This afternoon, Ev Williams, the founder of publishing platform Medium, announced that, after reevaluating its current strategy, the company is laying off 50 people and changing its business model. The losses in personnel amount to a third of the company’s staff.
His announcement, written on Medium (naturally: it’s the number-one source for founders announcing start-up layoffs, pivots, and shutterings), is candid, and as a document of a particular moment in the evolution of the media industry, fascinating. Medium was founded as a clean, easy-to-use space for individuals and groups to publish writing of, yes, medium length — one easy way to think about it would be as the YouTube of writing. But, as Williams (a founder of Blogger and Twitter) writes:
However, in building out this model, we realized we didn’t yet have the right solution to the big question of driving payment for quality content. We had started scaling up the teams to sell and support products that were, at best, incremental improvements on the ad-driven publishing model, not the transformative model we were aiming for.
This isn’t surprising — anyone working in digital media in 2016 could tell you that only a handful of businesses (Facebook and Google, specifically) can reach the monstrous scale necessary to make money off of advertising in a world where ad space is essentially infinite. What’s interesting, though, is Williams’s candor about the root problem — advertising as a single revenue source:
Upon further reflection, it’s clear that the broken system is ad-driven media on the internet. It simply doesn’t serve people. In fact, it’s not designed to. The vast majority of articles, videos, and other “content” we all consume on a daily basis is paid for — directly or indirectly — by corporations who are funding it in order to advance their goals. And it is measured, amplified, and rewarded based on its ability to do that. Period. As a result, we get…well, what we get. And it’s getting worse.
Williams says that 2016 was a big year for Medium, and in many ways he’s right. The company spent most of the year carving out a home for small publishers, offering to take over the management of technology and ad sales in exchange for having the content live on Medium. Sites like the Awl and ThinkProgress moved onto the platform, while new ventures like Bill Simmons’s the Ringer launched on it.
But Williams also says the company will be working on discovering a new revenue model. Nothing he writes in his announcement will be a revelation to any digital media company; all are currently attempting to find alternate sources of revenue and avoid churning out articles on whatever’s trending at any particular moment. Digital ad revenue is tough to come by, especially thanks to ad blockers. Medium doesn’t even use display ad units, otherwise known as banner ads. Businesses that migrated or launched on Medium, and developed revenue plans based on Medium’s old strategy, are probably not feeling great right about now. (We’ve reached out to editors at those sites to see if their relationship has changed, and will update when we hear back.)
“[W]e are shifting our resources and attention to defining a new model for writers and creators to be rewarded,” Williams says, “based on the value they’re creating for people.” Translation: Medium wants a way for its publishers to make money directly off of their readers. One solution would be the “tip jars” system that video-game streamers on Twitch use — a way to toss a few bucks someone’s way when you like what they’re up to. (Micropayments like that have long been solicited by bloggers, just rarely in a standardized way on a single platform.) Another solution would be, well, subscriptions. They worked for magazines and newspapers, didn’t they?