Udemy’s New Revenue Sharing Model Is Off To a Rough Start

November 3, 2013

What Does Udemy Pay Its Instructors (Now)?

Last month Udemy, a leading marketplace for user-generated online learning, announced a big change to the Udemy revenue sharing model.  It took effect a couple of days ago. Not surprisingly, it has generated a lot of controversy from the Udemy instructor-base.  And, since I've previously encouraged students of my online screencasting courses to consider Udemy as a ready-for-you channel for publishing and monetizing their digital-know-how, I felt it was worth helping to clarify--at least for my students--where much of the confusion seems to be at the moment and what you need to know before selling your courses through Udemy.

The Gist Of the New Model

image - figure 1 flow diagram

Figure 1 - Determining Procuring Cause (click to enlarge)

I won't re-hash each of the terms.  For that, you can read Udemy's announcement via the link above.  But the gist of it is fundamentally based on an accounting of who (whom?) is the original "source" of the subscriber.

My Realtor(tm) friends have a term called "procuring cause."  Basically, it refers to the agent who brings the buyer to a purchase transaction.  This "source-"thingy with Udemy subscribers is similar.  This issue is central to the new payout model, so understanding it is key to this whole confusing business.  It's implications are:

  • If Udemy is the procuring cause (source) of a new subscriber, then Udemy takes a 50% share of your course's list price.  (After any promotional discounts, if applicable.)  [Note: But, see scenarios 3, 3a and 3b in Figure 2 further below for a special case about how this share is modified based on a particular channel through which Udemy acquires certain subscribers.]
  • If you, as the instructor, are the procuring cause of a new subscriber, then you get to keep 97% of your list price.  (After any promotional discounts, if applicable.)

The flow diagram above (Figure 1) attempts to trace the rules by which you (or Udemy) become the procuring cause of a new subscriber.  (*Sigh...* It's sad that we need such a diagram, but it is what it is.)   While it sounds simple on its face, there's an often-missed click-timer issue embedded in this rule that makes things less intuitive.  Trace the blue path to see how this timer thing applies.   The essence is this:

(Assuming the person who clicks your link isn't already a Udemy subscriber then) You get credited as the procuring cause for that subscriber but ONLY IF she/he creates a Udemy account within 24 hours of first landing on the Udemy site through your couponed link.

  • Upside (sort of): Even if they don't buy your course during that first 24-hour window, you're still credited as the "source" PROVIDED THAT they create an account during that first 24-hour window.)
  • Downside (sort of): If the 24 hour window expires and the visitor still has not signed up for a new account, then your best hope is for a subsequent 2-hour window whenever (and IF ever) that student comes back in the future AND happens to remember -- and use -- your coupon code.

Purchase Scenarios

In the tables below (Figure 2 - Udemy-side Revenue Share; Figure 3 - Instructor-side Revenue Share), I laid out common scenarios.

  • The Subscriber Source column caveats the percentages on the basis of procuring cause for the subscriber.
  • The Channel column further caveats the percentages on the basis of additional incentives (e.g., paid ads, in-house promos, etc.) that may have been used to get the subscriber to buy a course.
  • The remaining columns are hopefully self-explanatory.
  • Finally, the rows with the yellow highlights are scenarios that seem to be all abuzz in the Udemy Faculty Lounge at the moment.
image - figure 2 - udemy-share

Figure 2 - Udemy-side Rev Share (click to enlarge)

image - figure 3 - instructor share

Figure 3 - Instructor-side Rev Share (click to enlarge)

In the Udemy-Instructor battlefield (that's how it feels at the moment), there are 3 FAQs that seem to be particularly controversial.

  • "Why am I now only getting a 25% share on purchases of my courses even when it appears that I am the original source of the subscriber?"
  • "Whoooaah... Udemy gets a 75% share for life of purchases by Udemy advertising-generated subscribers?"
  • "What the hell is this 24-hour/2-hour thingy about?"

FAQ #1: Why am I now only getting 25% share on purchases of my courses even when it appears that I am the original source of the subscriber?"

Well, as it turns out, the instructor is apparently not the procuring cause of the subscriber in these cases.  As far as I can tell from the discussion, much of the confusion here seems to stem from caveats related to scenarios 3a and 3b above.  (Go up there and take a look at Figure 2 now before continuing.)

