Medium Could Make More Money With Subscriptions Behind The Paywall & Ads Outside The Paywall
A Better Choice For Medium, Its Readers & Writers Is Subscriptions For Paywall Content & Ads For Free Content
By David Grace (www.DavidGraceAuthor.com)
Writers Need Readers
Almost all writers write because they have something they want to say or they have a story they want to tell. Very few people say, “I’m going to become a writer because that’s a great way to make a lot of money.”
Every writer’s fundamental need is for readers, but readers are hard to come by and are usually sequestered behind paywalls which are guarded by gatekeepers.
Gatekeepers Isolate Writers From Readers
Historically, gatekeepers have been agents, editors, and publishers. Most writers spend a significant portion of their time and energy trying to get their work past the gatekeepers. For many authors, doing the writing is easier than getting the readers.
Medium Eliminated Gatekeepers
Initially, Medium offered a solution to the gatekeeper problem because it had no gatekeepers. Authors could write and publish whatever they wanted, available free to anyone with a computer or a smart phone.
How Can Medium Make Money?
That was great, but it ignored the question:
“What is Medium’s business model?” In other words, “How is Medium going to earn the money it needs to fund its operation?”
An Ad-Based Business Model
Google makes money by selling ads related to the user’s search. Geno’s Pizzeria will pay Google to put a Geno’s ad at the top of the results of my search for “Pizza near me.”
Medium could have gone the same route, hosting ads targeted to topics related to the article where the ad was placed or to the demographics of the people who were the likely readers of that type of story.
Medium’s Mistaken Assumption That It Would Have To Share Ad Revenue With Writers
But Medium made a fundamental, crucial assumption that it would have to pay writers based on the ad revenue derived from the writer’s column.
Sharing Ad Revenue With Writers Would Skew Content
Once Medium made the assumption that it would have to pay writers part of the ad revenue stream associated with their posts, it followed that an ad-based model would encourage writers to follow the ad money, thus skewing Medium’s content to meet the desires of advertisers.
Medium didn’t want to give writers a monetary incentive to chase advertiser dollars so it rejected the advertising business model.
Medium Wouldn’t Necessarily Have Had To Share Ad Revenue With Writers
Medium could have chosen an advertising-based business model without electing to share the ad revenue with the writers. In that case, the writers wouldn’t have had any incentive to write articles that would maximize ad revenue because ad revenue would be irrelevant to unpaid writers.
The entire concern about advertising dollars driving story content disappears so long as Medium doesn’t pay writers a share of the ad revenue.
But, wouldn’t all writers demand a share of the ad revenue? Only if all writers were the same, and they are not.
Two Kinds Of Writers — Two Business Models
There are basically two types of Medium writers: Those who already have an audience and who want to monetize their content, and those who don’t have an audience and want to maximize their exposure.
If I were Kim Kardashian and I already had millions of followers, my primary motivation would be to earn the maximum amount of money from my articles and I would want to put my content behind a paywall and gain the maximum amount of money from a large number of reads by my fans.
As an unknown writer, I want my work exposed to 13 million potential readers instead of 6.5 million or 3 million so I would choose to put my work outside the paywall and gain the maximum amount of exposure and forego any payments.
Content behind the paywall with subscription revenue-sharing makes sense for the celebrity group of writers and ad-supported free content without revenue-sharing makes sense for the unknown set of writers.
The Assumption That It Would Have To Share Ad Revenue Led Medium To Choose A Subscription Business Model
But once Medium decided that it would need to share ad revenue with writers, it felt it had to reject an ad-based business model. That left Medium with a subscriber business model where readers would pay a flat fee per month or a per-word to access content.
Good, Free Stories Are Bad For Medium’s Subscription Business Model
If there are lots of good columns available on Medium for free, people would be far less motivated to pay a subscription fee. The more good Medium content that was available for free, the fewer people would subscribe.
By pursuing the subscription model, it became in Medium’s financial best interests to hide, reduce or even eliminate good, free content.
The Number Of Paid Readers Is Far Less Than The Number Of Free Readers
Of course, for the subscription business model to work, writers would need to be motivated to put their work behind the paywall. Medium did this in two ways:
- The carrot — it paid writers for stories published behind the paywall
- The stick — it refused to promote stories published outside the paywall
The writers’ problem with the subscription business model is that there is a much, much bigger audience for free content than there is for paid content, and the principal motivation for most Medium writers is to expose their work to the largest possible audience, not to earn money.
Writers Want More Readers But A Subscription Models Gets Them Fewer Readers
Medium’s need to put as many columns as possible behind the paywall is in direct conflict with one of the main reasons most writers chose Medium in the first place, namely, as a venue where their work would have exposure to the maximum audience.
We’ll Make It Up In Free Promotions
In response to writers’ concerns that stories behind the paywall would be exposed to a subscriber audience that is much smaller than the free audience, Medium promised to curate/recommend good columns that writers agreed to put behind the paywall.
In theory, the potential, theoretical promotion from this curation was supposed to make up for the smaller subscriber-only audience — fewer total eyeballs — by getting the writer more actual reads via Medium’s promotion of their column.
Stories Behind The Paywall Have A Much Smaller Audience
- Over 20,000 columns are published on Medium every day, but the number that can be promoted via Medium’s daily emails is, at most, few dozen. That means that the odds of your article behind the paywall being promoted are very, very small.
- In a practical sense, the promise of curation/promotion increasing the readership of the articles you agree to put behind the paywall is highly unlikely to ever become a reality.
Curation Introduces A New Set Of Gatekeepers
Secondly, curation is dependent on the talent and the tastes of the editors. If you’re writing columns debunking the idea of a universal basic income and the editor assigned to that topic thinks that UBI is the greatest idea since sliced bread, your columns are not going to be promoted no matter how well written they are.
