Would they?
Furthermore, "only signed-in users will be able to post notes, see the feed of Notes, and engage with notes." The inability to read feeds while not logged in makes Substack Notes much more hostile to casual browsers compared to Twitter. That's not a very eyeball friendly policy. I don't see how they can even be intending to replace Twitter that way. I'd personally want to see what Notes are like before signing up for Substack, but I can't do that.
Occam's razor suggests that the purpose of Substack Notes is straightforward: to create more engagement between Substack writers and Substack subscribers. It seems like a good idea for that purpose. But a Twitter replacement? If that's the intention, it's designed totally wrong.
No business would pivot to a dying monetization model unless it was their last option.
Advertising is not a solution for Substack; but rather a Trojan Horse.
It's not. Substack is very clear about that. https://on.substack.com/p/notes-faq
"The ultimate goal on Substack is to convert casual readers into paying subscribers. Because the Substack network runs on paid subscriptions, writers are rewarded for respecting the trust and attention of their audiences, not exploiting it like with ad-based social media."
"While Notes may look similar to social media feeds, the key difference is in what you don’t see. The Substack network runs on paid subscriptions, not ads. It’s social media with a heart transplant."