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Medium Business Model: How Medium Makes Money

In 2012, when Evan Williams launched Medium.com, he was no newbie in the internet publishing space.

Having co-founded Blogger in 1999(acquired by Google) and Twitter in 2006, Evan’s contribution to democratizing publishing on the internet had already been immense. 

So why did he feel the itch to leave Twitter and launch Medium.com in 2012, when this new startup was his third venture in an industry he had been a part of for 13 years.

In his own words, this is what he set out to do,

“In 1999, two friends and I launched Blogger, a simple tool for publishing on the web. Blogs, or “weblogs,” were largely unknown outside a small community of web geeks.

The idea that anyone, anywhere, could publish for a global audience seemed radical.

Today, we carry the Internet around on pocket-sized devices with more computing power and pixels than we previously had on our desks a few years ago.

We have innumerable options for sharing our deep thoughts or cat photos — with or without a retro filter. Our collective, casual, everyday shares demonstrate that millions of people have the power of a printing press at their fingertips. (And they use it.) That is an amazing advancement.

We think there’s more to do.

It’s clear we’ve only scratched the surface of how we can use the tools available to us to connect hearts and minds. It’s also clear that the way media is changing isn’t entirely positive when it comes to creating a more informed citizenry.

Now that we’ve made sharing information virtually effortless, how do we increase depth of understanding, while also creating a level playing field that encourages ideas that come from anywhere?

We don’t know all the answers. But we know that words matter (still), so we built a better system for sharing them.”

Having raised $163 million in funding since then, Medium has undergone countless strategic pivots. As a private company that is yet to turn profitable, Medium’s existence has been more complicated than anyone can imagine. 

The best way to make sense of Medium’s existence, whatever little we can, is to go over its history, trace back all major pivots and then arrive at the monetization mechanism it finally settled for.

Note: Medium’s history is super looong but feels great to make sense of everything in your head. We will get to ‘How Medium Makes Money,’ but it will take some time.  Stay with us as we go down this rabbit hole. 

Evan William’s first blog introducing Medium to the world started with a simple sentence that described Medium as,  “A new place on the Internet where people share ideas and stories that are longer than 140 characters and not just for friends.”

In the same introductory blog, Evan added, “On Medium, you can contribute often or just once in a blue moon, without the commitment of a blog. And either way, you’re publishing into a thriving, pulsing network — not a standalone web site, which you alone are responsible for keeping alive.”

For writers, the value proposition of Medium was that it eliminated the hassle of running a blog and worrying about distribution by providing writers with an alternative growing network of readers.

But anyone serious about blogging is smart enough to understand that owning distribution is the key to building a long-term online presence. 

Some people are interested in sharing an idea or two, for whom Medium can be great considering it provides better reach, and some people don’t want to go through the hassle of setting up and running a blog themselves.

But how many people like that existed? Was the number large enough to create a separate space on the Internet? 

Anyway, Medium still made sure it got the right influx of content in the beginning, the kind it wanted, by taking two steps:

1. In the early days, only a select group of people were allowed to publish content on Medium, a group that Medium scaled up gradually over time.  

2. To nudge Medium in the right direction, Medium hired a director of content who would focus on getting great content on Medium — by discovering and commissioning authors & institutions, which simply means Medium would pay writers to get quality initial traction.

By April 2013, Medium had grown to a 30 people team. In the same month, on the 17th of April, Medium made its first acquisition — a long-form science and technology journalism website that began its journey with help from 2,566 backers that donated $140,201 through Kickstarter, one of whom was Evan Williams. 

What was unclear at the time was how exactly Matter fit into Medium’s overall scheme of things, and the post-acquisition statements of the two co-founders of Matter didn’t help much either. 

Here’s what they said post-acquisition, 

“If you already know what we do, don’t expect big changes yet. Our service is an ongoing experiment, but we have no immediate plans to alter the team, the places we publish (our website and the Kindle store), or how much we charge for each article.

More importantly, we have no plans — at any time — to stop crafting hard-hitting narratives about big ideas. One of the things that made it easy to join Medium was the knowledge that the company believes in great storytelling as much as we do, and is prepared to support what we do.

But we will be rolling out some changes in the coming months. We’ve already started using Medium to expand on the ideas we cover — see, for example, Amputees & Wannabes, the recent series of commentaries around Do No Harm, our story about people who desire to amputate a healthy limb.

We’ll also be introducing some exciting changes at the Matter website — changes that will make the site better for readers, and improve our mechanism for supporting long-form writing.

Matter ended up having a topsy-turvy journey at Medium, which we will look into ahead.

