Medium needs to make money and apparently they haven’t decided or aren’t ready to share the plan yet. Well, I have two bad ideas, one okay idea, and one good one that I’d like to share.
I’ll start with the bad ideas first.
Charge for reading
There are two paradigms here: readers pay and advertisers pay. Let’s start with the one that Ev has already dismissed.
Advertisers pay
Meh. Nobody wants Medium to become another BuzzFeed. Nobody at Medium wants to work at another BuzzFeed. Building a clickbait business is not only not very interesting anymore, it’s also arguably not very profitable.
Although online ad spending is expected to continue to grow 5% per year, surpassing TV advertising for the first time last year, publishers are seeing declining click-through rates. Thus it’s becoming harder for advertisers to get a return from investing in these channels. Without extremely detailed viewer analytics, Medium won’t be able to compete with Facebook and Google for the big league ad dollars.
If you ask me, that’s why Facebook and Google have thrived while Twitter has tanked. Ad targeting on Twitter blows.
So I think Ev’s right to throw this strategy out. Next.
Readers pay
This is the New York Times and Wall Street Journal model. I think this makes sense when there are full-time writers to support, especially in the context of the tenuous advertising revenue described above.
We all want high-quality journalism, and it’s very expensive to produce. There’s traveling, original research, and sometimes extensive legal costs to cover. I’m willing to pay $10/mo for this.
Medium, on the other hand, has full-time stuff, but none of them are writers. The content on Medium is published for free, for the public good, with the extra benefit of personal branding and promotion for the authors. This is why guys like me post on Medium, LinkedIn and Twitter. I don’t expect to ever make money from my writing. I do it to contribute to the world and improve my craft.
Also, and most importantly, nobody wants to pay to read my stuff.
Charge for writing
Here’s where Medium should be looking for their revenue model.
Publishers pay
This is an interesting one. What if, instead of giving the publishing software away for free, they charged for it? I’m assuming it was initially free to lure publishers in and make money later by sharing ad dollars. Now that the ad model is toast, why not monetize the software and hosting?
Like most developers, publishers hate dealing with servers. Medium could be the Heroku of the publishing industry: simple, elegant, and (I’d suggest) cheap. It wouldn’t need to compete with WordPress VIP, which TechCrunch runs on. Enterprise is a pain to sell and support. Medium could be WordPress VIP for the mid-market.
This move might spawn a whole ecosystem supporting these medium-sized publishers: freelance editors, designers, photographers could offer services to them. Writers too, of course (I’ll give this point its own section).
Now, without an ad hosting system of its own, Medium makes it hard for publications to make any ad money (Do they also prevent sponsored content? Doesn’t look like it.) This is okay if they only want to attract publications that have too little traffic for that model to work anyway. However, these publishers still need some way to make a buck even if their IT costs are handled by Medium on some low freemium pricing model. The answer lies in building a marketplace.
To summarize, I suggest Medium makes money in two ways:
- Charge publications for hosting and software
- Participate in a wide range of marketplace transactions
The idea that I’m most excited about for Medium is the marketplace.
Businesses pay
First of all, I’m biased. I’m a B2B entrepreneur through and through. I’d rather eat my own organs than build a B2C app. So my proposed solution follows a B2B paradigm, but I think it makes real sense for Medium.
Businesses would pay for two things that Medium has a ton of: licensable content and available writers. This means that Medium’s publications essentially become storefronts for content and writers.
For example, let’s take me. I have a standalone Medium account. I’m not associated with any publications or other special pages in Medium. I’m just a guy trying to build his personal brand.
If I was open to being hired for a writing job (ghostwriting or not) I might set a price on my profile and put the equivalent of a lit taxi sign up. Someone might read this article and say:
Hey, I want Ryan to guest post or ghostwrite for my blog. He only charges $199 per 1,000 word article. A steal! I’m going to contact him.
Or if it was the article she wanted:
Ryan’s treatise on Medium’s business model was just brilliant. I want to republish it as a white paper for my audience to read. I’m going to contact him and work out a deal.
This probably won’t happen for me, but my chances of finding this customer increase dramatically if I’m associated with one of Medium’s top publications, like Hacker Noon. They give me viewership and credibility. My posts get more heart-likes. Hacker Noon becomes a seal of approval, like a fancy university degree.
In this way, the publications become the place to be if you want to get known. They’ll have to compete for the best Medium authors, curate the best content, vie for the best scoops. Readers benefit from better content. Writers benefit from paid gigs, and publications benefit from notoriety and a piece of the action.
The business model is a basic marketplace system. Buyer (business) pays seller (writer) $X for some writing. A portion (10%?) of $X goes to Medium, and another portion (another 10%?) goes to the publication, if it was involved in the deal. So the writer gets 80% of $X but doesn’t have to pay for marketing. Spending 20% of your revenue on marketing ain’t bad.
Will it work?
Let me cough into the mic to make sure it’s on. Okay.
Yes, it will. But it won’t be easy to build a good writer marketplace. My team and I should know — we’ve spent the past five years doing just that and we have the battle scars to prove it.
But I’m proud to say we did it. We have an amazing product and a large pool of talented writers doing all kinds of work for businesses today. We’ve transferred millions of dollars to writers without the scale and investment that Medium can leverage.
I’m looking forward to seeing what happens…