Substack Is Changing the Money Game. Here's What I Think It Means for Us

One coin for me, one coin for Substack, one coin for me......

The platform that sold itself as ad-free just introduced sponsorships. And honestly? I think it could be good for us.

Stay with me on that, because I know how it sounds.

The whole reason a lot of us landed on Substack in the first place was that it wasn’t that. No algorithm decides what gets seen. No advertiser is quietly pulling strings in the background. Just writers, readers, and a straightforward deal between the two.

But I’ve spent a fair bit of time digging into what’s actually happening here, reading through interviews with Substack’s CEO, coverage from people who track the media business closely, and guidance from creators who’ve already been running their own sponsorship arrangements for a while. And I want to share what I’ve found because I think there’s more nuance to this than the hot takes suggest. Some of it is genuinely good news for people building newsletters from scratch. Some of it warrants real caution. And one part of it, the AI angle, is something the whole platform needs to take seriously before it becomes a problem nobody can fix.

Let’s go through it.

What’s Actually Going On

In December 2025, Substack quietly rolled out what they’re calling a native sponsorships pilot (the ‘ads’ reference that some are claiming is coming to the platform). A small group of selected creators can now connect directly with brands through Substack’s infrastructure, include clearly disclosed sponsored content in their posts, and get paid for it.

Substack co-founder Hamish McKenzie was pretty clear about the framing: these are not programmatic ads. No banner appears next to your words that you had nothing to do with. Writers choose whether to participate, choose the brand, and keep control of the content. During the pilot, Substack is taking no cut of the revenue.

That last part is worth noting. It won’t last forever, but it tells you something about where they are right now. Testing the model, figuring out what works, before they nail down the long-term commercial terms.

The financial pressure behind all this is real, too. Substack raised $100 million in mid-2025 at a $1.1 billion valuation. Investors don’t write cheques like that, expecting the business to keep doing exactly what it’s doing. Brian Morrissey over at The Rebooting interviewed Substack CEO Chris Best a couple of years back, and something Best said has stuck with me ever since: “Business model is destiny.” He wasn’t wrong then, and he’s not wrong now. Morrissey also noted at the time that Substack’s existing model, taking 10% of paid subscriptions, simply wasn’t lucrative enough for a VC-backed business at that valuation. That context matters when you’re trying to understand why ads are happening at all.

Why This Could Actually Work in Your Favour

Here’s the thing that doesn’t get talked about enough with Substack’s current model. Your free subscribers are essentially invisible to your income.

Say you’ve built a list of 3,000 subscribers. Maybe 150 of them are paid. The other 2,850 read your stuff, maybe share it occasionally, maybe leave a comment here and there. But financially, under the current setup, they contribute nothing. That’s not a criticism of them. That’s just the structure.

Sponsorships change that equation. Those free readers suddenly have real value, not just social value but actual dollar value. And for newsletters in specific niches like marketing, business, finance, and productivity tools, that kind of engaged, intentional audience is genuinely attractive to brands that are tired of paying for passive scrollers on Instagram who are barely paying attention.

According to reporting on the Substack advertising landscape heading into 2026, for a newsletter with over 75,000 subscribers, a single sponsored placement could reportedly fetch around $20,000. Most of us are nowhere near that yet. But it illustrates the ceiling, and even at a much smaller scale, a supplementary income stream starts to make this whole publishing endeavour feel more financially sustainable, which matters when you’re building something from the ground up while still juggling everything else.

There’s also a psychological shift that I think is worth naming. Right now, if you’re trying to grow a Substack, there’s this constant low-level pressure to convert free readers to paid. And if you’re not careful, that pressure starts to quietly infect your writing. You start making decisions based on what drives a conversion rather than what genuinely serves the person reading. Ad revenue eases that pressure, which, oddly enough, probably makes you a better, more honest writer.

Brands are also just waking up to Substack as a channel. Right now, only around 5% of brand marketers are using it as a creator channel, and less than 1% cite it as their top ROI platform, according to recent marketing research. Meanwhile, the platform nearly doubled its US visitors between mid-2024 and mid-2025. That gap between audience size and advertiser adoption is a genuine early-mover opportunity. The writers building credible newsletters right now are going to be the obvious first call when brands start paying proper attention.

The Pros Worth Getting Excited About

Subscriptions and sponsorships don’t have to be in conflict. In fact, done well, they reinforce each other. If your readers trust your editorial judgment, and they should if you’ve been writing with integrity, they’ll extend that trust to a brand you’ve genuinely vetted and chosen to work with. Your sponsored content becomes more valuable to the advertiser precisely because your readers actually trust you. That’s a very different dynamic from a banner ad on a website nobody chose to visit.

Claire Venus over at Sparkle on Substack has written about this well. Her approach to aligning sponsors centres on finding brands whose values genuinely match your publication’s world, being transparent with your readers about the relationship, and treating the arrangement as a curated editorial partnership rather than an interruption. Writers who approach it that way report that readers often respond positively, particularly when the fit is real.

The other thing I didn’t expect was how much clarity the process of thinking about sponsorships forces on you. When you have to articulate to a potential partner who reads your newsletter, why they read it, and what they care about, you end up with a much sharper sense of your own positioning. That clarity is useful everywhere, not just in commercial conversations.