The first instance of Medium facing the conundrum of choosing whether it was a platform or a publisher occurred while Medium was still operating as invite-only, when a writer shared a blog on Medium (Deleted Later) claiming that the government was tracking her Google Searches; which turned out not to be the case. 

The platform vs. publisher, a debate that would haunt anyone trying to make sense of Medium and Evan William himself for years, was settled by a Medium tweet that said Medium was a platform.

By October 2013, Medium was no longer invite-only. As per Medium’s confirmation, the platform had opened up to everyone

Almost a month after that, Matter fully integrated with Medium and stopped charging for its content, but whether Matter decided to change the course of its ship on its own or lost the paying subscriber base it came to medium with, is up for conjecture.

In Dec 2013, when Medium launched its first iteration called Medium 1.0, Evan Williams confirmed Medium was a platform once again.

The first instance of an independent group of editors; commissioned to write on Medium quitting due to an unexpected Medium pivot occurred in May 2014.

In a parting post, Arikia Millikan, the editor of ladybits publication, wrote, “Medium and I have mutually decided to bring our collaboration to a close.”

Some excerpts from the post are worth highlighting. 

Explaining how the collaboration was designed to work, she wrote,

 I signed a contract with The Obvious Corporation (Medium’s parent firm) as a Collection Editor to be compensated at a rate of 5 cents per view for anything published in the LadyBits collection (with the rate decaying after certain traffic thresholds).

Nobody knew where the money was coming from to pay writers, but several Collection Editors speculated that the operation was financed by Ev and his mystery Twitter fortune.”

With regards to what led to the partnership ending, she said,

“Medium stopped curating a universal homepage where people browsing Medium.com would be exposed to the best writing on the site.

That meant that the people who were coming across LadyBits content because it was good, who wouldn’t normally have been exposed because they weren’t searching for feminist tech perspectives, weren’t finding us. Our traffic fell by about 50%, as did our income.”

The constant changes that Medium kept making made the collaboration so excruciatingly frustrating that here’s how she came to think of Medium at the time of parting,

“With every technological “upgrade” that shifted more curatorial burden to the collection editors, I couldn’t help but be reminded of the Cowbird, a brood parasitic cuckoo that lays its eggs in the nests of other birds when they are away.

The host mother bird unknowingly nests the foreign eggs and, when they hatch, the cowbird chicks consume an inordinate amount of resources, diverting them away from the native chicks.

After venting out her frustration, she ended the love-hate relationship with Medium with a customary thank you,

Everyone at LadyBits is grateful to Medium for inviting us to be a part of this crazy experiment. Personally, I’m forever grateful to Evan Hansen, the Medium product team, Ev Williams, and to the tech community for understanding the value of LadyBits and for facilitating what we wanted to do.

I hope that it continues to grow to support independent writers and provide a nurturing environment for innovative publishing projects. There are so many good ideas out there just waiting to exist.

Responding to the ladybits post, without specifically mentioning them, Evan Hansen, Editor-in-chief, wrote in a Medium post,

“One thing we learned: Paying for clicks is not automatically a recipe for producing scads of short, thoughtless posts. We picked editors we trusted, and we found, for the most part, they respected the site and reliably delivered high-quality writing.

We also learned (surprise) that high-quality posts do not automatically garner attention and audience commensurate with the effort of producing them. As a result, our payment model failed to support some really terrific contributors.

Getting back to sketching Medium’s timeline, In June 2014, Evan Williams answered some questions about what was going on with Matter and shed more light on Medium being a Publisher or Platform debate.

About a year and half ago, Medium acquired Matter, a Kickstarter-funded publication focused on investigative journalism in the area of science and technology.

Since then, the Matter team has published several award winning stories, moved all its publishing to Medium, dropped its paywall, and grown its audience into the hundreds of thousands. Good progress, but we wanted to do something bigger.

Today, we are relaunching Matter. Created from the ground up specifically for the Medium platform, Matter is a new online magazine committed to telling deeply engaging stories with fun, feeling and impact.

From science and tech to pop culture and politics, Matter stories provoke and entertain while providing a unique point of view on the people and issues of the day.

Matter will be headed up by Mark Lotto, formerly of GQ and The New York Times. Mark has built a crack team, and Matter’s founders, Jim Giles and Bobbie Johnson, will continue their efforts to bring important stories to our readers, as senior editors.

Here’s what Evan had to say on how he was thinking about Medium at that time,

Yes, we’re a publisher.

​A lot of questions have been asked about Medium since we launched, and this is as good a time as any to clear a few things up:

Medium is unquestionably a platform. We have a top-notch product team working hard to make Medium the best place for people and organizations to publish their stories and ideas to the world. More than 10,000 were published just last week.

