Udemy

Udemy’s new Commission Structure: 50% or Nothing

Udemy

Yesterday Udemy’s founder and CEO Eren Bali sent out an email to the instructors using the course marketplace to inform them about upcoming changes in the revenue share structure. From November 1st on the revenue share is going to be based on the source the student comes from. If Udemy brings a student to a course, the revenue share for instructors drops from currently 70% to 50%. If the student comes through the instructor, the revenue share increases from currently 85% to 100% for the instructor.

The reasoning behind these changes are growth. Bali and the team at Udemy believe that through the new structure they are going to be able to invest more resources into marketing, the platform and an affiliate network.

Is 50% commission fair to instructors?

Coming from the instructor’s side of the table I had my fair share of ranting about high commissions on platforms in the past. On the other hand, I totally understand that a platform like Udemy needs to make enough revenue to not only cover cost but to grow, especially when it raised significant venture funding.

And Udemy did something really clever here. I think, it was in the first interview I ever did for EDUKWEST in which Jon Bischke, back then founder & CEO of eduFire, said that marketplaces are a shared effort. The marketplace and its sellers need to work together in order to get customers. And that’s OK as long as the marketplace is actually delivering its promise of promoting the courses / lessons of its instructors in the first place and not relying on their instructors to do all the work themselves.

Attracting top instructors

This led to a killer argument: if you are doing all the work anyway, you can also host and sell your courses on your own. And that’s what top instructors usually did – or they sold their courses to platforms like Lynda.com that offered cash in advance. Udemy’s new revenue structure leaves top instructors who do their own marketing with no good reason not to use Udemy, to the contrary.

Besides getting 100% of the revenue for every student they point to their own courses there is a good chance of winning new customers through the platform and still earning 50%. Instructors also don’t need to care about setting up and maintaining a LMS on their own, don’t need to worry about the payment methods and they get a customer care team for free, as well. Sounds like a pretty compelling offer to me.

The new revenue share also leaves additional percentage points that Udemy can use to attract more affiliates who are generally used to commission between 50% to 75%. But the problem is that at the moment the really interesting courses don’t seem to be on the affiliate list. I dug into the vast back catalog, which is a daunting task in itself due to the huge amount of courses offered on Udemy, yet wasn’t able to find the courses I would be interested to promote.

Issues to solve

Maybe more quality courses will show up in the affiliate section when the new revenue share kicks in but this brings us to the biggest problem Udemy is facing to my mind: quality control. There is a certain waypoint in a marketplace when crappy content outnumbers the good or great one. I feel Udemy is past that point and it gets harder and harder to find good courses via the platform itself. Sure, if the entry point is the website or social profile of an instructor, the way to purchase is pretty straight forward. But if they land on Udemy and have to skim through tons of courses on the same topic, read the ratings and compare the prices it’s a different situation.

But that’s what Udemy needs to achieve, especially under the new revenue share model. Students who buy one course through a lead coming from an instructor need to buy at least one more course from another instructor on the marketplace for Udemy to generate revenue. That’s the advantage of controlled platforms like Lynda.com. They have control over the inventory, all courses have a certain standard of quality and there are not dozens of courses about the same topic.

Other marketplaces like eBay had to deal with this problem and came up with intelligent filters that learn about your preferences and only show you relevant content at a glance from which you can dig deeper if you like. I feel Udemy either needs to implement quality guidelines and curation before courses go live or work on filters that trim down the noise and come up with the courses that are most relevant to a student or affiliate.

And then there is still the question whether Udemy will be able to break out of its core market and enter new verticals, another essential step in order to reach their goal of teaching 10 million students, let alone 100 million. I feel, the team needs to go back in the trenches and seed new verticals like they did in the early days of their marketplace, getting in touch with instructors outside of the tech / startup ecosystem.

Kirsten Winkler is the founder and editor of EDUKWEST. She also writes about Social Media, Digital Society and Startups at KirstenWinkler.com.

  • http://www.planningforfailure.com Todd Charron

    There is some pretty nasty fine print in the new deal that Udemy doesn’t want you to talk about. Here are the details and what happened to me when I discussed it on the Udemy Facebook group.

    http://www.planningforfailure.com/post/63542124884/udemy-takes-more-from-instructors-censors-critics

    • http://kirstenwinkler.com KirstenWinkler

      Thanks for sharing, Todd. Left some comments on your blog.