The Cons. And I’m Not Going to Dress These Up

The way Substack launched this didn’t sit entirely right with me, and I think it’s worth saying so.

Between the July 2025 investor announcement signalling ads were coming and the December rollout, Substack went pretty quiet on the subject. There were apparently even support staff denying it was in the works. Then the announcement came out tucked inside a paywalled post on another creator’s newsletter. For a platform that built its entire identity on transparency and trust, that’s a clumsy way to handle a significant change. It doesn’t make the product bad, but it tells you something about how Substack may manage future decisions.

Then there’s the advertiser influence problem. I want to be honest here because I think it’s easy to wave this away until it’s already happened to you. Even when nobody is explicitly telling you what to write, having a financial relationship with a brand changes the landscape in subtle ways. You might start steering away from topics that could make your sponsor uncomfortable, without even consciously deciding to. This is how editorial integrity erodes in media, not through dramatic confrontation, but through the gradual weight of financial dependency. Morrissey made this point sharply in his Rebooting piece, noting that even publishers who market an anti-advertising stance often introduce advertising later under a different name, and the incentive pressures that follow are real regardless of what you call it.

The revenue cut question is also unresolved. Zero cut during a pilot phase is generous, and it will change. Substack already takes 10% of subscription revenue, and whatever they eventually charge for facilitating sponsorships is an unknown you’ll want to factor into whether the economics actually work for you.

And if you have paying subscribers, think carefully about their experience. Someone who has made a deliberate choice to financially support your work shouldn’t be encountering sponsored content in the posts they’re paying for. That’s a line worth drawing and communicating clearly.

How to Not Abuse It. Because This Part Actually Matters

The question to ask yourself, genuinely and regularly, is this: Am I making this editorial decision because it serves my readers, or because it serves my ad revenue?

That’s it. That’s the whole test.

In practice, it means only partnering with brands you’d actually recommend to a mate. Not as an ethical position but as a practical one. Your readers can feel the difference between a sponsorship that fits naturally into your world and one that doesn’t. The ones that don’t get remembered. The ones that do get scrolled past without friction and sometimes even appreciated.

It means not engineering your content around ad performance. If you find yourself writing longer posts because longer means more ad placements, or publishing more often because each post is another impression, you’ve already started down a path that will cost you reader trust faster than it earns you revenue.

And disclose properly. In Australia, this is a legal requirement, full stop. But beyond compliance, being upfront with your readers about why you chose a particular partner, what you genuinely like about them, and what editorial control you kept, that kind of transparency actually builds trust rather than quietly undermining it.

The AI Slop Problem. Let’s Be Real About This

Once ad revenue gets tied to content volume, the temptation to use AI to flood a Substack with posts purely for impressions becomes very real. We’ve already watched this play out on Medium. AI content farms are gaming the system, degrading the platform, making it harder for genuine writers to get found and read.

Substack has some natural protection here. Its audience is built on direct subscription relationships rather than algorithmic discovery, so if a writer starts publishing garbage, their readers unsubscribe. But that protection is only partial, and the writers who suffer most from a platform degraded by volume-published AI content won’t be the people doing it. It’ll be the ones who’ve spent years building something real.

I’m not pretending I don’t use AI tools. I do, and I’d guess most people reading this do too. But there’s a difference between using AI to sharpen an idea you already have and using it to generate volume for the sake of impressions. One is a useful tool. The other is a trap that will quietly hollow out everything you’ve built.

What Substack Needs to Do to Keep This from Going Sideways

This isn’t just a creator problem to solve. Substack needs to do some work here, too.

Paying out ad revenue based on genuine engagement like read time, return visits, and depth of interaction, rather than raw open rates or subscriber counts that can be inflated, would go a long way. Flagging accounts that suddenly spike from two posts a week to fifteen before sponsorship revenue kicks in would filter out a lot of the worst opportunistic behaviour. Giving readers a clear, platform-level way to see when a post contains a sponsored arrangement builds the kind of trust the whole model depends on. And enforcing editorial independence standards as an actual operational practice, not just a marketing promise, matters more as the financial stakes grow.

The writers who do well out of this shift will be the ones who were already getting it right before ads arrived. People who understand that their readers’ trust is the actual asset, and that a sponsorship approached properly is just another way to serve that relationship rather than take advantage of it.

I’m genuinely watching this with interest rather than anxiety. Not because I think it’s going to change my financial situation overnight, because it won’t, and if someone’s promising you otherwise, you know what to do with that.

But as another rung on the ladder, as a way to make building here more sustainable while I keep writing about the stuff I actually care about? Yeah. Worth paying attention to.

If this was useful, share it with someone who’s building on Substack. And drop your thoughts in the comments. I want to know whether you’re excited about this, sceptical, or somewhere in between.

Sources I read while putting this together:

Brian Morrissey, The Rebooting: “Substack’s CEO on ads, bundling and what’s next” (therebooting.substack.com)

Claire Venus, Sparkle on Substack: “How to align brilliant fit sponsors for your Substack newsletter” (sparkleon.substack.com)

LinkedIn Pulse: “Advertising on Substack: Why Brands Are Paying Attention in 2026”

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