No, I don’t think you are missing anything here. Publications definitely seem to be the elephant in the room and no one is talking about how they fit.
Perhaps they don’t. Perhaps publications will co-exist with membership but have to become drastically more niche focused such that they can draw a different audience to the more generalised membership.
Will publications suffer because individual authors are enticed behind the Medium paywall? Possibly, but it is also possible that focused publications could benefit from a backlash against membership because Medium has a different definition of “worthy” than the audience.
Just look at the concerns raised by the fiction and poetry sections of the Medium community. From what has been laid out they don’t seem to figure into this at all and their readers may be highly unlikely to pay for a site-wide subscription but could well pay for specific access to focused content.
It’s early days and we haven’t got the full picture but this is the danger with seemingly building a business model on the fly.