      • http://www.planningforfailure.com Todd Charron

        Thanks!

        • ddeubel

          Correct. I’ve never got 100%, always 50% and many times less. Despite driving lots of traffic myself to my courses. Very misleading on their part.

      • http://www.planningforfailure.com Todd Charron

        Hi Kristen,

        I’ve updated my post with some more details and interactions with Udemy. It gets worse. They’ve also added a way to always take a 75% cut! Crazy…

        • http://kirstenwinkler.com KirstenWinkler

          Will check it out, thanks!

  • Erik

    This new structure is horrible. I was in the middle of developing my first Udemy course when i found this out, now I’m not sure what to do. I have a great niche and some good ideas. Are there any other comparable alternatives? Seems that Udemy did a great job of driving traffic for the Instructors and I’m not sure how much the “other sites” do in that regard.

    • Mattia Toso

      Hi Erik,

      take a look at Kunerango (https://kunerango.com) maybe it’s right for you.
      Any feedback are welcome and you can reach me at:
      mattia [at] kunerango [dot] com

    • Dave Smith

      What you could do is… offer an introduction course on Udemy, and if people want to progress, send them to your website where they can buy more.

  • Aum Dhruv

    i complained and i was also booted out. is there a way to fight this. i make like 4000 to 6000 a month but all i end up getting is 1000$. rest they keep. i could have gone independent if this was not the case.

  • Aum Dhruv

    also i would love to connect with all of you.
    my email is auminusa@gmail

  • JK

    Hi we are an edu-tech company from germany that provides an
    alternative to udemy. However we are not a marketplace. We offer a hassle-free white
    label-SAAS-solution with basically the same capabilities as udemy and a
    better pricing model than they used to have. If you are interested just
    send me an E-Mail to julius.knoche@patience.io.

    It would be great if maybe even someone could answer me some
    questions in order to understand the needs of udemy instructors even
    better and further adjust our products and pricing towards your needs.
    White labeling surely eliminates udemy-driven-traffic but allows higher
    margins and more control over your own brand and customer acquisition
    processes. I would be also very happy to read any Input and criticism
    directly here in the comment section. Best regards, Julius

  • Come on Now Karen

    Where did you get the information about instructors keeping 100%? I am Udemy’s TOP Marketing instructor and I have NEVER received 100%! Even when courses are ‘private’ and we drive the traffic, we NEVER receive more than 70%.

    • http://kirstenwinkler.com KirstenWinkler

      This was the official commission structure back in October 2013 when I wrote this post. I know that this case essentially never happened and that content creators usually get between 10% to 15% these days which is, quite frankly, a joke.

  • http://kirstenwinkler.com KirstenWinkler

    Yes, for example when the student is already registered on Udemy, you get the usual 25% and there seem to be other exemptions that make sure that Udemy or its affiliates get the bigger part of the cake.

  • Nora Stewart

    I’m out of Udemy and about to take my courses down, if I can figure that out. I find the way they treat people is terrible and more than happy to go elsewhere.
    I can recommend a good site in Australia – YesCourse.com – check it out. Treat you with respect & genuine commitment to a good outcome for all with 70/30 split – no messing.

  • http://www.fluentlanguage.co.uk/ Kerstin

    As another Udemy tutor who has found her revenues significantly lower than hoped for, I have a divided opinion. On the one hand I feel that the learning environment and exposure offered by the platform are worth a good cut of my commission, and I don’t mind. But on the other hand, I find it practically impossible to actually bring a quality student to my course and prove that they came from me.

    If I run a promotion with another tutor, it will be an affiliate sale. If I refer someone from my website, the student will grab a Udemy code, get 80% discount on my course and Udemy will keep 70% of the sale. It’s quite frustrating.

    My issue is not with hesitating to migrate, but with a feeling that I need to understand exactly how I can continue to serve my existing students on Udemy while migrating to another platform. They are Udemy clients, not Kerstin clients, so it wouldn’t be right to tell them to move providers just to maintain access to my course. But if I want to avoid duplicating my course, what do I do?

  • http://www.CompleteUnityDeveloper.com/ Ben Tristem

    Thanks for this article. We love their setup. Our new course(www.udemy.com/unitycourse) is in the top 1% most successful Udemy courses now, and we put it down to a healthy mix of Udemy traffic and our own promotion m