Memberful, a Patreon subsidiary, launches a newsletter product to challenge Substack

Between Facebook outages and Twitch data breaches, last week was bumpy for social platforms and the creators who build businesses on them. As internet creators look to diversify their income streams and retain ownership over their audiences, membership software maker Memberful is launching a newsletter feature today to add to its subscription membership services.

While competitor Substack takes 10% of creator revenue, Memberful charges 4.9%, plus a monthly rate of either $25 or $100, depending on the pricing plan. For those with a large enough audience, retaining that extra 5.1% of revenue can make a difference, even with the added monthly fee.

“Our focus for the last eight years of building a product has been to be great at membership, and then provide you the ability to plug-in to a Mailchimp, or a Discord, or a WordPress,” Memberful founder and CEO Drew Strojny told TechCrunch. “But we noticed, having done this for so long, that communication — and specifically communication with email — is so fundamental to the digital membership model that we felt like this is something we have to do. When you’re building a membership, it’s almost guaranteed that you’re going to want to email your members.”

Strojny said that even without its own newsletter feature, Memberful has been attracting former Substack users. Since Memberful offers white-label membership plans, creators can use the service to have more agency over how their branding and their newsletter appear. Like Substack, Memberful allows users to retain ownership over their email lists.

Patreon bought Memberful in 2018, but instead of absorbing the independent brand, Memberful now functions as a subsidiary of Patreon.

“Think of it as more of a decentralized Patreon,” Strojny said. “When consumers use Memberful, they probably don’t even know they’re using Memberful, they just think, ‘Oh, I’m on this site and I’m signing up for a membership.'”

When creators offer subscriptions on Patreon, it’s housed under the company’s domain — but Memberful lets creators embed subscription tools on their own websites. (See, for example, the YouTube series Good Mythical Morning’s website¬†or podcast network Relay FM’s membership page, which use Memberful). While Patreon charges a percentage of creator earnings (between 5% and 12%, depending on the plan), Memberful charges a set rate plus a transaction fee (10% for the $0 starter plan, or $4.9% for the $25 pro plan and $100 premium plan). The premium plan is a white-label offering, removing the Memberful branding altogether.

At launch, the newsletter feature will function like a members-only blog and email list. Users need to log in to view content on the web, but in the future, Strojny says that creators will be able to make public posts that are available to anyone online, subscriber or not. Memberful customers will be able to schedule emails and send messages to targeted subscriber groups, like members on different monthly tiers. This feature will appear on Memberful customers’ dashboards alongside conversion analytics, branding, checkout and content hosting tools.

As a subsidiary of Patreon, Memberful’s content moderation policies take after its parent. Patreon bans bullying, harassment and hate speech, while Substack also prohibits writers who “publish content or fund initiatives that call for violence, exclusion, or segregation.” But Substack has been criticized for its lax enforcement of its content moderation policies, which it has referred to as “hands-off.”

“We don’t feel like we have to reinvent the wheel when it comes to content moderation because, being a Patreon company, we have the resources in place to handle that,” Strojny said. “It makes us feel really good about having a lot of that already established.”