Why Medium Works.
You might’ve joined because you think Medium has a slick UI, a concentration of great content, and a pretty respectful community as far as commenters go. But slick UIs can be replicated. Great content creators are as loyal to publishing platforms as politicians are to policy positions — they go where the advantages are. And as far as respectful commenters, communities often lose the genial homogeneity of their early adopters as they scale.
Still, Medium is one of the most exciting new companies in years. But why, exactly?
This is that story.
The greatest challenge most companies face when beginning to publish content online is convincing themselves to stay the course while they build a search engine profile and subscriber base robust enough for them to see a return on their investment. I’m not going to sugar coat it — using content for online demand generation takes hard work. It’s not unusual for a company to spend three or six months consistently publishing content before they start to see some meaningful views on their articles and start generating a significant number of leads.
But it works — companies that stick with it don’t just see traffic and leads, they see a predictable and scalable source of them that has helped companies grow at unprecedented rates.
So if it works, why pivot to an untested strategy that’s taking your content off of your own website, and limiting your ability to grow your organic search presence?
First, let’s establish the risks of offsite publishing.
There are three immediate limitations that make publishing on an offsite platform unattractive:
Issue #1: SEO Footprint. Publishing on another site raises the search engine footprint for that site, not the publisher’s site. Articles that accumulate more and more views over time — one of the core sources of predictable and scalable site traffic — will be going to another website. Not your own.
(Medium is beginning to address this by allowing brands to publish on their own domains, like we are with ReadThink.com.)
Issue #2: Audience Ownership. Although you might be able to build an audience of “followers” on an offsite platform, you get almost no information about them. Without collecting an email address like you would on a more conventional content management system (CMS), you lose the opportunity to send special offers, reactivation emails, and other communications.
Issue #3: Platform Risk. You don’t own the experience when you’re publishing on someone else’s platform. You can’t engage in conversion rate optimization experiments, site personalization, and you’re at the whim of any changes that platform may want to implement — which may be good for their overall user base, but bad for you.
So why would anyone publish on Medium, then?
These concerns still exist on any offsite platform, but Medium has found a way to balance them with one key value proposition: In addition to being a content management system that you could use to publish online — it comes with a built-in audience.
Medium has about three million subscribers (although I can’t find an official public number, three million is the number of people who follow the Medium Staff account, where everyone is opted in to follow and presumably few people opt out). When you publish on Medium, you have the chance that your article will be shared with part of that audience. Because of this, publishing on Medium should lead to a much faster growth in views and audience than if you just launched a publication using a conventional CMS platform.
In that way, Medium is fulfilling one of the primary functions that search engines have historically served. Google and other search engines own a massive audience, so content creators spend a great deal of time writing for (one might say “on”) Google.
But Medium solves a different end-user need than search engines. While conventional search engines solve for delivering an answer to users as quickly and seamlessly as possible, the Medium team is solving for “total time reading”. Medium wants to help users find and read as much relevant content as possible rather than wait for them to search for it.
Medium has positioned itself nicely in a blue ocean between the jobs that conventional search engines perform, and the jobs content management systems perform.
And as a publication writes content that brings more people into the Medium universe, it only adds more potential value for every other publisher on the platform.
Where Medium Turned From Good Idea, to Genius Company
Medium’s genius begins when we look at them beyond their content technology strategy, and into their marketplace and platform strategies.
By building a market network for publishers that comes with a built-in audience, Medium has become a demand-side vendor for a two-sided marketplace: publishers supplying content and readers demanding it. Evaluating their strategy from this perspective is useful because it gives us a framework to understand how Medium is taking the strategies pioneered by eCommerce marketplaces like Amazon and eBay and applying them in a unique way.
eCommerce marketplaces, like Amazon.com, are irresistible to retailers because Amazon already has a massive audience of customers that they can filter down to the merchant’s products. If you want to start making money tomorrow selling items online, your best bet is to launch an eBay or Amazon store tonight. If you want readers for your content tomorrow, your best bet is to launch a Medium publication tonight.
In a two-sided marketplace, however, the marketplace usually has to subsidize the acquisition of one side (either supply or demand) in order to attract the other. Medium is doing for content publishing what transactional marketplaces have historically done for retailers, subsidizing the acquisition of an audience.
Once they’re executed, the most brilliant strategic moves seem so obvious.
Now that this “obvious” element of two-sided marketplace strategy has been applied beyond transactional marketplaces to content and readers, to what other markets could it be applied?
While you might think publishers would gawk at the idea of sharing their hard-earned subscribers with other publications, the low- and mid-ranges of the market (where disruptive innovations often see their genesis) may not. Small and mid-size media companies and business owners that struggle with content creation may care more about their content being read than that their readers don’t read content published by others.
“There are thousands of options in a cigar store, but my biggest competitor isn’t someone making a better cigar; it’s someone who makes a terrible cigar and turns a potential future customer away from the hobby of cigar smoking.”
