On Substack, Seigniorage, and Post.News

If you’re reading this, you know that I have a Substack newsletter. You may even know that all my posts are public—nobody has to pay to access anything I write here. In fact, you couldn’t pay even if you wanted to, since I haven’t activated paid subscriptions.

It’s not that I don’t like getting paid. It’s that I write with irregular frequency, sometimes going weeks or months without posting a word. This wouldn’t be fair to paid subscribers, and it would put pressure on me to write even when I have nothing useful to say.

So imagine my surprise when I got paid for my last post, simply by posting a link to it on the new social media platform Post.News

Okay, I didn’t get paid much, since the cash value of 165 points (if I ever accumulate enough and choose to cash out) is $1.65. But bear in mind that I had less than a hundred followers at the time, and the post itself wasn’t exactly viral material. And I have no intention of converting points into cash in any case—they will be distributed to others whenever I see something especially informative, interesting, or appealing. And many of these recipients will likewise distribute to others the points that they receive.

In this manner, the currency that Post has created will continue to circulate internally. In fact, the total stock of this currency will grow as people purchase points at exchange rates that vary with the amount purchased:

New users are endowed with 50 points at no charge, but beyond that must buy from Post itself. If someone buys 10,000 points at $126 (the most favorable exchange rate), the company can use $26 for operating expenses, holding the remainder to finance redemptions.

If purchases exceed redemptions on an ongoing basis, the company will start accumulating dollars. Any entity whose debt circulates as money has the power of seigniorage, and can spend in excess of anything it earns. Even if these accumulated funds are invested in safe assets such as US Treasuries, the interest payments can be used to cover costs. This is roughly how a bank operates, although mortgages and personal loans are riskier than federal debt. Regulators will probably be interested in exactly how Post’s accumulated balances are held and used.

Post’s creation of a convertible internal currency opens up certain opportunities for others. Most obviously, major media companies can offer individual articles for sale instead of (or in additional to) charging a much narrower subscriber base for full access. Reuters seems to be taking advantage of this already, with individual stories offered at prices ranging from zero to five points. If this proves lucrative, expect others to jump in.

This may be especially useful for smaller, local news operations. Imagine a breaking news story that is covered primarily by local reporters at the scene. Regular updates distributed on Post at nominal cost could breathe life into local outlets that have seen dwindling revenues over recent years, as people have gravitated towards the major media sources offering a broad range of coverage. It seems possible that this trend towards centralization and concentration in the media industry could be reversed, or at least decelerated, through the use of Post as a medium for distribution.

And what about Substack, which has a number of extremely talented stand-alone writers providing opinion and analysis that is very difficult to find elsewhere? There is simply not enough time in the day to read more than a handful of newsletters on a regular basis, and the cost of subscribing to more than a few can quickly become prohibitive. But occasional individual posts that come highly recommended can be affordable—in terms of both time and money—if offered to non-subscribers on Post.

Now where does this leave Twitter? Damon Linker fears that the exodus of left-leaning users could leave the site monocultural, in the image of Parler or Gab. This is a valid concern, but not the only one. After a few days poking around on Post, I’m finding that Twitter feels dated and dull. And ultimately this may prove to be a harder problem for its new owner to solve.