Dear Ev Williams,
You just announced that you are pivoting away from ads and are intent upon solving the content monetization problem, but you didn’t indicate that you have figured out how to do that just yet. As the former cryptocurrency engineer of reddit, a position dedicated to solving that problem, and Cofounder & CEO of Yours, a company dedicated to solving that problem, I have spent a lot of time figuring out how to do that. Allow me to sketch out a vision for how this might work at Medium.
The obvious way to monetize something is for people to purchase it. However, putting money on the internet is a hard problem. What’s to stop someone from copying a money file as many times as they want, giving themselves unlimited money? Digital money would surely suffer from inflation and could never have value.
Satoshi Nakamoto solved this problem with the invention of the blockchain. Digital signatures are used to transact in bitcoin, providing authenticity, and the blockchain is used to provide an immutable shared history of all transactions. It is not possible to copy a bitcoin, only to move it. Scarcity of money on the internet turns out to be possible after all.
There is another problem. Since the blockchain is a shared database of all transactions, it would become too large if every transaction in the world were recorded on the blockchain. Fortunately, some brilliant people solved this problem with a network of smart contracts that only settle to the blockchain during disputes, allowing the vast majority of transactions to take place off-chain, reducing the marginal cost of a transaction to zero. My cofounder and I have created the first implementation of such a smart contract network for the web. It is the world’s first peer-to-peer web-based micropayment system.
So it is technically possible for users to possess and transact in digital currency on the web. That’s a huge advance, but now we have another and arguably harder problem, which is why anybody would pay for content on the internet. Two early attempts at this were Changetip and Zapchain, both of which were based on tipping. Unfortunately, neither of them succeeded in drawing a large mainstream audience. I believe the reason for this is that tipping does not provide a strong incentive to make payments. In the real world, you don’t tip for free coffee. You pay for coffee because they won’t give it to you otherwise.
The same model can be adopted on the internet. Imagine if every Medium author had the ability to draw a pay wall at a location of their choice in the article. The author of a short story might place the pay wall towards the end, right after a cliff hanger. Would that author’s fan, who is dying to see what happens at the end of the story, pay ten cents to read the conclusion? I bet they would. Or consider an investment researcher who has compiled research on a variety of financial assets, and places the pay wall after a summary of the research but before the conclusion about which assets to buy. Would a follower pay one dollar to read the conclusion if it might make a $1,000,000 difference in their investments? I bet they would.
It’s easy to play this game with many types of content: journalism, entertainment, and even scientific research. But a pay wall is just the simplest option. Once payments are embedded in a content app, many other possibilities present themselves. For instance, what if it were possible to invest in content? The fan of a particular creator is the first viewer of a new article, and is absolutely certain this article is going to be widely popular. Would they put down ten dollars to share in ten percent of all future revenue? I bet they would.
Let the physical economy be your guide. Tipping is one type of transaction. Purchasing and investing are others. There is a quadrillion dollar economy in the physical world with many types of transactions suitable for different purposes. There are also many roles in the physical world, and by analogy, the digital world is not just people making and consuming content, but also curators, moderators, and more. Each role is a problem and an opportunity. Who pays? When do they pay? Why do they pay? How much do they pay? Who decides? Who gets what fraction? When do they get it? Find the right payment scheme and you create economic freedom for a new group of people.
The solution to the content monetization problem is two-fold. First, you need a smart contract network on bitcoin to enable peer-to-peer payments. Second, you need thoughtful incentives to give people a reason to make payments. The opportunity created by the intersection of content and payments is far larger than the current physical economy, and Medium is well positioned to be one of the most important drivers of the new information economy, if you use bitcoin.