Pennies for your thoughts
Why advertising is not the only way to support Medium’s vision
Given Ev and co’s recent funding announcement, monetizing the platform might not seem like priority number one for the Medium team. More urgently, Medium needs to figure out how to get quality writers onto the platform. But, as Edward asked in an old post, “What if a revenue model is necessary in order to achieve scale (of a certain type) in the first place?”
The general logic is simple. In order to attract high production value (i.e. reported, researched, media-rich) pieces on the platform, Medium needs to become a destination for professional writers. In order to attract professional writers, Medium needs to figure out how to get writers paid.
So far, Medium has paid certain writers and influencers out of pocket, which is nice, but ultimately won’t scale. Eventually we, the consumers, will have to support the content creators either directly with our wallets, or indirectly with our attention (read ads).
I’ll save the branded content discussion for a later day, but I do believe native advertising can be done well without sacrificing UX—look at Vox. But the quickest, sustainable way to pay writers is with consumer-direct payments. Let’s see what we can learn from looking at some existing revenue models for digital media:
NYTimes (metered paywall):
You’ve reached the limit of 10 free articles a month.
The digital subscriptions business is just a slice of the Grey Lady’s revenue pie, but may be the single biggest driver of the paper’s future success. One important figure to consider is of the Time’s 60 million unique visitors (U.S.) a month, one million of them pay; 59 million don’t. The one million subscribers also contribute a large chunk of the traffic (ad dollars) to the site. The NYT teaches us that even for a pub with global distribution, a loyal group of core readers still generates a disproportionate share of the revenue.
Patreon (recurring crowdfunding):
Creators receive millions of dollars each month in support from their patrons
Patreon helps creatives earn sustainable incomes with recurring patronage from their fans. Think Kickstarter meets the Medicis. Unfortunately, writers haven’t been too successful on the platform with the exception of the venerable Tim Urban (left). One issue seems to be that crowdfunding is largely predicated on offering unique rewards. I like that Patreon incentivizes creatives to produce (ie. fans can give $x for every 500-word article you write), but it’s hard to get people to pay for anything when the value proposition of the provided good/service isn’t proven. In order to get paid, writers must create perceived value for the next piece they write.
Wikipedia (donations):
Please read: A personal appeal from Wikipedia founder Jimmy Wales
“The small non-profit that runs the #5 website in the world” does an annual fundraising campaign that appeals to the good samaritan in all of us—if you value our mission, please donate what you can. The problem is that donation drives are downright annoying. I’ll even go as far to say that having someone repeatedly and directly ask you for money is worse than advertising. The model can work for non-profits, but donations often aren’t recurring and require persistent pestering to become a long-term strategy. Furthermore, I’m not sure any for-profit business would implement a revenue model with such a large incentive for freeloaders.
In order to drive revenue, Medium ultimately needs members, not subscribers. Although the difference may seem purely semantic, it’s the difference between belonging to a network and receiving a service (social norm vs. economic norm). The active readers and thoughtful responders that make up the Medium network are the site’s UVP. The audience is what sales people sell to brands and why writers choose to publish to Medium instead of or in addition to other sites.
Eventually, some members may pay to access the full catalog of content on the site, some may pay to directly support the writers they love, some may pay because they believe in Medium’s vision. Fundamentally, members deserve a reading experience void of interruptive takeovers and blinking banners and writers deserve to be rewarded for creating valuable content.
Using total time read as a metric for success instead of clicks is a great first step toward driving depth of engagement. Using a subscriber-share model (as explained in this excellent article about Spotify) instead of a big pool is a great way to incentivize writers to attract unique viewers to their content. Vikram, I like your promote button, but I worry when paid promotes influence the ranking algorithm. The truth is, no one model that any of us write a thought piece about is going to be the golden ticket. (Although Todd, this is awesome.)
With funding, Medium has the unique opportunity to experiment intentionally. Like the Times, I believe Medium’s core users will ultimately drive the lion’s share of revenue for the site. After Medium tests different revenue models, they must listen to these core users to see what’s working. As someone who has derived a lot of value from the writing on Medium, I know I’m not the only one who’s excited to pay it forward.
