I'm Medium's CEO and I left a longer answer down below about what I think went wrong. But I also think your summary is about right. Every startup needs to choose a business model eventually and we botched the rollout of ours.
The subscription actually does work and could (will?) be enough to sustain us. But we didn't roll it out in a way that's congruent with anything else we were doing.
Most notably, the subscription implies that we have some premium content to share. But instead of incentivizing premium content we spent the subscription revenue to pay people to flood us with low quality click bait and content mill articles. Of course, that's not what we set out to do. But it's effectively what happened. I'm partly through reversing it.
The subscription actually does work and could (will?) be enough to sustain us. But we didn't roll it out in a way that's congruent with anything else we were doing.
Most notably, the subscription implies that we have some premium content to share. But instead of incentivizing premium content we spent the subscription revenue to pay people to flood us with low quality click bait and content mill articles. Of course, that's not what we set out to do. But it's effectively what happened. I'm partly through reversing it.