Medium: A Happy Medium Between Passion and Profits

Beginning the Story

With stories ranging from self-improvement to machine learning, Medium is the go-to online publishing platform for reading, writing, and sharing stories. Founded in 2012 by Evan Williams, the former chair of Twitter, the company boasted 60 million monthly active readers in 2016, representing a 140-per-cent increase from the previous year. Today, Medium is seen as a centralized blogging platform for all types of content creators, including amateurs, publications, and academics. While the company has experienced rapid growth, fundamental issues with its business model have precluded it from reaping profits and ultimately have forced it to rely heavily on venture capital (VC) to remain afloat. To alleviate its unprofitable reliance on external funding, it is recommended that Medium enters the e-learning space.

From Small to Medium

Medium creates a middle ground between the informative nature of journalism and the personal nature of blogging. Readers often go to Medium to share their passions and stories, while they go to competitors such as Quora for answers and discussion. In addition to individual stories, the platform is popular for publications—groups of stories centred around one theme that have been major drivers of reader growth. Medium initially built this identity by focusing on helping content creators become profitable and reach audiences by promoting quality content. As such, the platform’s value proposition to creators was three-fold:

  • First, Medium handled the hosting and technical support competencies, which allowed publications to focus exclusively on content creation;
  • Second, publications were offered revenues based on clear, objective metrics. In one example, a content creator received $3.00 for every thousand views; and
  • Third, Medium offered exposure to a large reader base of 60 million monthly active users. These value propositions were enticing enough for publications to switch to Medium from traditional blogging platforms such as WordPress or Blogger. For example, The Bold Italic, an online magazine based out of San Francisco, generated enough advertising revenues to reach profitability once it relaunched on Medium. With this model, Medium generated revenues from selling banner advertisements at the bottom of premium publication content.

As a result of this tangible value proposition, Medium witnessed explosive growth in its readers and engagement. Because of the network effect, this value proposition was further amplified as more content creators joined the ecosystem.

Moving to the Paywall Model

In August 2017, Medium stopped selling advertisements and replaced them with the Partner Program. The rationale was that by having revenue directly correlated to the number of clicks and views, the old model created poor incentives that would harm content quality. The new program would allow content creators to place stories behind a paywall and would change the compensation structure to use an algorithm that employs metrics such as “claps”—a measure of appreciation—and reader time. To access stories behind the paywall, readers would have to pay a monthly $5 subscription fee to join and obtain unlimited access. The transition involved laying off 50 employees and closing Medium’s satellite offices in New York and Washington, D.C. Although drastic, Williams and his team wanted to realign their focus to reward creators “based on the value they are creating for people.” From the perspective of the content creators and publishers, this shift suddenly put their previously predictable revenues in a state of flux.

Breaking Down the Paywall

The primary reason that this model will not work for Medium is that it jeopardizes the company’s key resource: its relationship with content creators—specifically publications. The latter group was not informed in advance of the company’s decision to implement a paywall model, and consequently interpreted this shift as Medium turning its back on them. The loss of stable advertising revenue also meant that Medium lost one of its most differentiable value propositions to content creators. Many of Medium’s most popular publications left the platform in what was called a “Medium Exodus.” Among these publications were The Awl, Backchannel, The Ringer, The Billfold, The Pacific Standard, Film School Rejects, and Thrive Global, which had over 640,000 combined subscribers and were all among Medium’s top 100 publications. To this day, these publications have not returned to Medium, resulting in continued doubt regarding the efficacy of the change.

Medium Graphic 2 - Cash Gap Graph-01

Furthermore, the paywall model fails to turn the company into a sustainable business. Medium received $50 million of Series C funding in 2016, which the company used to fund operating expenditures and other cash outflows such as capital expenditures. With the goal of reducing its reliance on VC capital, the paywall model must generate enough revenues to cover royalty costs to content creators and the various cash outflows associated with the $50 million. However, the company is facing difficulties in paying content creators in the first year of the paywall implementation. Even under the assumption of 30-per-cent and 25-per-cent reader growth rate in 2017 and 2018 respectively, Medium is estimated to only generate enough money to pay about 7,500 content creators in 2018—a negligible amount compared to the total number of content creators on Medium.

