Ev Williams, the co-founder of Twitter, spent five years building Medium into one of the slickest publishing platforms on the Web. Yet he found himself in traditional publishing purgatory on Wednesday, cutting 50 employees and searching for a new business model. There could be no better proof that delivery methods matter little and content is king.
In the post outlining the changes, Williams explained that he had lost faith in advertising:
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.
It’s an emotionally convincing argument. In a strange echo on the same day, Glenn Greenwald, the journalist who gave the world Edward Snowden, made similar accusations against The Washington Post. The newspaper, according to Greenwald, spreads falsely sensational but “richly rewarded” stories, ensuring their viral distribution but not making an effort to convey the retractions in a similar way. One example he gave was a recent story about Russian hackers allegedly penetrating a Vermont utility, which was widely shared on social networks but turned out to be untrue.
It’s hard to disagree with both Williams and Greenwald about the ad-driven model’s effect on content. To make money for the publisher, a Web page just needs to stay open a few seconds. It doesn’t matter if the story has any substance. Besides, many “readers” who repost links to stories never get beyond the headline, and in many cases ads aren’t even seen by humans, so it’s irrelevant if there’s any content next to the ads.
Indeed, the ad-driven business model is dishonest and distorting. Williams, however, must have known that for a long time as a major shareholder of Twitter, which makes almost all its money from advertising. Medium didn’t fire its ad sales team because Williams suddenly developed qualms about the effect pageview-based ads were having on content. More likely, the model didn’t work too well, given the emerging Google-Facebook duopoly that is gradually sucking ad revenues out of all other platforms (Twitter is affected, too).
So, despite its beautiful publishing software, Medium is now stuck where most newspapers have been since the early 2000s — losing ad revenues and looking for a way to make money off its content so it could, as Williams put it, reward writers “on their ability to enlighten and inform, not simply their ability to attract a few seconds of attention”. That’s not a nice place to be, and it’s probably Silicon Valley arrogance that got Medium there. As Elizabeth Spiers, the founding editor of Gawker, wrote in response to Williams, “too many Valley companies intent on fixing broken models think incumbent companies are using broken models because they’re idiots and not because the problems are not easily solved”.
There is no way to disrupt this the way Uber is disrupting the taxi business: writing to which people will subscribe is not a commodity
No one said, however, that arrogant tech entrepreneurs can’t learn from their mistakes. Medium could use a business model that would reward quality. It might turn it from a jungle of useless writing submitted by its many amateur users into a quality-driven environment. Now, like many others, I stumble across links to Medium posts on Twitter or Facebook; if writers were paid well for quality work, it would probably make more sense to use the site’s own catalogue of subjects.
Williams suggested the new model would be “transformative” and said it was too early to describe it. That’s hardly good news for investors, who have already contributed US$130m to the start-up. Some of these investors, however, appear to have a clearer idea of the next model that Williams let on. They mention, for example, micropayments, made increasingly easier by the development of financial technology.
I am deeply sceptical of pay-per-story models, including that of the company touted as the first success of the approach, Dutch-based Blendle. The company, which counts The New York Times and Germany’s Axel Springer among its shareholders, offers a curated newsfeed from professional media sources with the opportunity to pay for each story read — and receive refunds if it disappoints. I tried out Blendle as soon as it entered the German market and didn’t even spend the €2,50 I was given to start paying for content. My problem was first described by Clay Shirky, one of the Internet’s foremost public intellectuals, in 2003: the mental transaction cost of making a decision whether or not to pay every time I wanted to open a story. The refund opportunity only increased the number of decisions I needed to make. The process of accessing what I wanted to read ceased to be smooth. It didn’t work, though Blendle probably counts me among its million users.
Despite its beautiful publishing software, Medium is now stuck where most newspapers have been since the early 2000s
No business model that involves selling content can get around a fundamental fact: content can only be consistently good if its creators can make a living from it. It’s an illusion that creating a platform and inviting everyone to it will eventually reveal enough free, or nearly free, pearls to make the platform’s owners fabulously rich.
Now that Williams is concerned with rewarding writers, he may soon find out that there are few workable ideas that can provide enough revenue. Advertising is one, with all the flaws that have proved so off-putting for the Medium founder. There are things like per-story micropayments, Blendle style, or donations — say, through a platform like Patreon, which helps fund YouTube channels and podcasts. They, however, provide only a thin revenue stream to professional publishers and can sustain a relatively small number of independent creators. Many other worthy ones need the security of a real job in an industry that has lost so many as a consequence of the digital media revolution.
And then there are subscriptions. In 2006, The New York Times Company made just 16,2% of its revenue from circulation, including subscriptions, both online and offline. In the third quarter of 2016, that share approached 60%. The subscription model is proving viable for professional content creators. It’s a virtuous circle: good professional writers produce content for which people are willing to prepay, and the prepayments allow the writers to concentrate on producing a quality product.
There is no way to disrupt this the way Uber is disrupting the taxi business: writing to which people will subscribe is not a commodity. It’s rare and expensive, and it’s not about good software or buzzwords like “network effect”. That will probably be the next revelation for Williams as he retraces the steps of “legacy” publishers. — (c) 2017 Bloomberg LP