Nieman Foundation at Harvard
“Politics as a chronic stressor”: News about politics bums you out and can make you feel ill — but it also makes you take action
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Jan. 5, 2017, 9:47 a.m.
Business Models

Medium lays off dozens as it tries to find a publishing business model that may not actually exist yet

But what happens to the publishers who gave up some measure of their independence for the platform?

Last March, Ev Williams described his publishing platform, Medium, as a superior alternative to the rest of the web. “It’s a simplistic view to say go where the people are,” Williams said. “You need to go where the right people are.”

Turns out that being among the right people — the publishers, tech executives, and media elites that Medium has wooed to its platform — still isn’t a business model. On Wednesday, in a Medium post, Williams wrote that the company was laying off a third of its staff, about 50 people, and shuttering its New York and Washington offices. The positions being cut are “mostly in sales, support, and other business functions,” Williams wrote. But those leaving also include Saul Carlin, the company’s head of publisher development, whose job was to bring on board buzzy publishers like The Ringer and The Awl as well as smaller publishers and individuals.

It isn’t clear what happens to those publishers now. It appears that Medium is expecting them to keep up some form of business as usual. “Some of the web’s best publishers are now on Medium, and we’re happy to work with them every day,” Williams wrote. (Sunil Rajaraman, CEO of The Bold Italic, told me that the announcement “has had zero effect” on his site.) But Andy Hunter, the founder of nonprofit Electric Literature, which migrated to Medium last year, told me, “There’s been no official communication. I’m sure Electric Literature will be fine, but I certainly doubt the in-network ad revenue will reach the levels that they originally projected.” (Politico also reported that “Five members of the revenue beta program [said] that they did not receive any advance notice of Medium’s change in strategy before Williams’ public announcement.”)

In a particularly unusual position was The Establishment, a year-old site focused on and funded by women, which was set to announce it had transitioned to Medium yesterday when it was surprised by the announcement. “This is not the announcement post we had planned to publish today,” cofounder Kelley Calkins wrote:

Medium initially approached us about a possible migration over the summer. We have been in the process of migrating our site from WordPress to Medium since late fall, excited to join the ranks of publishers we admire—ThinkProgress, The Awl, Femsplain, The Ringer, Pacific Standard, to name but a few—and the broader Medium network of talented writers and thoughtful readers alike. Our launch day, today, was scheduled in early December. We received news of Medium’s pivot and attendant downsizing when the rest of the world did, around noon.

At this time, this is, literally, all we know.

The publishers who remain on Medium will be working with a reduced number of tools. When Medium launched its publisher program last year, one of the touted benefits was sponsored content, facilitated by Medium. Now Medium will no longer offer this option. Native advertising (what Medium called “promoted stories”) offered “at best, incremental improvements on the ad-driven publishing model, not the transformative model we were aiming for,” Williams wrote.

Elizabeth Spiers, whose There Is Only R was also part of Medium’s revenue beta for publishers, also was not informed about the changes, and wrote:

“I’ll admit I’m baffled when the stated rationale for throwing in the towel is that ad-backed media is broken. If we agree that it is, it was broken when Medium began the publisher program, and had they listened to any people who’ve been publishers before (many of the publishers in their revenue program, for example), that would have been obvious. So I agree with Bryan Goldberg here when he says that you generally have to understand an industry before you try to disrupt it, and too many Valley companies intent on fixing broken models think incumbent companies are using broken models because they’re idiots and not because the problems are not easily solved.”

Transformative or not, advertising help was still a draw for small publishers who might not have had the desire or bandwidth to arrange those deals on their own; now it won’t be an option.

In June, shortly after The Awl and The Hairpin migrated to Medium, Awl publisher Michael Macher told me:

“Advertising is business as usual. The big difference is that we no longer offer banner ads and we’re not working with ad exchanges or networks anymore. We’re more focused on high-gloss custom editorial now. We do content marketing deals and sponsored posts with brands, and we have a few of those deals in the works. Medium also sources some deals and we produce content for them; we worked on a great program for the financial tech company SoFi, and there’s more coming down the pike.”

“We have not seen a big issue — or a little issue — with revenue [as a result of getting rid of banner ads]. We’re really pleased with revenue; it’s good,” Macher said at the time.

Wednesday’s changes essentially force publishers to abandon advertising as an option, unless they arrange branded content deals on their own. Medium’s template had never been friendly to banner ads. There were workarounds in which publishers could upload them on their own, but the site’s design — even with some of the customization that Medium was working on with some of its publishers — doesn’t really offer room to promote — well, much of anything. There aren’t sidebars or columns where a publisher that does want to rely on some kind of advertising could place it.

“We are shifting our resources and attention to defining a new model for writers and creators to be rewarded, based on the value they’re creating for people. And toward building a transformational product for curious humans who want to get smarter about the world every day. It is too soon to say exactly what this will look like,” Williams wrote.

A person familiar with the company mentioned “micropayments and membership” as potential ongoing areas of investment. But it’s not clear why Medium would somehow be able to achieve success through micropayments at scale when no other company has been able to. It seems as if the closest parallel might be Amazon, which with its Kindle self-publishing program and $0.99 ebooks gave many authors a voice but ultimately enabled only a very select few to make significant money.

That leaves subscriptions, which has also only been a successful business model for a relatively small number of individual creators. It is a model that some Medium publishers are already using or at least experimenting with, and one that others, like The Awl and The Ringer, may need to consider — but there’s no guarantee it will work for the general-interest-ish publishers that Medium wooed.

“Medium found itself straying down the path of least resistance, where legacy models reside,” M.G. Siegler of GV (formerly known as Google Ventures), an investor in Medium, wrote Wednesday. “At some point, there will be a fundamental recalibration of the publishing model…In the long run, this will benefit all of us.”

In the short run, though, the small publishers that signed on with Medium are once again in at least a holding pattern, and may not be able to keep themselves treading water even if Ev Williams’ company can.

Top screenshot from here.

POSTED     Jan. 5, 2017, 9:47 a.m.
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