It's understandable that many of us, as Udemy instructors, expect that if the payment report says that the sale is "organic" and that an instructor-coupon was used by a subscriber in the sale, then Udemy should only have taken a 50% cut; not the 75% share that's causing so much consternation.

image - figure 4 - reporting format

Figure 4 - Snippet of current payment report format (click to enlarge)

But here's the thing: the source AND the channel are what count.  What's not so transparent in the current reporting format is who, originally, was the source (procuring cause) of the subscriber in question AND what channel was used to procure that subscriber.  As scenarios 3, 3a and 3b above try to summarize from the discussions is that:  if Udemy is the source AND the subscriber came in by way of an advertisement that Udemy paid for (e.g., Facebook, Google, Groupon, etc.) then Udemy takes the higher 75% cut.  And if that weren't controversial enough, then add this phrase:  For Life.

That last bit is a nice segue to FAQ #2.

FAQ #2:  "Whoooaah...Udemy gets a 75% share for life on purchases by Udemy advertising-generated subscribers??"

Um, yes.  (I was gob-smacked by this one, as well.)  Unfortunately, I don't think this point was sufficiently outlined in Udemy's original announcement, which is what I think is causing so much consternation.  Hell, I just re-read that whole announcement and can't find a reference to it at all.  But, when threading through the discussions in the Udemy Instructor Lounge battlefield, there's this revelation from one of Udemy's reps:

image - fig 5 - udemy share on ad-generated subscribers

Figure 5 - Udemy share on ad-generated subscribers (click to enlarge)

So, there it is.

FAQ #3: "What the hell is this 24-hour/2-hour thingy about?"

This last one in my "top 3 FAQs" was indeed mentioned in the original announcement.  But it's one of those things that bears a visual graphic to fully appreciate.  So, again, it's worth taking time to trace through Figure 1 above.  By tracing the blue boxes in Figure 1, you'll get the sense of a clock that starts in the nebulous background that governs affiliate marketing engines.  I won't re-hash a narrative about; I'll let you trace the diagram and revisit the sections underneath it about "Upside" / "Downside".

Summary

Figure 1 is the centerpiece of the model; it's worth taking time to understand it.  While Udemy unfortunately spins it by making it sound simple enough, (paraphrase: if you source it, you own it; if we source it, we own it), the mechanics of the 24-hour/2-hour timer bears some highlighting, as does the 75% for life scenarios in 3a and 3b of Figure 2 above.

I'm reserving my comments for now about how much I think this new model tilts the scale in Udemy's favor (or not) at the expense of their partners, but keep an eye out for a future post with my thoughts on it.

In the meantime, I'd welcome your thoughts about whether or not you think it's a fair deal and, more importantly, how would you advise other would-be Udemy instructors about whether or not you'd recommend they put the effort in to creating a course for the Udemy marketplace?


Ready to learn the Screencasting Wizard's secrets?Learn to teach online. Go beyond PowerPoint: learn to screencast using Camtasia Studio for Windows, Camtasia for Macintosh, or ScreenFlow for Macintosh. Watch the free previews now and read the topics list on our 5-star rated screencasting courses. Click here to learn more.


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About Mel

Mel is the online training architect and screencasting wizard at Kareo, one of Forbes' 2013 list of 100 Most Promising Companies in America. He's also the creator of Digital-Know-How, a training website devoted to developing learners' skills for screencasting and web video course development. Mel is also the chief blogger of ScreencastingWizard.com; Mel's personal blog. The comments and opinions you read here are Mel's and not associated with any other company.
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16 Responses to Udemy’s New Revenue Sharing Model Is Off To a Rough Start

  1. Todd Charron says:

    Hi Mel,

    Thanks for this post! It’s a great summary of where things are currently at. I added it to my post, http://www.planningforfailure.com/post/63542124884/udemy-takes-more-from-instructors-censors-critics as a reference.

    Just as a heads up, Udemy continues to remove links to my post and kick people out of groups that disagree with their new approach, so be careful what you say around them…

    • Mel Aclaro says:

      Hi Todd. Yeah, what a convoluted messy business it all is right? Thanks for the heads up, I have heard that the expulsions were happening and did in fact notice a few (former) members who went “quiet” after a while… sad state of affairs.
      In any case, thanks for sharing and cross-posting to your blog.

  2. David S Trees says:

    Hey Mel,

    Thanks for posting this. Me reading it is timely.

    I am about to create some simple training programs in my areas of expertise.
    I was going to launch them on Udemy as a first point of call.

    I would really like to hear your honest opinon about whether you would think that for right now, this is a good idea. At least until this whole % earned thing is cleared up or more moral for a provider perspective.

    I can build WP sites and Membership sites if that is what I need to do.
    I was planning to use Udemy as I have done some great iphone 5 photography and video training courses. I thought it was a cool idea. I don’t mind a simple 50/50 split if someone comes from their efforts. But 75/25 for life… Umm not thanks.

