Will AI Models Ever Compensate Creators? Tony Stubblebine (Medium CEO)

We're at the end of the creator economy as we know it. There's a lot of failure. AI makes the content mill more accessible - people are more prolific, but the content is more generic, debased, less valuable. We're in a writing renaissance where writing is more important because it's more useful. Every platform is talking about AI slop. The AI companies created a prisoner's dilemma by defecting on day one. Content is going to go private. Google is screwing themselves, and it's true for all AI companies because they need ongoing access to high-quality information. The people with a defensible position are those doing more than content creation.

It's a big deal to be here. Let's talk about stuff hopefully that people have never heard.

I think we're just in a new era. If you've been on the internet for a while, there was web 1.0, web 2.0. This is the AI era - everything changed. If you're in content or media at all, the headline is your business model has to change because Google's traffic disappeared. The whole internet is built on the idea that we all get customers for free because Google was sending us customers for free. That didn't disappear, but it went way down - say 50%. Then the production costs of content changed. The production cost of high-quality content is still incredibly high, while the production cost of trash dropped near zero. Every platform is only talking about AI slop right now. As the CEO of Medium, I'm like, how do I redesign Medium for a different business model because we don't get as much free traffic? How do I redesign Medium so that I can pull human content out of AI slop? Everyone is starting this era in a bad mood. Our business model went away and we're getting swarmed by spammers. But what's most exciting is we're coming out of that, finally starting to see what's good. Writing is about a year behind what programming was in terms of AI-assisted tools. Programmers are talking about agents and multiple streams and burning out because they're so productive. What will that mean for writing? I hope it means we're able to hear from experts who were previously too busy, and more people are sharing their lives in written format.

I've always felt this is a more extreme version of something I felt for a long time - there's a barbell effect in content. On one side is the content mill, and AI makes it more accessible. People are more prolific, but the content is more generic, debased, less valuable. As it becomes less valuable, people react by creating more of it. If I need to make $100 a month and it used to take 100 articles, with AI people are willing to create 10,000 articles to get to that same dollar amount. I don't care about that side of the barbell - it's not what got me excited about the internet. The other side is more timeless than the creator economy almost missed. Before there was a creator economy, there was an expert economy. People used the internet not to write every day, but to write when they had learned a life lesson. They turned their life lessons into valuable shared lessons and made money in all the ways experts make money. My blogging is what got me my job as a CEO. I make more as a CEO than I did as a writer, but the writing advertised who I am and what I'm good at. The people with a defensible position in this new media ecosystem are doing more than content creation. You have to spend time living before you have something interesting to write about, otherwise you're just parroting things from the internet or what ChatGPT can spew out.

It's what I started with - if we're in a new internet era, everything's up for grabs again, including business models. People were comfortable in the channels you could grow a business before, and now they're trying to figure out the new channels. In everything in tech, I always try to remember what's old is new. At the beginning of this era people said AI summaries replace human stories, and I kind of shrugged - did CliffNotes replace books? No. When you're talking about storytellers as a core function of a business, it's timeless. A business isn't just telling an entertaining story, they're telling a useful story. The first time I ran into that idea was reading How to Win Friends and Influence People - if you want to be a good salesperson, you want to be a good listener and offer value. If you can do those two things, you have a good chance to sell your product. There had been an era of white hat content marketing where companies were sharing valuable information you'd never heard before. 37 Signals with Basecamp was one of these - they weren't on my radar because of an ad, they were on my radar because they were talking about tech and how to build a company in a way no one had been that transparent before. That's what people are reaching for with this idea of story - can we sell with value again? Can we tell really valuable stories and use that to build relationships with new customers? Frankly, that's my favorite way to sell. It feels good, it makes you feel good about yourself. You want to run a business that makes the world better, and what's cooler than even your marketing plan making the world better?