— Alan Rubin, founder of the Alec Bradley cigar company
And so it is with ad-monetized and lead-generating content: If you can publish in a medium (pun intended) where you can share the efforts of other publishers who delight large and valuable segments of users, you’re likely to grow more quickly than trying to grow an audience on your own.
“The Nail That Sticks Out Gets Hammered Down”
There’s a Japanese proverb: “出る杭は打たれる” (deru kui wa utareru — “Stand out from the crowd and you just invite trouble for yourself”).
While typically used to express the social consequences of exceptionalism or deviance, it also perfectly illustrates how platform companies test an infinite X-axis of potential customer use cases with an app marketplace. In other words, the nail that sticks out gets hammered down … as the number of customers using a solution for a specific use case grows, the core team can or internally develop those that “stick out” on the Y-axis of customer value creation.
This is the genius behind platform strategy — and exactly what Medium is positioned to take advantage of. It allows the core company to analyze an infinitely long tail of potential use cases without having to invest in them themselves. Without having to build out technology to see if customers will use it, platform companies allow their ecosystem participants to test the use cases on their behalf.
Platform strategy applies beyond just software companies. Amazon.com, for example, allowed third-party sellers to teach them how to sell and price jewelry by bringing experienced jewelry vendors into the Amazon Marketplace.
“If you don’t know anything about the business, launch it through the marketplace, bring retailers in, watch what they do and what they sell, understand it, and then get into it.”
— Randy Miller, former Amazon Director
With a large and growing community of users, Medium has the potential to enable a conventional software application marketplace where third-party developers could build apps such as retargeting or analytics integrations.
In addition to feature development, by owning a central platform on which media publishers create content, Medium could use the millions of writers creating content to guide their own media creation strategy. In the same way that Netflix can use movies created by other studios to study and make decisions around what Netflix Originals to create, Medium has the potential to become a media powerhouse in its own right by knowing in advance what content will be popular with what audience segments (such as those most likely to click ads).
Just as they applied transactional marketplace strategy to content and readership, Medium has positioned themselves to apply platform strategy to a number of potential future market maneuvers.
How All This Impacts Content Management Systems
Historically, content management systems (CMSs) have competed on ease of use and breadth of functionality for market share. The dominant CMS by far, WordPress, holds a commanding 58.9% of the CMS market.
Although WordPress has seen some decline in market share over the last year, they’ve benefited greatly from early-mover advantage and the robust marketplace and developer ecosystem they’ve grown over the years. Launching a WordPress website is famously easy to do, and because of the number of users, there are a huge number of developers and agencies that offer services to help you build out WordPress sites.
And that’s the classic chicken-and-egg problem when platforms suffer when developing marketplace ecosystems: In order to attract talented developers and agencies to specialize in your platform, you first have to have a large enough user base to make capturing a portion of it valuable and attractive.
This leads to a virtuous cycle for WordPress (or any platform): As they grow larger, the value of building specialized apps or services around their platform becomes more attractive. This, in turn, increases the value to end users who adopt the WordPress platform, because they get access to a wide spectrum of technology and service.
As Medium’s audience reach grows, and their API functionality increases, they’re also positioned to develop a robust third-party developer community. But it’s their unique ability to generate value for publishers faster that makes Medium represent such a significant disruption risk to traditional CMSs.
Disruption Alarm Bells Should Be Ringing
WordPress, companies that monetize through the WordPress ecosystem, and other similarly-positioned CMS platforms should be worried by the rise of Medium. Although WordPress holds what may appear to hold an unassailable market position now, recent history is rife with examples of established incumbent firms being rapidly disrupted by new entrants.
Disruptions often begin with companies that serve a smaller total addressable market than the current mature market selling a product that offers lower margins and a lower overall cost. Uber began by offering on-demand car services to people who couldn’t afford dedicated limousine services but were also frustrated by the traditional cab experience. Instead of formal car service agreements with large corporations, Uber created a network that could pull from the excess capacity of that industry and bring a lower-end customer (like me) into the market. They then moved down into disrupting the cab market as well as up into more traditional business travel.
Similarly, Medium started off by addressing the niche and relatively unprofitable market of individual writers building individual brands who weren’t concerned with growing their own web properties. They quickly graduated to larger names like Elon Musk, Walter Isaacson, and others. While they don’t currently service the higher-end content market of publishers — businesses with enough revenue that capturing their market share should seem very attractive — that doesn’t mean that they can’t.
Medium also has the potential to use superior unit economics to out-leverage conventional CMS platforms in customer acquisition and growth. Medium has nailed one of the core causes of customer cancellation for content platforms: time to value. If Medium can have a lower churn rate than conventional content management systems, giving them a great Customer Lifetime Value (CLTV), they have the opportunity to afford a great Customer Acquisition Cost (CAC) as well — which would enable them to spend more on growth than the incumbents and other competitors.
Never assume that because a company doesn’t serve a specific market or have a specific functionality that they won’t or can’t. Ask yourself what would happen to your market if they did.
Growing up playing chess, I learned to ask myself, “How do they intend to use that move to hurt me in the future?” With Medium having the potential to move into several different markets, many companies should be watching their moves closely and asking themselves the same question.
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