Monday, February 13, 2017
What does a new business model look like for Medium?
Today the company announced layoffs for a third of its staff, leaving 50 people out in the cold for 2017. In a post on the Medium Blog CEO Ev Williams also announced that the VC-backed company would close its New York and Washington D.C. offices.
The reason? Medium wants to try a new business model. And if you just felt a little deja-vu about this message from Williams, know that you’re not alone.
When Medium first launched in 2012 the company promised that it would introduce “a new model” for publishing. 5 years later, while Medium may host more publishers and writers than it did in 2012, it still hasn’t figured out how to make money, unless you count traditional and native ad trials. Today the company is scrapping both revenue schemes and in the process has decided to sack a lot of staff in “sales, support, and other business function” departments of the company.
According to CEO Ev Williams:
in building out this [ad supported] model, we realized we didn’t yet have the right solution to the big question of driving payment for quality content. We had started scaling up the teams to sell and support products that were, at best, incremental improvements on the ad-driven publishing model, not the transformative model we were aiming for.
Upon further reflection, it’s clear that the broken system is ad-driven media on the internet. It simply doesn’t serve people. In fact, it’s not designed to. The vast majority of articles, videos, and other “content” we all consume on a daily basis is paid for — directly or indirectly — by corporations who are funding it in order to advance their goals. And it is measured, amplified, and rewarded based on its ability to do that. Period. As a result, we get…well, what we get. And it’s getting worse.
Just like every other company in media right now, Medium sees a problem with ad-supported, commoditised, targeted content but they can’t yet solve it. In his post announcing the layoffs Williams concludes that:
It is too soon to say exactly what [a new strategy] will look like. This strategy is more focused but also less proven. It will require time to get it right, as well as some different skills. Which is why we are taking these steps today and saying goodbye to many talented people.
Which made me wonder, what would an ad-free model look like at Medium, a model which presumably would also exclude native or promoted posts?
Unless the company has a magical new model hidden up its sleeve it’s safe to assume that Medium may have to make money by directly charging users for content.
Medium has already tested a subscription model in this vein through its ‘Memberships for Publishers’ beta program last year.