One of the publishers on the platform is Medium, the company, as we have been from the beginning. Sometimes we find a writer we like who has a story we think should be told and commission them to tell it.

Sometimes we partner with great editors to create ongoing publishing efforts, things like War Is Boring, Human Parts, and The Nib. The relaunch of Matter is our most ambitious publishing effort to date, but it’s likely not our last.”

If this does not settle the Medium Platform or publisher debate, you can refer to Medium as a Platisher. Coined by Jonathan Glick in a 2014 Vox Article, Platisher is a fun term that weaves together elements of being both a platform & a publisher, which Medium seems to be.

Platisher Medium finally generated revenue for the first time in July 2014 using good old advertising. BMW sponsored a series of posts on a Medium collection called Re:form, in exchange for  “Presented by BMW” appearing near the top of the page and BMW videos running at the bottom of every article. 

Commenting on the BMW brand partnership, Evan Hansen had said, “We’re in exploratory moment. “It’s not about the money, it’s about the experiment.”

By June 2015,  Re:form had been closed down, or as Medium told Business Insider, the project had been terminated because its predetermined length had ended. Noticeably, it was around the same time many Medium commissioned publications significantly cut back their output because Medium reportedly axed independent budgets for freelance projects.

Around the same time, Matter stopped operating as an independent site in terms of management, and “staff writers at Matter” were transitioned to “Medium Writers”.

Amidst all these major upheavals, Evan Williams shared a new version of what Medium was, according to him, which was a bit different from his earlier musings, “Medium is not a publishing tool. It’s a network. A network of ideas that build off each other. And people. And GIFs (yeah, we have those, too — not our specialty, though, to be clear).”

By October 2015, a few months after the budget cuts in commissioning publications, Medium had started partnering with publishers once again. 

While Medium was still going to be home to more advertisements, the approach would be different, “we are going to be exploring new ways for professional and independent content creators to connect with both brands and their readers. We are committed to facilitating those relationships in a way that helps money flow back to creators so they can sustain themselves doing what they love.” Evan Williams had written in a Medium post.

From the announcement, it was clear Medium was not a company that would eat all expected ad revenue alone but also share it with the content creators. But that didn’t justify Medium’s volatile history of publisher collaborations.

By March 2016, Medium’s first acquired publication, Matter had died, or how Medium put it,

“We’re spinning off Matter, the National Magazine Award-winning longform publication, from the Medium mothership.We’re now an independent media company called Matter Studios. And we’re going to be a very different kind of media company.

For starters: It’s not a website. It’s not a website. Matter won’t even be a publication, not anymore, or a publisher, not precisely. We’ve been describing it as sort of a studio and sort of an incubator.”

In April 2016, when Medium announced new tools for publishers and member-supported publishing, allowing readers to support publications they loved directly through paid memberships, it seemed like Medium had finally gotten serious about helping publications thrive on the platform.

The idea sounded so lucrative to publishers that many even dropped their independent sites and migrated their content entirely to Medium.

Fast forward to January 2017, Medium made its biggest shift in strategy ever — they decided to drop the advertising revenue model altogether in the quest for a new business model, leading to a third of the staff — 50 people being laid off. 

Evan Williams explained the rationale behind the move in a post titledRenewing Medium’s Focus’.

“We set out to build a better publishing platform — one that allowed anyone to offer their stories and ideas to the world and that helped the great ones rise to the top.

In 2016, we made big investments in teams and technology aimed at attracting and migrating commercial publishers to Medium. And in order to get these publishers paid, we built out and started selling our first ad products.

This strategy worked in terms of driving growth, as well as improving the volume and consistency of great content. Some of the web’s best publishers are now on Medium, and we’re happy to work with them every day.

We also saw interest from many big brands and promising results from several content marketing campaigns on the platform.

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.

To continue on this trajectory put us at risk — even if we were successful, business-wise — of becoming an extension of a broken system.

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.

That’s a big part of why we are making this change today.

While Medium was trying to move in the right direction, why did it choose the wrong path (advertising) in the first place if they knew the model was broken.

More importantly, the change meant many publishers would not be able to make money by displaying sponsored content facilitated by Medium, which was one of the reasons why many Publishers had jumped aboard the Medium train. 

Andy Hunter, the founder of Electric literature, a site that had migrated to Medium earlier, pointed out there had been no official communication with publishers before Evan made the announcement,

“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.” 

The establishment, a publisher which was set to announce it had migrated to Medium was also left surprised. Instead, Kelley Calkins, co-founder of The establishment wrote a post titled Unexpected News From the Establishment

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” 

Around three months after the layoffs, Evan Willaims finally settled for the subscriptions as Medium’s Business Model, launching a $5 per month subscription membership for readers in March 2017, a model it has stuck to since then.

