Medium pivoted from the ad tech business because it realized for the scale of revenues it aspires to be, it needs massive amounts of traffic. For a $500m revenue run rate per quarter, which it might target to achieve in a couple of years — Medium might need as much as 10–25 billion ad views. That is not possible without a couple of billion page views to match.
A few days ago, Medium’s CEO Ev Williams introduced a paid only feature for users. While it is a commendable pivot for Medium.com, I believe it will be not as successful as both Ev as well as the investors who have poured over a $100m into the startup.
Unfortunately, as DHH has mentioned in his blog, the fallacy of chasing exponential growth does corrupt and devour. Don’t get me wrong — I am not against exponential growth. But not when it is manufactured for the sake of justifying investments. I don’t support growth when it is forced upon and it doesn’t become sustaining.
Medium moved to build ad sales teams when there was pressure to grow revenues. Large publishers were brought on board and in some case they were paid. There was a good chunk of users who moved with Medium. The challenge was that these users won’t engage as much as they do on Facebook (or Snapchat). The engagement isn’t going to be enough to justify advertisers.
And for no obvious fault of theirs, the advertising teams at Medium had to go.
Medium is now trying a “new Medium Experience” i.e. another model that will now charge the customers to access premium content. I think this initiative is great but it does a few things wrong.
- It takes away the choice from consumers. Don’t get me wrong — I do subscribe to a few content websites and services. But content largely has been free (subsidized with ads) and while I am willing to pay for NYT or Washington post, I am not really sure if I’d want to pay to Medium.com or the publishers on it. I might have been happier if I were given a choice of using a page with ads and the same page without ads. That choice would have made a lot of difference to a lot of people.
- $5- I am not even sure if Medium will be able to then share that revenue with a whole bunch of other publishers who are on medium. The amount $5 looks too low to sustain multiple publishers. Maybe this is just a test and maybe this is a test. I really think that unless medium simply becomes a middle man collecting toll for the magazines and publishers at an individual or using a-la-carte plan, it is not going to work. And for that, the pricing has to be a lot more.
Post Cable Networks (PCN) and Video as the future of Content
Jon Steinberg coined a nice term called Post Cable Networks, describing the new post cable services and I think Medium is also a PCN to the same genre except with a different kind of content. I also think that Medium and many of its publishers will be forced to move to live video and other forms of video for content and monetization because video happens to have the highest perceived value for content in the minds of the consumers., and not so incidentally, the highest value per thousand impressions as paid for by advertisers.
Medium’s new experiment is probably doomed to fail-as-is and will likely to pivot to more types of content, including video and better types of pricing for publishers participating in it. At some point, it will conflict with the mindshare with Snapchat, Instagram and Twitter unless it moves quickly to remedy its mistakes including not having ads as a part of its monetization strategy and not focussing more than one kind of content.
