I wrote the following paper about Medium.com for my midterm in EP&E 399 Digital Platforms:

Abstract

Medium.com, a digital platform for text content creation and consumption, has faced numerous challenges in monetizing text-based content and retaining both writers and readers on the platform. This paper examines Medium’s position in the digital platform space, its monetization challenges, and declining viewership numbers. Furthermore, it explores the broader question of why text as a medium is more difficult to monetize than other mediums, such as video. By analyzing Medium’s business model, algorithm, and community engagement, the paper offers recommendations to address these issues, such as increasing transparency and developing a more robust community. The paper highlights the significance of addressing these challenges in the broader context of digital content creation and consumption.

Contextualization

Medium.com is a digital platform that has gained significant attention in recent years for its approach to text content creation and consumption. Sometimes referred to as the “YouTube for text” (Hazard Owen, 2019), the platform provides an online space for writers to publish and share their work with each other and a global audience. One of the most enticing features of Medium is that it offers writers alternative revenue streams in contrast (or addition) to traditional publishing models. Rather than paying lump sums per article or hours written, the Medium Partner Program pays writers based on the engagement their articles receive from readers. This model incentivizes writers to create content that resonates with readers, and importantly, enables writers to earn passive income from their work to supplement their income.

While video platforms like YouTube have successfully monetized their content through advertising and sponsorships, text-based platforms such as Medium have historically struggled to attract similar revenue streams. One of the critical challenges faced by media companies in the digital age is establishing sustainable revenue streams. Technology’s profound impact on content production, distribution, and consumption has led many media companies to struggle with monetization strategies for rapidly changing consumption patterns (Chyi, 2012). Additionally, advertising revenues have become less reliable in online media markets compared to offline markets (Rußell et al., 2020).

In response, content providers increasingly seek direct sales revenue over advertising revenue. For example, according to German market data on the digital news publishing market from 2014 to 2018, direct sales revenues show a much stronger growth (€112 million to €359 million) than advertising revenues (€238 million to €325 million) (PricewaterhouseCoopers, n.d.). In this context, digital paywalls have emerged as a potential solution as content providers seek to build stable revenue streams (Myllylahti, 2019).

Problematization

In the past few years, Medium has experienced a noticeable decline in views as writers have been abandoning the platform in favor of self-publication and other platforms, such as Substack. Medium has continually struggled to monetize text-based content, leading to several pivots in its business model in the past several years at the cost of users. As of 2020, the company has raised over $132 million in venture funding but is still not yet profitable (Towey, 2020).

Medium.com’s primary challenges stem from the unique difficulties of monetizing text-based content and its tension with viewership and community engagement. Medium’s current solution is to use a paywall that employs a usage-dependent soft access restriction model, allowing users to access a limited number of three articles per month before they have to pay for the monthly subscription. This type of access restriction lets consumers choose their preferred free content within a pre-defined allowance, giving them control over their consumption (Halbheer et al., 2014). However, implementing paywalls comes with crucial drawbacks. Beyond ongoing competition for free content alternatives on the internet, there is a general lack of willingness among consumers to pay for online content compared to its physical counterparts (Berger et al., 2015). Furthermore, pricing online content can decrease viewership and drive down online advertising revenue (Chiou & Tucker, 2013). This tension between direct revenue and advertising revenue emphasizes the need for careful consideration and configuration of paywall solutions. Paywalls discourage non-paying users from engaging with the platform and reduce the consumption of content on their platform.

Medium also lacks the same-caliber “stars” that YouTube has, which can serve as a crucial diver for attracting new audiences and revenue streams. Interestingly, Medium has actively penalized the ability of writers to get an extremely high number of views through its algorithm, leading many popular writers to jump ship from the platforms. Additionally, the stars that it has attracted were often hired from legacy publications that return to said publications after their brief stint on Medium. Substack, a recent competitor for Medium, offers writers and readers a different value proposition. Instead of a “discovery” centric approach, Substack encourages readers to subscribe to specific writers with recurring payment, presenting writers with reliable expectations for how their writing and monetization would be handled (Tracy, 2020).

Medium also continues to struggle with establishing a clear brand identity. The platform’s dilemma revolves around the following questions: “If the plan is to grow frontpage traffic and be more like a magazine, what kind of magazine is Medium? What’s it about? Who’s it for? And if they narrow the focus enough to make that easier to answer, who gets left out?” (Medium and Being Your Own Platform – Marco.Org, n.d.). In an attempt to address this issue, Medium reintroduced vertical “magazines” in February 2020, with content organized thematically, and transitioned to a new “sustainable, subscription-based business model” (Towey, 2020). This move was an attempt to define its brand without losing its breadth of content. Access to new verticals was included in a regular Medium subscription, costing $5 per month or $50 per year, unlocking unlimited access to content. However, despite having 120 million readers, Medium did not disclose how many of them were actually subscribers.

Medium continues to struggle and does not pay its writers nearly as much as creators from comparable platforms. The next section seeks to identify strategies to address Medium.com’s monetization challenges and declining viewership numbers.