Writing a New Story

Despite the obstacles that the company has faced, Medium continues to remain a go-to platform for amateurs, experts, and companies to share knowledge, insight, and passion. To remain a valuable platform for content creators and become financially viable, Medium should establish a separate educational passion platform. Specifically, content creators can use this to create courses on their preferred topics in addition to writing stories on the main platform. Content creators can choose to have their course content delivered in a combination of methods like podcasts, written series, or live streams. Medium essentially expands its knowledge-sharing ecosystem with cross-promotion between a content creator’s stories and their courses. This also further incentivizes the production of quality content, as the stories act as the content creator’s evidence of subject matter expertise. To monetize, content creators can set a monthly subscription price that subscribers would pay to gain unlimited access to courses produced by the same content creator.

Who Will Clap for Medium?

The online learning industry is expected to grow at an annualized rate of 7.2 per cent, reaching $325 billion by 2025. In the last three years, over 25 million people across the world have enrolled in Massive Open Online Courses (MOOCs). Medium stands out from the crowd of MOOCs with its existing audience of engaged readers, the network of high-profile content creators, and its unique position as a centralized blogging platform for a wide variety of topics. For example, a reader with no prior knowledge of deep learning may have their interest piqued by a content creator’s success story of integrating deep learning into their business. That same page would have links to courses that are relevant to understanding what deep learning is and would be written by the same content creator. Casual browsing would lead the reader into an integrated learning environment: the reader would be able to access quality course content discussing deep learning and learn from the same content creator that initially piqued their interest. This provides Medium a significant advantage as they can control the readers’ experience from their initial interest in the topic until their decision to further their interest by pursuing a course. Traditional educational platforms like Coursera or Udemy only engage potential customers after they have decided to take a course. With Medium, readers would subscribe to content creators instead of courses, providing a richer experience and a higher-quality learning experience.

Activation barriers identified by consumers who are interested in online courses include the perception that the course may be too advanced for them. While Coursera and Udemy have brand-name universities and professors to draw in their audience, the level of concentration and commitment required to keep up with the material can also intimidate readers who are approaching new subjects. Thus, competitors that provide a very formal learning platform often struggle with user engagement. Only four per cent of Coursera users who watch at least one course lecture actually complete the course and receive a credential. In contrast, Medium is known for its extremely simple and intuitive reader experience and website design, which would help facilitate a stress-free and informal learning environment. It is important to attract content creators who are editors of popular publications or have thousands of followers across several social media platforms, since the status builds social credibility. This is especially applicable in teaching topics that rely heavily on hands-on or personal experience, such as starting your own business or being an effective leader.

Implementation and Challenges

In contrast to competitors that charge users per course, Medium should implement a pricing model that fits its value proposition. On Medium, content creators build reputations and readers discover knowledge through following them; as such, Medium will charge readers subscription fees to specific content creators, which will capitalize on the relationships between readers and creators. Moreover, content creators will be free to determine their own prices according to Medium’s guidelines based on quantity, complexity, and uniqueness.

Medium Graphic 3 - Customer Journey-01

One important concern is quality control regarding courses. By providing specific high-profile content creators with “verified badges” and forming an in-house team to manage content creator relations, Medium can ensure that all content is legitimate. In addition, feedback and recommendations from the active community will mitigate quality concerns and provide natural improvements as more courses are offered on the platform.


The proposed model can only be successful if it can generate enough contribution to cover the annual $50 million that Medium receives in VC funding, taken as a proxy for cash burn. Assuming growth in total Medium users is 30 per cent, and two per cent of the expected number of Medium users become content creators, 1.6 million content creators are estimated to be making courses for their subscriber base one year after implementation. If these content creators charge readers an average of $5 a month with Medium taking 45 per cent, it can be expected that Medium will be able to generate positive net income by 2018. Comparatively, Udemy offers a 50-per-cent share to most of its content creators. The revenue that each content creator receives will incentivize them to continue to create unique, quality content for their subscriber base. Content creators have a number of platform tools, including quizzes, podcasts, and discussion forums, which they can use to convey their content.


By positioning itself as a platform to share passions and offer distinctive value behind a paywall with courses, Medium can continue to build its engaged reader base and incentivize writers, ultimately ensuring it evolves into a mature and self-sufficient company. After all, everyone is looking for a place to share their passions online — what it comes down to is finding the medium.