I figured Medium founder and Twitter billionaire EV Williams wouldn't be impatient with a money-losing venture - kind of like a local millionaire I know who doesn't seem to mind the prospect of losing money on music clubs.
But Williams is trying to run Medium as a business - a fact with painful immediacy for those 50 employees laid off last week, along with the publishers that signed on to Medium's now-cancelled native advertising program.
I was going to roast Williams for his innocuously-titled post, Renewing Medium’s focus, which announced the disheartening news. But I'd rather see Medium succeed than gloat over its missteps. Medium isn't done. Williams still has plenty of VC money to burn through, and some interesting-but-uncomfortably-vague ideas about where to go from here.
In his post, Williams lamented that "The broken system is ad-driven media on the internet." I know some happy shareholders over at Facebook who would disagree. Perhaps Williams also meant culturally-broken. If so, we do agree. What's truly broken is top-heavy, VC-funded publishing. I doubt we agree on that.
Enterprises are encouraged to invest in content to win attention. I've certainly recommended that - albeit with caveats. What are we to make of this high-profile content setback?
Why Medium canned its native ad beta program
In his post, Williams bemoans the state of online media. Clickbait corruption does a disservice to thoughtful readers:
We believe people who write and share ideas should be rewarded on their ability to enlighten and inform, not simply their ability to attract a few seconds of attention. We believe there are millions of thinking people who want to deepen their understanding of the world and are dissatisfied with what they get from traditional news and their social feeds. We believe that a better system — one that serves people — is possible. In fact, it’s imperative.
Williams doesn't divulge the reasons behind the surprising shuttering of Medium's native ad program for publishers. Yep - the same program that was beta-launched with utopian fanfare only nine months ago. He does admit to disappointment:
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.
Hmm... I doubt Williams was ever in a meeting where his sales director told him, "Mr. Williams, we're making boatloads of money on our native ad program," and Williams responded, "Well, I don't care how much money we're making, this program is not transformative enough!"
We get closer to the financial truth here:
However, in building out this model, we realized we didn’t yet have the right solution to the big question of driving payment for quality content.
The content consumers are willing to pay for - or not
Sounds to me like Williams has his heart set on an inventive, reader-supported model. He bashes corporate-funded approaches:
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.
Yeah - except corporations also funded The Beatles, Led Zeppelin, Aretha Franklin and Stanley Kubrick. Great content has been funded by dubious/meddling sponsors long before the Internet. The problem we face now: digital consumers are not exactly clamoring to pay for content.
- Willing to share alarming amounts of data for a social community they view as indispensable and easy to use (Facebook). In turn, that data can be sold/leveraged for targeted advertising with far more precision.
- Willing to pay for specialized content in narrow areas tied to their own financial prospects, such as investor advice and tech insider views.
- Unwilling to pay for most videos and podcasts.
- Willing to make mini and/or monthly payments to trusted, low-friction platforms to consume music (iTunes), TV/videos (Netflix), and books (Kindle). I use"mini-payments" to distinguish from true micropayments, which have yet to take hold.
- Willing to pay for some structured training and self-education content (Lynda).
- Willing to provide a decent amount of data in exchange for relevant virtual events (webinars), which they would not likely pay for.
There's an old bromide, "information wants to be free." That's not entirely true. Viable paid models for privileged information persist. What is true: content wants to be frictionless. That does not rule out mini/micropayments. It does rule out complicated log-ins and unreliable streaming.
Another truth Williams must overcome: text-based content thrives on free. Text content thrives on:
- free/one-click social sharing
- unencumbered, paywall-free search indexing
- a vague-but-pervasive Internet ethos that information should be free, resulting in an audience of entitled consumers. Some folks might be wiling to pay for music, but paying for text is an ideological step beyond that.
Free text also means no credit card expirations, no Paypal hassles, no mobile phone password encyrption hell. And: no annoying "teaser" previews that leave a sour taste, or result in data pop-ups to continue reading, before content value has even been established.
Can a reader-supported model work at Medium scale?
