The megastars can make a decent profit from the long tail of thousands of readers. As far as "better" goes, someone like Tim Denning is better than most writers in that he knows how to write an article that will please a very large audience, and to do so in a consistent way so that his readers keep coming back for more. It's an art form (but it's not necessarily great art).

The real cash cow isn't readers (as opposed to writers) but casual readers as opposed to avid readers. Unless Medium charged readers a certain fee per story, then a writer in a universe of avid readers isn't likely to earn much, except for the (very) long tail.

Now Medium could attempt to generate revenue by constantly adding new (and thus casual, at least for a time) readers, in a kind of ponzi scheme--except of course (as you point out), many of these readers will become writers as well, thereby diminishing writer profits even further.

The solution if one isn't (or doesn't want to be) a Tim Denning is to write well for a specific audience (doesn't matter if they are writers or readers, casual, or avid), then channel some of them into a secondary revenue stream (e.g. paying subscription to a newsletter or to a service).