Lessons about the Creator Economy from Twitch and Substack

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Dear subscribers,

I worked on creator growth at Twitch and now write this newsletter on Substack. Live streaming and publishing might seem like two different fields, but I see many parallels between the creator economies on both platforms.

Below are eight observations:

1. Consistency is the key to growth

On Twitch, creators grow by streaming consistently, which means broadcasting for many hours a day, 6 or 7 days a week. If they take time off, they’ll lose paid subscribers:

On Substack, most paid newsletter writers also publish several times a week. It's a good thing that streamers and writers love what they're doing because there's no escape from the grind.

2. The 80:20 rule applies to both creators and fans

On Twitch and Substack, top creators have thousands of fans and make hundreds of thousands every month. But the vast majority of creators stream to an empty room or write for a few readers. It’s very hard for creators without an existing audience elsewhere (e.g., on Twitter) to grow organically on the platform.

The 80:20 rule applies to fans well. On both platforms, only a fraction of viewers and readers pay to subscribe to creators. Some of these paid subscribers are true fans who will even gift subscriptions to other viewers and readers to bring them into the creator’s community. Gift subscriptions was one of the most successful product launches at Twitch, but I'm not sure how successful it has been for Substack.

I think this is because…

3. The community is just as important as the content

On Twitch, viewers subscribe to support a creator and stand out in the creator’s community (e.g., through sub-only emotes and chat badges). They also subscribe to get a shout-out from the creator and other viewers in a live channel. For true fans, nothing is more satisfying than mass gifting subs in a channel to see everyone else freak out. 

On Substack, readers subscribe to support a writer and access the writer's sub-only content. But I think readers also subscribe to build a deeper relationship with the writer and other readers in the community. Savvy writers already have sub-only Discord and Slack channels to engage and retain their paid subscribers. As someone who pays for Lenny's product newsletter, his Slack community is just as valuable to me as his content (in fact, some of Lenny’s content is sourced from his community).

Substack should take a page from Twitch's playbook by investing in helping writers build communities on-platform. Community features could include:

  1. Channels (e.g., threads, AMAs) for readers to talk to writers and each other.

  2. The ability for writers to give status and privileges to loyal fans (e.g., sub-only badges and comment moderation).

These features will go a long way towards increasing the value of paid subscriptions.

4. Creator collaboration helps all creators grow

Creator-creator communities are just as important as creator-fan communities. 

On Twitch, creators collaborate to grow together. For example, when ending their stream, creators would often “raid” to send their viewers to another creator that they support. When live, some creators will also play games with each other to combine their communities. These collaboration tools give creators control which other creators they want their audience to discover instead of relying on Twitch's algorithms. 

Substack also encourages writers to collaborate with each other. The team recently introduced Substack Bridge to bring emerging and experienced writers together. Substack should invest in more on-platform channels for writers to interact with each other and recommend their favorite newsletters to readers.

5. Unbundling will lead to rebundling

Twitch and Substack unbundled the cable TV package and the mainstream news publication in two ways. First, they made it possible for a single creator to publish content and find an audience without being part of an organization. Second, they made it easy for fans to support their favorite creators without having to pay for a "bundle" of many creators.

Yet, some rebundling is already underway. It’s exhausting for a single creator to maintain a Twitch channel or Substack newsletter at scale. As their audience grows, creators might recruit a small team to edit their content and moderate their community. They might also own a live channel or newsletter with other creators to split the work.

I see these "joint venture" examples more frequently on Substack than on Twitch. The top paid Substack newsletter is Dispatch, a multiple-writer publication with 10,000+ subscribers. The biggest channels on Twitch, on the other hand, are still run by single creators (albeit with a team to support them).

With rebundling, both platforms should consider tools to help creators manage team roles (e.g., moderators, editors) and form joint ventures with each other.

6. Different monetization for different willingness to pay

On Twitch, creators have many different ways to monetize their viewers, including:

  1. Ads for free viewers

  2. Virtual goods for interested viewers

  3. Subscriptions for fans

  4. Gifted/tiered subs and merchandise for true fans

These monetization channels let creators earn income from all viewer segments instead of only from those with a high willingness to pay.

Substack's mission is to "Make it simple to start a publication that makes money from subscriptions." This mission makes sense in the context of the ad-supported model that the rest of the news industry uses. By adding community and other features, Substack can give readers even more reasons to subscribe to a creator. But ultimately, I think some readers just won't pay for a monthly subscription. Finding other ways for creators to monetize these readers (e.g., one-time transactions) without cannibalizing their subscription revenue could be an exciting avenue to explore.

Writers are doing this already by themselves - Deez Links is a free newsletter that tries to monetized through classified ads and merchandise.

7. Come for the tool, stay for the network

Ben Thompson's essay about platforms vs. aggregators applies to the creator economy as well. Platforms provide tools for creators to publish content and get paid (e.g., Gumroad). In contrast, aggregators collect a critical mass of users and charge creators for access to this audience (e.g., YouTube). Aggregators can take up to 30-40% of a creator's revenue, while platforms only take 1-10%.

When I joined Twitch in 2017, it served primarily as an aggregator that funneled visitors from its homepage to individual channels. In the years that followed, Twitch evolved from surfacing only top creators to adding categories and tags to using an algorithm. Meanwhile, creators primarily relied on 3rd party tools to stream and check analytics. Over time, my team helped bring more of these tools in-house. 

In contrast, Substack is a platform that provides tools for writers to publish online, manage an email list, and get paid through subscriptions. Today, Substack writers rely primarily on word-of-mouth and social media to get discovered. Writers are already asking for better on-platform discovery, such as channels to highlight newsletters by topic instead of overall popularity.

The difference between Twitch and Substack is that Twitch has a large audience that visits its homepage, while Substack’s traffic mostly goes directly to a writer’s newsletter. This has real implications for each platform, as we’ll discuss below.

8. Small creators want discovery. Large creators want revenue.

Small creators want discovery. They’re grinding away for that extra viewer or reader and don’t have the luxury to think about monetization until they have an audience.

In contrast, large creators want revenue. They already have an audience on social media that they can drive to their content.

This dynamic creates two challenges for the platforms:

  1. Discovery: Large creators attract the lion's share of fans to Twitch and Substack. As platforms, there's a natural desire to funnel some of these fans to small creators to help them grow. Unlike YouTube however, Twitch and Substack have set the precedence that the creator owns what's displayed on their content page. As a result, outside of the homepage and a few other surfaces, creators want control over who gets recommended from their content pages.

  2. Monetization: Large creators will continue to demand more value from each platform or re-negotiate the platform’s 10-30% share of their income. On Twitch, the primary value is still discovery. Millions of viewers visit Twitch's homepage and mobile apps looking for content to watch (when Ninja moved to Mixer, he saw a steep drop in viewers). Substack doesn't quite have direct traffic to its homepage yet. To justify its 10% cut, Substack could invest in more value-added tools for writers or better on-platform discovery.

I believe these patterns exist across all creator platforms. New platforms like Substack can learn from observing how mature platforms like Twitch evolved to adopt best practices and avoid making the same mistakes.

To recap:

  1. Consistency is the key to growth.

  2. The 80:20 rule applies to both creators and fans.

  3. The community is just as important as the content.

  4. Creator collaboration helps all creators grow.

  5. Unbundling will lead to rebundling.

  6. Different monetization for different willingness to pay.

  7. Come for the tool, stay for the network.

  8. Small creators want discovery. Large creators want revenue.

If you enjoyed this post, let’s connect on Twitter.