I remain tantalized by the prospect of a true micropayments model for publishing. That's an alternative to a monthly subscription option like Spotify (some have speculated Williams is heading towards a Spotify-like model). In Online Publishing Should Look At Steem, Not Spotify, For Inspiration, Fred Wilson argues that Medium could learn from the blockchain-powered social network Steem, which has a nuanced system of tokens and incentives (check my podcast with Steem's co-founder, Ned Scott). Wilson:
I don’t think Spotify (music), or Netflix (video), or Amazon (books), should be the inspiration for online publishers in search of a new business model. The sad truth is most people are not going to pay a monthly subscription for online publishing content. Certainly not for blog posts by people they have never heard of.
The new online publications that have a paywall have built nice small businesses that pay the bills and maybe make some money for the founders. That’s a great way to go if you want to be small. But if you want to be a large network with millions of readers and publishers, as Medium already is (2 billion words written on Medium in the last year. 7.5 million posts during that time. 60 million monthly readers), a paywall is not going to work.
In a post on Medium last February, Jared Spears took the micropayments argument further (How micropayment can save publishers from ad-blocking). Spears points to the Dutch online news channel Blendle, which is further down the micropayments-for-publishers model than most. Spears gets into tricky territory when he writes:
As long as we still value [publishers'] content, there’s still a value equation that adds up.
Alas, that's not a foregone conclusion. Micropayments can scale, but we haven't established that the value equation of micropayments works for the bulk of content creators. It's unclear whether Williams is looking at micropayments, Spotify, or some other model. But it sounds like he's headed in that neighborhood:
So, we are shifting our resources and attention to defining a new model for writers and creators to be rewarded, based on the value they’re creating for people.
Intriguing models from the tech industry
Closer to the enterprise, a number of tech publications have pursued appealing models. The Information has a paid subscription model - and no investors to fret about. The Information's Jessica E. Lessin issued an email to her subscribers about Medium's changes, re-iterating her belief that publications should cut advertising dependencies.
She called publishers out for minimizing subscription possibilities at scale. She has a point, though I think she's underestimating that huge cultural divide between older generations that paid for print newspapers and how the Internet rolls. Lessin is NOT a micropayments fan. But would it be realistic to subscribe to Medium as a whole? That's a big leap from tech stakeholders paying for specialized content from The Information.
Ben Thompson's one man show at Stratechery is a superior reading experience, with a combo free/paid model. The New Stack seems to be doing well with a variation on the sponsored content model. Obviously you are reading another "no investors" publication right now. Ours is another twist on a sponsored content model, and a commitment to disclose.
I'd like to see even more approaches that aren't bogged down in invasive ad tech, though Facebook is a huge rebuttal to those who argue readers want anonymity. Readers want value. Achieve that value, and fresh possibilities could emerge.
Final thoughts - enterprises don't need to think like Medium
Digital media startups might not be the best content model for enterprises. I'd point to LinkedIn instead, where the free blogs have become a front porch to a deeper revenue model. There seems to be an equilibrium of benefits between the professional exposure of the content, the data benefits to LinkedIn, the upsells to the real subscription moneymakers, and the overall reader experience.
Then there is the LinkedIn community that supports and drives it - however fragmented and imperfect. The big missing ingredient is live events, but it's a model enterprises can study. Also have a look at my use case on Copyblogger (Email marketing isn't broken (yet), but Copyblogger found a better way).
Williams' preoccupation with charging for content should not be a concern for B2B companies. Content revenues would always be a tiny percentage of big ticket sales anyhow, so it's better to leave the front porch open. Leave the culture change on paying for text content to idealists with deep pockets. But: data-for-content is a fair and achievable goal. Medium can't survive on data. It has to achieve profitability on content. If your company can avoid that narrow pressure, avoid it.
If you can't, I'd suggest building a digital media business with no offices to close, few if any employees to fire, and no venture capitalists to fret about. Maybe then you'll be the one to create the formula Williams and company are under pressure to find.