There’s been a lot of conversation, particularly in light of the volume of “fake news” that was spread during the recent election cycle, about whether or not Facebook and Twitter in particular were or weren’t media companies. There were compelling arguments on both sides (they actually are) but one thing at least Facebook does not have in common with media companies is that its ad revenue is growing.
Unfortunately the same can’t be said for Medium. In a 5-min read posted today, founder Ev Williams has announced the company is shutting down its offices in both New York City and Washington, D.C., laying off about a third of its staff in the process. The problem seems to have come from a curious form of Silicon Valley math, whereby Medium started by selling a clean, uncluttered publishing and reading space. But while that attracted plenty of start-up founders who were writing about launching or shutting down their businesses, it didn’t move the needle too much on big-name-brand adoption. So it made an appeal to publications that involved various ad offerings. But it now finds it over-extended itself in terms of supporting those publishers, with ad revenue continuing to lag.
That’s problematic when you’re positioning yourself as the cure to struggling publisher’s ills. Medium is admitting that selling ads is hard and that the system is largely broken, more interested in cheap pageviews than it is in supporting high-quality journalism. And it’s a tacit admission that the paid membership option it offered publishers isn’t scaling enough to actually support more fully those publications.
Williams says they’re essentially going back to the drawing board to come up with a new way to support online media, but that has to be viewed in the context of that being the goal of Medium back when it launched. So it’s kind of a sideways admission that it failed at its initial mission but will try again.
Any sense of schadenfreude is fleeting, though, since there are real stakes here, particularly for the number of sites – Film School Rejects, Backchannel and a number of others – who were pitched Medium as the cure to their problems. Medium would handle the backend, freeing them from worrying about server maintenance and other concerns, as well as offering them attractive (at the time) advertising income as well as the aforementioned membership tier. While it’s not addressed in Williams’ post, one has to wonder what those site owners have or haven’t been told. These people can’t wait for Medium to figure out a whole new way to bring in online revenue, they need to pay their writers now.
More than that, I can’t help but think that this is why being a platform isn’t a business. Platforms are dumb, it’s media companies that offer money. WordPress and other companies aren’t telling you they’ll both save you from technical concerns and help you make money. That is, though, the promise Medium made and it’s the one that Facebook and others are making as well through offerings like Instant Articles and more.
What Medium’s unfortunate pivot shows is that putting all your eggs in someone else’s basket means you’re outsourcing the terms of your continued existence. Yes, to some extent that’s the deal all web publishers are making since they’re reliant on the ad industry to not completely meltdown, but it’s more pointed when you move into providing the structure of the company’s very existence. It’s why I’ve always warned against outsourcing content solely to social networks and other owned platforms; better to live or die while owning your own material and controlling your own existence than to be doing well only to have the third-party you rely on for infrastructure fail and take you down with it.
I’m hopeful Medium will figure things out and continue to provide a service to the media brands it’s hosting. But this is not a hopeful sign and could be the first sign that more problems are coming. It’s not as if others haven’t tried to figure out new, innovative ways to bring in online revenue before, with little variation on three options: Advertising, Memberships/Subscriptions and Tip Jar micropayments. If Williams and his team can come up with something new, that’s great and I’ll be pulling for them. I just hope it comes in time to not do lasting damage to those brands that are now counting on Medium for their very existence.