The Business Model

Yesterday, I asked you for ideas about the business model for Capitalists.

I promised I had something in mind to share with you. A possible business model. I told you something as boring and seemingly irrelevant as words could make a difference. That brings up a business model… the business model of Medium.com.

Medium.com is to blogs what YouTube is to videos. Writers submit written content and share in the revenue it generates. The revenue comes from subscribers paying monthly rather than from advertising.

Medium has over 725,000 subscribers who pay $5 a month. Writers are paid based on consumption. The vast majority of the 175,000 Medium writers make very little or nothing for their articles of which they post over 20,000 a day.

There are over a billion blogs on the Internet today and the vast majority make nothing and have no audience. An interesting little tidbit: LinkedIn has 4,550,000 profiles which identify their owners as editors; 4,000,000 are writers; 2,710,000 are authors; 2,320,000 are journalists, reporters and correspondents; 1,060,000 are publshers; and 586,000 are bloggrs.  Millions of writers looking to promote themselves.

Google has vigorously argued in court that it should not have to pay content creators. Media companies were badly burned by dipping their toes in the water on a partnership with Facebook.  Apples foray into journalism was a failure with media companies balking at its proposal and subscriptions selling poorly. Big tech and media have a poor relationship.

Medium and About.com years before it are trying or were trying to go around media directly to writers (known as guides to About.com). The results have not been as positive as those of YouTube which has made billions and paid out hundreds of millions. Online training companies Skillshare and Udemy have also met with success sharing with trainers.

Is the difference as simple as the fact that the companies don’t deal in media but in text? Or is it more than that? Blogging is notoriously ineffective as far as earning money. It shouldn’t surprise its tough for Medium and others to derive revenue in that area. One bright spot for bloggers looking to make money: affiliate marketing.

Affiliate marketing pays creators and publishers commissions for sales that they originate. Commission rates vary from marketer to marketer. They go from three all the way fifty percent or even more. Bloggers often make most of their revenue from affiliate commissions. Here is the business model I propose:

Create a high dollar, high value, elite subscription of say 50.00 monthly.

• Pay a 50% commission to the blogger or creator that originates the sale for the life of the subscription.
• Pay writers and creators a share of the revenue generated by the site based on consumption and user ratings.
• Pay freelance writers and creators a great deal for content that we give away for free in order to attract potential customers to the site to upsell them to subscriptions..

The challenge with this business model is building something that creates enough value to warrant such a pricey subscription cost. The business model will mean we offer more than just access to content.

Tomorrow, we’ll discuss what value we can create that warrants $50.00 per month.