In practical terms, putting your articles behind the paywall may well reduce your potential audience by millions, yes millions, of people without garnering any overbalancing increase in your column’s exposure.
At the end of the day, an editor/curator is just another gatekeeper, something that writers came to Medium to escape.
Medium Magazines
Medium adopted a second tactic in pursuit of subscription revenue — Medium-produced magazines whose content is only available to subscribers.
The hope was that the Medium Magazines would have such arresting content that large numbers of people would be motivated to become subscribers in order to have access to them. For that to work, the Medium magazines had to publish only new content that was placed behind the paywall.
Medium Magazines Introduced More Gatekeepers & Took Story Choices Away From Writers
But the problem there was that these Medium magazines created exactly the conditions that writers came to Medium to escape — someone else choosing your work’s subject matter and writers having to get their work past a gatekeeper.
So, getting published by a Medium magazine meant that you had to write the articles that the editors wanted instead of writing the articles that you wanted, that you had to talk about what the editors wanted you to talk about instead of what you wanted to talk about.
Secondly, instead of seeing your work published instantly, you had to submit your article to a gatekeeper, then wait days or weeks for him/her to approve or reject it.
Both of those situations were absolutely the opposite of why most people chose to write on Medium in the first place, namely:
- The ability to say what you wanted to say instead of what someone else wanted you to say, and
- The ability to avoid gatekeepers.
Of Course, Medium Needs To Make A Profit
I’m not blaming Medium or criticizing it for trying to make money. I understand that a business needs to make money.
Medium Relied On Two False Assumptions
I’m saying that Medium made two fundamental mistakes in its reasoning:
- That it had to choose EITHER an advertising business model OR a subscription business model, and
- That if it chose an advertising business model, it would have to share the advertising revenue with the writers.
Two Business Models Make More Money Than Just One
In fact, Medium can have BOTH an advertising business model AND a subscription model, and doing that will actually make Medium MORE money than its current choice of a subscription-only business model.
Two Business Models Return Content Choices To Writers & Avoid Adding Gatekeepers
Moreover, by using both business models Medium will avoid the drawbacks of
- Editors dictating the content and
- Installing a new set of gatekeepers.
How Would A Two-Business-Model System Work?
Under a two-business-model system, as a writer I would be free to either
- Publish my columns behind the paywall as part of the subscription business model and I would earn a share of the subscription revenue, OR
- Publish my columns outside the paywall where Medium would be free to insert ads in my stories and I would not share in that ad revenue.
If I chose to publish my columns outside the paywall my columns would still be curated with the costs of curation being covered by advertising revenue. Moreover, since free columns would generate ad revenue, it would be in Medium’s self-interest to promote my free columns that were published outside the paywall.
Promotion Of Both Free & Paid Columns
The Medium Daily Email would have two sections, Recommended Free Columns and Recommended Subscriber Columns.
Free columns with ads would be promoted in the Free section of the daily email and columns behind the paywall would be promoted in the Subscriber section of the email.
This leads us to the second change in policy that would result from a two-business-model system.
Effect Of A Two-Business-Model System On Medium Magazines
Right now, Medium magazines are designed to generate new subscribers which means they will only publish new content located behind the paywall.
If content outside the paywall also makes Medium money, then Medium magazines will no longer have to be the carrot designed to lure paid subscribers.
Medium Magazines Could Now Accept Previously Published Columns
Instead, Medium magazines could now accept columns previously published outside the paywall if the work fit their topic areas and editorial standards.
If Medium magazines abandoned their subscription-only orientation, writers could publish what they wanted when they wanted, and if one of Medium’s magazines later decided to publish an issue on that topic, it could either find the writer’s old column on its own or it could announce what it was looking for and the writer could send the magazine a link to his/her already-published story which the editors would be free to re-publish in their magazine.
If a previously-published column originally had ads because it was published outside the paywall, then it would still have ads when it was published in a Medium magazine and it would still be available to everyone.
Columns that were originally behind the paywall would be ad-free in a Medium magazine and would only be accessible to subscribers.
The criteria for publication in a Medium magazine would be the “best” columns on that topic rather than the current limitation of only columns that are behind the paywall because columns both inside and outside the paywall would each make money for Medium.
The Benefits Of A Two-Business-Model System
Of course, adding an advertising component to the Medium system would not be a trivial effort. Why should Medium go to all that trouble?
A Bigger Audience
Well, what’s the ratio of Medium’s paid subscribers to unpaid but registered Medium users?
Medium reportedly attracts about 13 million unique readers per month. If half of them are paid subscribers that means that articles behind the paywall lose six and a half million potential readers every month compared to articles outside the paywall.
There is no hard limit on the number of people who will read free Medium columns. The number who will read Medium columns behind the paywall is, of course, very limited.
People are being bombarded with paywall pitches. Bloomberg wants people to subscribe. The NY Times wants people to subscribe. Etc. Etc. Etc.
There is a real limit on how many people will subscribe to how many publications. For readers, it’s potentially death by a thousand cuts. How many publications can you afford to support at the rate of $5 here, $7 there?
But it doesn’t have to be that way.
As Business Insider has shown, you can have both ads and subscriptions. You can put some content behind the paywall and derive a subscription revenue stream from it and put other content outside the paywall and use it to generate advertising revenue.
From Medium’s point of view, the crucial point is that it can make money on both sets of writers (famous and non-famous) and both business models (subscription and advertising) while still leaving content choices to writers and still eliminating gatekeepers.
There is also the benefit of choice. Let the writers choose if they want ads and a bigger audience or money and a smaller audience. Let the readers choose if they want free stories with ads or paid-for stories without ads.
Let Medium make money no matter which choice readers and writers make.
— David Grace (www.DavidGraceAuthor.com)