    I spotted your course today on there today and was about to sign up…
    HOWEVER… I found you 100% on You Tube, not on Udemy. I use Camtasia and was trying to learn how to do PiP.

    You might see my comment I just left on your Camtasia 2 for Mac video review, Pt 2.

    I am not interested in any of what seems to me to be, silly, small minded exploitation of a life blood of an organisation. (Typical parasitic corporate small mindedness, get folk in, change the goals… Silly! )

    I am, like you, passionate about training people to become all they are purposed to be. Finding agreeable, high value, exchanges ( £$€ ) for all involved.

    If Udemy are playing “silly buggers” as we say in England and Australia… Then I will re jig my thinking and look for somewhere more appropriate to launch / share my trainings. If you would prefer to comment privately I would really truly appreciate it. I honour privacy and respect honesty. My email is listed in your mailing system now. Feel totally free if you wish to use it. Thanks for a very honest article which is easily understandable.

    • Michal says:

      Hi guys, I was in shock today when I found out about a new Udemy revenue share model. 3 months ago I decided to start developing courses for sale and spent whole week reviewing different platforms available for easy uploading etc, at that time I chose Udemy I wrote down their revenue share model; it was 70% or 85% for the author depending on circumstances. I just finished uploading today my course and was shocked when I saw under agreement conditions what is their share now. Frankly I think they will get backlash same way as E-bay got after shortchanging their small sellers. Does anybody has any suggestions for other platforms? I would like to continue developing courses about health and wellness. I do not have HTML knowledge so I need fairly easy platform.
      Thanks in advance.

    • Mattia Toso says:

      Hi guys,

      I read with great interest the article by Mel and your comments.
      We Kunerango created to allow anyone to create their own school.

      You can contact me mattia [at] kunerango [dot] com

      Check it out: https://kunerango.com

      Every feedback are welcome.

      • forthehackofit says:

        It would be interesting to see a demo course @mattiatoso:disqus I like the intro video but an actual course would be great. I have an introductory course on responsive web design that would be free that I could use as a test if you want. 10% is very attractive if you host the videos and take care of the payments.

  3. Christian Reuter says:

    Hi Mel,

    Thanks a lot for your great post on Udemy’s new revenue sharing model. I had still the old 85/15 cut in mind and was going to publish my first online course on Udemy by the end of January. Now I’m warned… Good luck to all instructors who switch to other more trustworthy platforms or build their own. Why independent instructors don’t unite to build their own common and fair platform?

    • Mattia Toso says:

      “Why independent instructors don’t unite to build their own common and fair platform?”

      Hi Christian,
      good question!
      We have created Kunerango (https://kunerango.com) for this reason.

      Check it out, every feedback are welcome.

    • mgozaydin says:

      Yes
      why you do not do that.
      Are you non smarts *

  4. JBK says:

    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

  5. Danielle Leslie says:

    Hi Mel, just wanted to let you know that your information is out of date. As of July 2014, on Udemy, instructors earn 97% for all sales they drive with an instructor coupon code, 50% for all sales Udemy drives (as you know, a huge benefit to being on Udemy is having access to the 5 million+ students already on the site), and 25% for affiliate and ad sales. The revenue share you describe above is no longer in place; you’re misinforming people. You can see http://udemy.com/teach for the latest.

    I’m happy to say it’s a very favorable share for instructors! (I work with our instructors everyday, so I would know. :)) No other site is offering 97% share to instructors for their driven sales PLUS access to millions of students in the marketplace. It’d be a great time for you to update the post b/c it’s now irrelevant and incorrect.

    • c0ppo says:

      Actually, it’s not fair. Not fair at all. I am not a teacher, nor I do any kinds of lectures. I simply buy them since I enjoy learning. And this post shouldn’t be altered at all. All those who want to use Udemy should see how they treat their instructors. Who’s to say things won’t get even worse once Udemy reaches 20mil people?

  6. Mehdi Khouadri says:

    For me Udemy can market your course very well, but when It comes to the revenue commission, it’s not fair. This COURSE https://www.udemy.com/make-money-teaching-online/?couponCode=earn100 taught me how I can build my own website, redirect clients from udemy to my website and earn 100% revenue share by offering a lower price

  7. sitetrailadmin says:

    Globalcademy.com is also a good alternative to Udemy. It is useful for instructors NOT to rely on just one source of revenue. Udemy policy changes can affect teachers – and that is why Globalcademy, Lynda, Alison and other channels are essential in the marketing mix. Diversify sooner rather than later

Comments are closed.