The story of Medium to me is the story of publishing on the internet. The founder, Evan Williams, is not just the founder of Medium - he's the founder of Blogger, which at one point was one of the 10 most trafficked sites on the entire internet. Then he was the founder of Twitter. Do you know why we call it blogging? It was called weblogs when he started Blogger. He was looking for domain names and settled on Blogger because it was available. When he started Medium, he was reacting to his experience of helping make the internet a place where everyone can publish. His experience at Twitter got toxic - that's not why he likes to write. Writing is about sharing deep thoughts. I like to say, 'When you blog, your wisdom becomes someone else's wisdom.' So he created Medium to house deep, authentic ideas and information. Then Medium went sideways trying to make the business model work. Evan believed ad-driven businesses created bad incentives - you stop caring about quality and start caring about attention. So he said we can't have an ad-driven business, we have to have a subscription-driven business. But we want that subscription business to be open to anyone to publish into. That's never been done before. On Substack you subscribe once, twice, three times. On Medium, a reader subscribes one time and gets hundreds of thousands of authors all at once. Medium went through a period where they brought in professional journalists - the logic was you need super high-quality, recognizable content. But it cannibalized what made Medium in the first place. Medium is meant to be chaotic. If everyone can publish, it's the wild west. Our job with the subscription is to pull stuff out. When I took over, we had grown our subscription but it started to decline because our incentives had pulled in the opposite direction. We'd gotten overrun by get-rich-quick creator economy types, and our cost structure was insane. Ev is truly a visionary but not relentless about execution. At some point I made a case - he seemed ready to step down and didn't want to do the turnaround. I was incredibly close to the company, Medium's ultimate power user - something like 2% of Medium traffic was going through a publication I was running. I shared office space and was close to many people in the company. I said, 'Go do something else. Let me take your vision and see if I can save this company.' We went from losing two and a half million dollars a month to being profitable. We've been profitable since August 2024. Just as I got this turnaround done, the whole internet changed. We got this AI era, and now we get to extend Medium into this new era. Medium is reawakening into a creative moment.

I was. I had access to all the financials. When I was applying for the job, the application was essentially 'pitch us that this is worthwhile,' and the pitch required financial modeling. For the most part I got my foot in the door by being a super user, a writer on Medium. But the work itself was financial engineering - first you have to get out of a profit and loss hole, then you have to get out of a toxic investment structure. We had this liquidation preference, this debt coming due that we couldn't pay. If the investors wanted to put us into bankruptcy, they could have. The only thing we could do was offer them to convert it into equity, and they're not going to take that unless you've shown you can improve execution. People forget how much you rely on relationships at the board level. If I wanted to make any major change to the company - sell it, acquire something, hire a new CEO - I would have needed majority approval from five different tranches of investors, many of whom weren't talking to me because it wasn't worth their time. Many of those people were trying to sell their stake to the bottom-feeder private equity market. I didn't even know who I'd be in business with if I didn't get this investor restructuring done.

You have so many groups you have to bring along and it's hard to do it all in parallel. This is an opportunity to speak to the value of Medium and this idea of experts versus creators. Normally a recap is done by bringing in a new investor as the forcing function - they say, 'If you want my money, we have to clean this all up.' But in 2022 there was no new investor, no market to invest in Medium. I didn't know what pressure point to poke at until I talked to this VC Mark Suster who had blogged on Medium about how to do a recap. He said, 'I'd rather you lead your own recap than come to me' - basically, clean your own house first. It was such an example of lead with value. His business is deal flow from entrepreneurs, and venture capital is a word of mouth business. He put out this blog post that saved my situation at Medium. It was posted to Medium, which is so cool and meta. What he told me was that the psychology of a CEO is you think you can work your way out of any problem. In order to get a recap done, you have to acknowledge you can't work your way out and you have to threaten to quit. I thought it through and realized there's no point in me coming to work tomorrow if there's a significant risk my investor partners are going to sabotage me down the road. We started with that as the pressure point and added in the debt coming due. We used those two things to push through a full financial restructuring, cramming down the investors.

Like Silicon Valley investors, because they understand, they're not going to nickel and dime you. Like if you go to them and say your equity is currently worth nothing, will you play ball? They'll be like, 'Yeah, great. Something is better than nothing and also we don't want to be in the way.' And so yeah, we got it done. The liquidation preference went away, the debt went away, we created more equity for the team. And it's almost like the Medium after that is just a Series A startup on top of a 10-year-old asset.

Yeah.