your business. But you can, if that's the only one variable that you're changing you can isolate its contribution to your particular CAC or ROI in that case. Some of it is direct, some of it is indirect, some of it is there's value in perception. The way that the audience of the podcast perceives the company can be increased for all those reasons. If it's a well executed piece of content, they may think this company is well run,

Chris Best [40:02] - full of smart people and then how do you actually correlate what that means.... We have very biased viewpoints on, you should absolutely podcast for your company, get your voice out. It's your direct line to your audience whether the audience is potential customers, investors, the industry that you're in, there's no filter when you produce the podcast content and that's a great place to be for your brand. You guys are a startup, do you buy podcast ads? We have, yeah. We do buy podcast ads.

Chris Best [40:32] - Are they worth it?

Jonathan Gill [40:33] - They are worth it and then sometimes they're under priced, sometimes they're overpriced but they are very much worth it. If you stop doing it, you notice. We are not podcast producers because we are not skilled in the art of content. But you guys are.

Chris Best [40:49] - I guess we are a little bit. Yeah, it's an interesting question. I'm a little bit more skeptical about podcast advertising. I would be like, to me if you're a startup that's thinking about doing it, I would want to have a really good thesis for why this would specifically work for you. I am a podcast company is probably a pretty good one. Not to say that it's never worth it but it's hard to make good use of just raw advertising money as a startup. If you can figure out how to do it, then great. I suspect as I kind of hinted before that there's a lot of podcast advertising that's in a little bit of like an Emperor's New Clothes state, where like too much is it's overpriced and because there's just not metrics there it's just waiting for the other shoe to drop and like some, the per download rate is going to go down a lot at some point, which as an advertiser would signal maybe do less of that. You mentioned that we did a podcast which we did and this was actually maybe related to the reason why advertising would be good. Which was we found the trick with Substack when we were bringing writers on especially in the early days was we had to meet with people in person to just sort of like tell them what we were doing and why. Ehen we were doing that with writers in the early days we had this really good rate of people sort of seeing why we were doing what we're doing and getting excited about it and buying the religion and being like I want to do this too, this is so exciting. Of course I'm going to make all this money

Chris Best [42:12] - and then going on to make all the money. We couldn't convince them to do it over email and stuff. We're like well there's only so much of us, so we're going to have to at some point do this scale, we're going to have to be able to tell this emotionally resonant story at scale. One of the best ways to do that is probably not a shock is a podcast. We were like, this is before we even had an audio feature. We're like we should just do a podcast because it's a way for us to like give this message in an emotionally resonant way that we believe it without having to like individually meet with thousands of people.

Craig Cannon [42:44] - As a founder, how do you go about budgeting for that? You did it in-house, right?

Chris Best [42:49] - Yeah, and we're fortunate, one of our our first employee is Nathan Baschez who was previously Head of Product of Gimlet Media. He's like a podcasting guy and he's like here's how you do all of this stuff. One of my co-founders, Hamish is a journalist and has done tons of interviews and they kind of like knew a bunch of, we sort of had in-house a bunch of like the pieces you would need to do it well which we were just fortunate I guess. I don't know.

Craig Cannon [43:18] - Did you put a monetary value of like, "This is how much we're willing to spend on this because we expect a conversion of Y?"

Chris Best [43:24] - No, I mean that's, maybe people run their companies that way. We're not at that level of sophistication for like quick things like that.

Craig Cannon [43:32] - Right, well because this is a really common question that I get. It's like I'm going to do a podcast, what should I expect?

Jonathan Gill [43:38] - In terms of measurement, so a portion of Backtracks is the analytics and the measurement and we do that in various ways. If you have an existing podcast and you're doing maybe a new season or you're rebooting, you can have comparative metrics. You can actually know if you're trying to target certain markets if people are listening in those markets. You can change your, basically run A/B test on release cycles, content structures. All of that's in our product of well, "Are we doing a three-person panel? Are we doing a one-on-one Q&A? What's the structure of the content that's working?" and then you analyze as metrics not just downloads, but playback and and where those playbacks are occurring? Depending on your company if it's a startup that has a very social media focus and your audience is on Twitter, is that audience listening to your content on Twitter or are they coming to your site? What's your metric? One thing is to know your metrics when you start. Before, don't wing it afterwards or kind of reverse your way into it if you're thinking about it that way. One part is podcasts are a good way to sell yourself, sell your product. Then do you need to actually concretely measure that? You'll probably want to know how you're doing relative to are you improving or is your audience growing? There are ways to do that but a very fine-tuned metric driven way of producing the content where there's absolute ROI and CAC... the way we think about it is there's a difference between attention and opportunity,

