What Medium’s bold new strategy means for the news industry
It’s a question that has stumped newspapers for nearly two decades: How can content be monetized without ads?
Medium’s Evan Williams is searching for the answer.
In a blog post this week, Williams announced his decision to cut about one third of Medium’s staff, mostly in sales and support, because Williams envisions Medium as a platform that doesn’t depend on ads.
“Our vision, when we started in 2012, was ambitious: To build a platform that defined a new model for media on the internet,” Williams writes. “The problem, as we saw it, was that the incentives driving the creation and spread of content were not serving the people consuming it or creating it — or society as a whole. As I wrote at the time, ‘The current system causes increasing amounts of misinformation … and pressure to put out more content more cheaply — depth, originality, or quality be damned. It’s unsustainable and unsatisfying for producers and consumers alike … We need a new model.'”
According to Williams, Medium invested in attracting commercial publishers to the platform in 2016, and, “There is a business case” for continuing to do so. But, as he writes, “To continue on this trajectory put us at risk — even if we were successful, business-wise — of becoming an extension of a broken system,” one where “‘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.”
How will Medium become profitable? Here are some other business models newspapers and online news sites are tinkering with
His blog post didn’t offer any solutions yet. “It is too soon to say exactly what this will look like. This strategy is more focused but also less proven,” he writes. But he’s not the first to experiment with publishing on an ad-free platform.
As news content is arguably more popular than ever before, a Pew Research Center study shows that since 2008, more people in the United States have gotten their news online for free than from paid subscriptions to newspapers or magazines. To counter the lack of subscriptions, newspapers have relied on ad revenue to cover some of the costs of producing the content that readers have grown to expect for free. But do they have to?
A 100-year-old French newspaper serves as a model for newspapers looking to ditch ads from their sites. Le Canard Enchainé has published every Wednesday since 1916 with no ads, and, more recently, a similarly ad-free website.
Longtime editor Erik Emptaz told NPR last year that he credits the paper’s independence and its humor for its success without advertising, saying “French newspapers today don’t face censorship but they have huge economic pressure. Our independence comes from the fact that we don’t have advertisers. So we can write anything we want about anybody.”
Selling for 1.20 euros ($1.50), the Canard made around $3 million in profits in 2015 by selling around 400,000 copies a week. According to Emptaz, the paper banks its profits so it can keep operating even if it becomes less profitable.
But while the Canard has a long history of being sustainable without ads, newspapers that have relied on ad revenue are having to get creative if they hope to offer readers content without ads.
In the US, the Washington Post reported more than doubling its subscription revenue in 2016, though that was after a $50 million investment by Amazon founder and CEO Jeff Bezos, who purchased the paper in 2013. Similarly, other news sites are subsidizing their content creation by offering other products and services — Reuters News Agency is owned by Thomson Reuters, a company that offers financial and legal services, and Bloomberg News is subsidized by Bloomberg Terminal, its data service.
How can smaller publishers increase their revenue?
One could argue that legacy publications, such as the ones listed above, already have such strong branding that they can push for subscriptions and paying for other services. But what about smaller papers and sites?
The Salt Lake Tribune launched a program in summer of 2015 offering readers an ad-free website, but at a higher premium: an extra $10 a month. Then-editor and publisher Terry Orme told Nieman Lab that just days after launching the program, more than 100 people had bought in.
“People are signing up,” Orme said. “Not thousands, but we have eclipsed triple digits. For being up for two days, I’m happy with that.”
Orme said his goal was to reach six figures in revenue from the program, which would require between 0.5 and 2 percent of the Salt Lake Tribune’s 3 million monthly unique visitors to purchase memberships. More than a year after launching, the site has nearly 700 ad-free subscribers, editor Jennifer Napier-Pearce tells Geektime. It’s far short of the original goal (less than one tenth of 0.5 percent of its readership), but that doesn’t mean the paper has given up on the project.
“Our numbers are small and our revenue is minimal, but yes, I would consider our membership program a success,” she says. “Outside of an editor’s column in July 2015 and a vague button on our home page, we’ve done zero marketing around this program and still, a thousand readers have signed up. Our members are demonstrating that they want to support our journalistic mission with their hard earned dollars above and beyond our subscription; that’s extremely valuable and that’s worth celebrating.”
Medium could be planning on proven monetization strategies like value for value, which requires readers to purchase subscriptions, or just asking readers to pay for certain premium content. Considering the minds behind Medium, though, including Twitter co-founder Williams, it could come up with something completely new, and for that, newsrooms will be watching, fingers crossed.