Anthea Stratigos – January 18, 2017
We love Medium, and it’s too bad it’s become caught in business-model crosshairs. Valued at $600 million less than a year ago, it laid off one-third of its workforce and closed offices in New York and Washington DC. The company said it was no longer happy with the advertising-based path it was on (slippery slope for sure), so it pulled back to restart or re-evaluate its revenue model, a fundamental for sure. Especially with big investors in its back pocket. Medium no doubt ok’d the move, but tough going when big valuations follow with this kind of news. We think Ev and company started to feel a bit dirty by advertising because that road, while it got Medium more revenue, was actually the model it wanted to disrupt in the first place.
In the course of this news, one of our most stimulating colleagues, David Worlock, sent a note citing Fred Wilson who says that Steem is the next business model to adopt. To quote David:
“ Steem.io is a blockchain-based social media environment, which is now the third largest cryptocurrency, rewarding writers, readers and commentators for community contribution. As Finland starts this year by creating the world’s first social income environment, paying basic salaries to the unemployed, and India celebrates Aadhaar, the world’s first social identity platform with over a billion securely identified individuals on board, it may be the case that two decades of development of a networked society is beginning to change society itself. If, en route, it reinvents publishing then we should be proud to be the first to say so! All best wishes for 2017.”
Steem is a reminder (as is Medium) that, until we live in a society fully based on barter (not in our lifetimes), money is the currency that moves the needle. Oh yes, people say things like “audience,” “users,” “eyeballs,” or “social currency” — all good stuff and real — but at the end of the day what makes our planet and the business of information go ’round (whether media based business model or paid model) is the stark, simple reminder that the money comes from somewhere.
As long as I’ve been in this industry, you’ve been able to turn and twist and nip and tuck 49 different ways to make money, but at the end of the day, they fall into two pretty clear categories: media-based (marketer/advertiser/sponsor funded) or paid for (the audience, user, or their institution) … even in the land of consumers. The government can pay, corporations can pay, educational institutions can pay, and people can pay. When all is said and done, someone pays because free doesn’t cut it. Someone subsidizes free, and they’re called advertisers, marketers, or sponsors. The news industry learned that hard lesson circa 2001 when they opened up their content to the big portals, gave their content away, and then wondered why they were in a free-fall a half decade later. Don’t get me wrong. There is great free content out there — just look at all the fabulous bloggers and people who post on LinkedIn, Facebook, or Twitter. But to survive, on this planet at least, they have to make money. Either another job subsidizes them, advertising does, or someone somewhere pays. It’s like the law of entropy. It just is.
So we’ll watch Steem. We’ll watch Medium, just like we watched PaidContent, GigaOm, Buzzfeed, TechCrunch, or the dozens of companies before them, including Prevention, Consumer Reports, and any other number of esteemed brands — some who worked out well and some who didn’t. There are always new names and new faces on new technology platforms. But the way to make money … Ah well, that doesn’t change much over time.