How do you make money from online publishing? Medium’s Ev Williams shows he is as far away from the answer as the rest of us.
In a blog post yesterday Ev announced his company is firing fifty staff as online advertising revenues fall short.
Online advertising’s disappointing revenues are no surprise to pretty well anyone observing the online publishing industry for the past five years, it seems to have come as a revelation to Ev and the investors who’ve staked an estimated $140 million in the venture.
That money, which most online publishers would gag for, seems to have gone on a bloated headcount given the company can afford to fire fifty people. It’s a shame the company’s investors didn’t appoint a board that checked management’s hiring practices.
Something that should worry other publishers is the organisation’s Promoted Stories division is being shut down as part of the restructure. This underscores how branded content doesn’t scale the same way traditional advertising does and won’t represent a major revenue stream for online publications.
It isn’t the first time Ev Williams has got it wrong, in founding Twitter he and his team turned their back on ordinary users and developers to focus on courting celebrities in the hope big brands would pay large amounts to be associated with them. It didn’t work.
Contrasting Ev’s Twitter and Medium experiences with that of Buzzfeed founder Jonah Peretti is interesting. While Buzzfeed still hasn’t found the formula for profitability, Peretti and his team have gained a deep understanding of what works in online publishing.
To be fair to Ev, we’re all trying to figure out the revenue model that will work for online media, his travails with Twitter and Medium show just how hard it is to find a way for publishers to make money from the web. What is clear though is burning a lot of cash on sales staff is not the answer.