Jonathan Gill [45:09] - and sometimes at the early stages of something being able to measure it at a certain absolute way is not always the best way to treat it.

Craig Cannon [45:17] - How do you guys, so both in newsletters and podcasts, a lot of the questions we also got were about people who are curious of getting started. Best practices like how to actually get going and what to expect would be worthwhile talking about. We were working with you guys pretty early on. I'd done a podcast before the YC podcast so I just kind of winged it. Someone comes to you and like, "Hey, we're going to do a podcast or we're going to do a newsletter," what do you tell them? You have to start with these things, this many episodes or whatever you might suggest.

Jonathan Gill [45:49] - It's a simple answer, "Why do you want to do the podcast? What is your podcast about?" Now if you can't answer that, that's a bad sign. Also that helps dictate how many episodes you can do based on the topics. Are you going to exhaust the topic? Is it, frequency, that you want to do one a week, you want to do one a month, are there monetary constraints? You can first start with the content and then how professional do you want to get on scheduling? Are there certain things in your industry or in your company or you as a person? I want to get out an episode before this holiday. That helps, you can back your way into what you need to do before then. The most important thing to us is always, "Why do you want to do this? What do you want to do this for? What are the topics?" People always ask about equipment and things like that but there's lots of answers on the internet for that.

Chris Best [46:43] - Newsletters are great, because for newsletters when people are like, "How do I start a newsletter?" We're like, "Just start it, just go." Especially, we tell people if you're not sure what you're doing, start a free one, which you can do on Substack, we don't charge you anything. Just literally make your first post and then tell people about it and add your mom and a few other people from your Gmail contacts into your list and just go. It's good at some point to develop editorial strategy about like here's what I'm doing and here's why people would listen to it. It's kind of like startups in that it's you have one idea and that's not what works and you change a bunch of stuff. For us the one reliable predictor of success we see is do you do it consistently? If you do then, and you pay any attention to the feedback you get, you're going to eventually find something that's good. The way that most people fail is the same way they fail when they're doing like a blog or something is they do one post that's like I'm starting a blog and they do one other post and then there's never another one.

Craig Cannon [47:41] - Right, it's sorry it's been a while and then--

Chris Best [47:44] - Yeah, sorry it's been a while, I'll try to do these more often six years ago. But for newsletters, it's literally just do it. Just do it and like, if it's good, people will give you the feedback you want and it'll grow and the other cool thing we found is if you find that, if you get to a place where you have a newsletter that people are regularly reading, like if you're just regularly opening it, chances are you'll be able to charge for it if you want to at some level because it's actually harder to make something that's good enough that people regularly want to consume it than it is to convince some fraction of them to pay.

Craig Cannon [48:18] - That's a great takeaway.

Chris Best [48:19] - For newsletters, if you think about starting a newsletter, just start it. Go to, this button, it's real easy, it's yeah.

Jonathan Gill [48:28] - In podcasting if you've never done it before, you can get a few practice episodes in. No one actually has to learn those mistakes, some people just start, it needs to be perfection from the beginning but treat your content strategy when you're just starting in a new medium like you would a startup. You don't know exactly what's going to work but start and have a thesis and try it. No one needs to necessarily know the first iteration, but they'll say, "Oh this is the greatest newsletter I've ever received, this is the best podcast." They don't know that you've been practicing doing this for so long and you've improved over time. Part of that is it is just going and then as you get going, you can change your structure based on what you've learned.

Craig Cannon [49:12] - I think that's great. All right, thanks guys, thanks for coming in.

Chris Best [49:14] - Thank you.

Jonathan Gill [49:14] - Thanks Craig.