Publishing platform Medium announced today that it had laid off 50 people — about a third of it staff — amid growing concerns about its advertising-based model. The company said it would explore alternatives to pageview-based advertising in the hopes that it can develop a lucrative, sustainable alternative for writers publishers. “While we could continue on our current path — and there is a business case for doing so — we decided that we risk failing on our larger, original mission if we don’t make some proactive changes while we have the momentum and resources to do so,” CEO Ev Williams said in a blog post.
Williams said Medium grew in popularity as a product last year, with 300 percent growth in readers and published posts. (The company claims about 60 million monthly readers.) It also invited more than a dozen boutique publishers to move their businesses to the platform, including the Awl Network and Bill Simmons’ new publication The Ringer. Medium split ad revenue with the publishers, generating the company’s first real revenue. It’s unclear what will happen with those publications now.
Williams soured on the ad market, he said, after coming to believe it leads directly to mindless clickbait, fake news, and other undesirable content. “It’s clear that the broken system is ad-driven media on the internet,” Williams wrote. “It simply doesn’t serve people. In fact, it’s not designed to.” (Disclosure: The Verge is ad-driven media on the internet.) What Williams didn’t say is that the online advertising market is hypercompetitive, and has been mostly sewn up by Facebook and Google. Which means Medium might not ever grow as big as its investors hoped for, no matter how many publishers it signed up.
So what business model will Medium use to supplant its old advertising revenue? The company didn’t say. Alternatives that publishers have tried to date include subscriptions, paywalls, and tip jars — though it’s unclear how those would generate more profits for Medium than ads would. It appears the company plans to build a new model entirely. If the company succeeds, writers, publishers, and readers would all stand to benefit — but it’s going to be much easier said than done.