In what seemed like a good way to placate the annoyed publishers, Evan Williams said, “We will be routing 100% of the revenue from founding members (those who sign up in the first few months) to writers and independent publishers. 

Yet post Medium’s subscription announcement, several publishers like Pacific Standard and Film School Rejects left the platform. 

In August 2017, Medium announced that they had switched the subscription paywall from a “no access” to a “metered” one, meaning non-members would also be able to read a limited number of stories every month.

Writers would get paid based on claps, which is essentially Medium’s version of likes.

To make Medium’s subscription more attractive, Medium also added content from “premium publishers” like the Financial Times, The New York Times, The Economist, The Atlantic, Forbes & New York. Unlike other Medium writers who were to be paid based on claps, these premium publishers are paid flat fees per article upfront.

A year after Medium’s subscription was launched, Evan Williams shared a graph highlighting how Medium’s subscription offering had fared since launch.

A month after Evan shared subscription growth numbers, Medium abruptly cancelled the membership program of its 21 remaining subscription publisher partners; a feature Medium had rolled out in 2016, which allowed publications to sell individual paid memberships.

Basil Enan, Medium’s head of partnership, said, “The primary reason for discontinuing this feature is that it creates confusion among paying Medium members who do not have access to certain stories that are locked only for subscribers of a specific publication.”

After settling for the subscription-based mode, Medium has constantly made upgrades to the program and also added features to make Medium more lucrative to writers.

In October 2019, Medium updated their methodology for calculating writer earnings to improve how writers get paid. In a blog post announcing the same, Medium informed,

“Instead of paying based on claps as the main signal, we will now reward stories primarily based on reading time, which we’ve seen to be a closer measure of quality and resonance with readers.”

In June 2020, Medium added support for Newsletters. With this new feature, all publications can directly to reach out to their subscribers in their inbox. Later, Medium also added the capability to export this list off Medium, if writers wanted to do that.

By August 2020, Medium had reached a milestone of 1.25 billion pageviews.

Medium Page View Growth from 2013 to 2020
Source: Medium

In the beginning of 2021, Medium also added support for custom domains, an old feature that was put on pause due to technical difficulties and lack of prioritization.

In August 2021, Medium announced a major update to their partner program. While earlier writers were given a portion of the member’s subscription fee on the basis of reading time, they would now also be able to make money by referring their readers to Medium’s $5 monthly subscription plan. Under this referral scheme, writers would get paid half of the membership fee of the person they reffered, net of standard payment processor fees, for as long as they remain a member. Up until the new referral announcement, Medium had paid $28 million to writers participating in the Medium partner program.

Towards the end of 2021, Medium made two acquisitions: Knowable(an audio-first learning company) & Projector(a multimedia design platform).

To reiterate Medium’s Business Model, Medium makes money from selling subscriptions in exchange for unlimited access to Medium. The subscription can be bought for either 5 dollars per month or 50 dollars per year. Medium shares a portion of its subscription earnings with writers.

Since Medium is a private company, it is not obliged to share revenue or profitability numbers. But we can still try to make a rough estimate. According to Axios, Medium had 725k subscribers as March 2021. If we were to assume that 50% of the subscribers are subscribed to 5 dollar monthly plan and 50% of them are subscribed to 50 dollar annual plan, the estimated revenue comes to around $40 million.

Considering Medium has raised $163 million, its seems like the platform is yet to turn in a profit.

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Medium Business Model: How Medium Makes Money
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Medium Business Model: How Medium Makes Money
Medium’s history is super looong but feels good once you are able to make sense of everything in your head. We will get to ‘How Medium Makes Money’, but it
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I'm a digital marketer working 5 days a week as a salaried employee & writing business blogs on weekends.

My goal is to turn this blog into a full-time gig. But for that to happen, I need it to generate as much revenue as my salary to protect the downside.

To be transparent, I currently make money with ads, but it isn't enough to transition to working full-time.

Why do I want to work full-time on the blog if I can carry on writing on the weekends?
Two reasons:

  • My blog gets more than 20000 monthly visitors, most of them through search. The only bottleneck to growth is the amount of time I'm able to dedicate to the project, so working full-time will help me scale and turn it into my primary income source.
  • Working on projects of my own opens the door to unlimited personal and financial growth.

If you've found value from reading my content, feel free to support my dream in even the smallest way you can.

Muaaz Qadri
Muaaz Qadri
A Proud Computer Engineer turned Digital Marketer