Recommendations

To address the issues faced by Medium.com based on the above research, we propose the following two key recommendations as methods to increase user trust and interaction:

1. Increase Transparency

Medium should prioritize providing more detailed and transparent information about its algorithm, monetization practices, and revenue-sharing models. Doing so can help build trust and empower content creators to make informed decisions about their content strategies.

1a. Algorithmic Transparency

Medium should publish clear guidelines on how the algorithm works, the factors affecting content visibility, and the weighting of these factors (Diakopoulos, 2014). This could involve explaining the role of engagement metrics, such as claps, reading time, and shares, in determining content’s prominence on the platform. Providing clear guidelines and policies around their algorithm would also help prevent misunderstandings and reassure content creators that their content is being served properly, preventing the departure of more users. Additionally, Medium should be transparent about any changes made to the algorithm’s operation patterns, notifying creators in a reasonable timeframe before changes take effect. Many of these changes are inspired by Global Manifesto for Fairer Platform Work, which calls for greater transparency and accountability in algorithms and data analytics in platform work (A Global Manifesto for Fairer Platform Work, n.d.).

Medium should clarify its monetization practices and revenue-sharing modules, including how the platform calculates earnings for content creators and how it distributes ad revenue or subscription fees. By offering this transparency, content creators can better understand the financial implications of their work on the platform and address concerns about fair compensation, which is a common criticism of digital platforms in the context of the gig economy (Srnicek, 2017). Moreover, this level of transparency ensures that writers receive a fair share of the value they generate for the platform (A Global Manifesto for Fairer Platform Work, n.d.).

1c. Limitations and Balancing Transparency

While increased transparency can offer numerous benefits, it may also lead to potential drawbacks. For instance, revealing too much information about the recommendation algorithm may result in content creators gaming the system to maximize their visibility, compromising content quality and the user experience. From lessons learned from other platforms, such as Twitter, it is evident that striking the right balance between transparency and protecting user privacy and platform integrity is essential (Gillespie et al., 2014).

By carefully considering these trade-offs and providing as much transparency as possible without jeopardizing user privacy or the platform’s integrity, Medium can foster a more supportive environment, building trust with content creators and making the platform more attractive to potential writers.

2. Develop a Community and Incentivize High-Quality Content Creation

Medium should prioritize developing a more robust community around its platform, specifically fostering interaction between content creators and readers, and encourage content creators to engage with each other and collaborate on projects, which could lead to increased readership and monetization opportunities.

A. Fostering a Vibrant Community

Medium should prioritize creating a sense of community around its platform by encouraging interaction between content creators and readers. As seen in platforms like Substack, where contributing a certain amount unlocks opportunities with the creator, Medium can implement similar contribution tiers to increase engagement. Features such as forums, Q&A sections, and live events, some of which could be exclusive to subscribers, can promote a more interactive environment. Medium should also facilitate collaboration among content creators by providing spaces and tools to share ideas, resources, and feedback. A platform that encourages cooperation can foster a supportive environment that is attractive to both new and established creators, leading to a richer and more diverse content offering.

B. Incentivizing High-Quality Content Creation

To attract and retain top-tier content creators, Medium should offer competitive compensation packages and promotional support to increase their visibility on the platform. Medium has already made efforts in this direction by increasing investment in original content by 168% since 2017 (Towey, 2020). However, as mentioned earlier regarding writers abandoning the platform, further improvements can be made, such as setting up a system that rewards high-quality content based on metrics like reader engagement, retention, and satisfaction. These incentives can enable Medium to enhance its value proposition to writers, driving increased engagement and subscription revenue.

C. Limitations and Balancing Community Development

While developing a community and incentivizing high-quality content creation can be beneficial, there are potential limitations to this approach. First, fostering a community may require significant investment in platform development, including creating new features and maintaining a safe and respectful environment for users, with no guarantee of success. Second, incentivizing high-quality content can be challenging due to the subjective nature of quality and the potential for gaming the system. Medium must find a balance between encouraging quality content and preventing manipulation of its algorithms and reward systems, which may best be achieved through objective optimizations in its metrics and algorithms. By creating a vibrant community, Medium can increase engagement on its platform, encourage readers to become paying subscribers, and ultimately benefit content creators.

Implementing these recommendations would help Medium address its monetization challenges by building trust with content creators, increasing engagement on its platform, and ultimately attracting more paying subscribers.

Conclusion

Addressing the challenges faced by Medium.com is critical in the broader context of digital content creation and consumption. Optimistic perspectives underscored Medium’s role as a key player in the participatory web, where any writer could share stories and engage with readers (Masumian, 2015). It is essential to analyze Medium’s position in the digital platform space and apply concepts in platform governance to ensure the platform’s long-term sustainability and fair treatment of its content creators. To overcome the above challenges, we proposed two feasible recommendations: increasing transparency around the platform’s algorithm, monetization practices, and revenue-sharing models; and fostering a more robust community that encourages interaction between content creators and readers. These recommendations, if implemented, hold the potential to build trust, increase user engagement, and ultimately, create a more equitable and sustainable platform. However, it is important to acknowledge the challenges and limitations associated with these recommendations, such as the risk of algorithmic exploitation and the potential amplification of harmful content. By addressing these challenges in a cohesive and informed manner, Medium can strengthen its position as a leading platform for digital content and become a more equitable and sustainable space for creators and readers alike.