Online publishing platform Medium has led a bit of a tumultuous life. Seeking to thread the needle as it tried to be both a publisher and a writing platform, the company tried several different business models (allowing individual publications on its platform to offer paywalls, building its own publications, and more), seeing varying levels of success in the process.
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Since 2017, though, the company has employed a subscription tier, which seems to have worked reasonably well. In fact, in a recent conversation on TechCrunch’s Equity podcast, the company’s CEO Tony Stubblebine told me that the company is finally heading toward profitability at a pace that will see it get into the black by the first half of 2024.
When Medium becomes profitable, it will finally be able to fund its own efforts. For a company that has been around for 11 years and raised nine figures of capital, that’s a big moment. And for an online writing platform, that’s downright impressive.
Media is a tough game, and wringing value out of words on the internet is a never-ending battle. Here’s an excerpt from my conversation with Stubblebine about how Medium got itself back on the right path:
TC: Through some different strategies over the years, the company has grown a very large subscriber base, and I don’t think everyone knows how big it is. But I do know that back in March of 2021, you guys said you had around 725,000 paid subscribers. And then in your [2023] State of Medium keynote, you mentioned that you had seen some churn, but had brought the ship back around and were seeing pretty rapid growth. I’m curious how big is the subscriber base that powers Medium’s economic engine today?
TS: Are you fishing for transparency and numbers from me as CEO?
That was about as politely as I could say, “Tell me the damn number, Tony.”
I think the numbers help tell the story. We announced 720,000 subscribers back when you said. It went up a little bit further; our high point was 760,000 subscribers.
But when I took over, we had been lost. We had been getting really good at driving attention, actually; our recommendation algorithm had gotten better and better. But the more we got things in front of people that they would click and read, the more they unsubscribed, which is counterintuitive to all of us. However, now we explain that as: “What people are willing to read is very different from what people are happy to have read.”
That’s very different. In a way, we’re grateful because this is why we wanted to be a subscription business in the first place — we wanted our incentives to be aligned with the readers.
So it took all year to redo our incentives and our recommendation algorithm, because [recommendation decisions] can’t just be made around attention. We put subject matter experts as a signal inside of the recommendations, and as a result, the quality of the substance went way up. Even though sometimes we’d make a change, and the click-through rate would go down . . . When we did that, everything changed. The churn rate got better, the growth got better . . . So when I took over — I don’t want to gloss over the numbers, I almost did, and it would have been completely accidental.
I was gonna bring you back and be like, “The CEO who promised transparency has pulled off the greatest CEO trick in the book: Confuse them with personal anecdotes!”
When I took over, we were at 682,000 subscribers. So we had dropped quite a bit. In fact, that drop had been accelerating as we’re getting closer to me taking over. Maybe [it] wasn’t the most compelling-looking job in the world, but I was close enough to Medium that the case I made to the board and the investors [was that] we could right the ship, and there’s a reason for Medium to exist. So August 2023, we’re back at our high point, and we’ve had back-to-back months of record growth. I don’t want to say [the number of subscribers] we have today, because we’re coming up on a bigger milestone so I’ll just save it for then.
There are only two milestones that could be coming up: 750,000 or 1 million. I’m curious to know which one it is. I presume you’ll call me when it’s time to share that?
Yeah, we’re coming up on a million and we want to announce that when it happens.
I’m excited about that because it sounds like Medium has found its source and it knows who it wants to get stuff from. It has an idea of who it wants to distribute to and how, and at a million subscribers, when you get to that point at $5 a month, it’s $60 million a year in top line. Of course you have COGS — you share [revenue] with writers to some degree, but it looks like Medium is going to be big enough that you can’t kill it. That’s my perspective on that number. It feels self-sustaining and robust.
We’ll be profitable by May [2024] or earlier. That doesn’t rely on any new work on our part — just the current traction puts us there. That’s huge. I think one of the things with the publishing platform and the thing that I’ve tried to get across to our writers is: “You can rely on us.”
Medium has this history of pivoting, which is somewhat deserved. But what better message could we put out to people [to explain that they] can rely on us, that we’re profitable? We’re a sustainable business.
Going from 760,000 subscribers to 682,000 would be a decline of just over 10%. If TechCrunch+ lost 10% of its subscriber base, I am pretty sure I would implode from the sheer stress.
Regardless, how big is Medium today? And how long will it take to reach 1 million subscribers? We can do a little mathmagic to arrive at a decent guess:
- Medium returned to 760,000 subscribers in August, and has seen several months of “strong” growth since.
- How strong is “strong,” though? In August, the company expected to add just over 100,000 gross subscribers. We don’t know the net figure of course, but let’s assume it’s 50%.
- Two months at 50,000 net subscriber growth would put the company at around 850,000 subscribers by the end of October. So we could expect Medium to reach the 1 million goal in the first quarter of 2024 if the next few months go really well. If not, it’ll likely happen in the later part of H1 2024.
At 850,000 subscribers, Medium’s gross annual recurring revenue works out to $42.5 million (if every subscriber pays for the cheaper annual plan) to $51 million (if every subscriber pays monthly). Subtracting what Medium pays to authors leaves a smaller but still material figure.
To be honest, I didn’t think that Medium was going to pull it off. It felt like it was too big to fail as a platform for people to post their writing, but it was also too twisted around its own history to find a clear path forward. Perhaps I was too pessimistic.
We’ll have more on this when the company reaches seven figures’ worth of subscribers and we can interrogate Stubblebine on the company’s plans to go public.