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
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.
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.
Figure 2 – Udemy-side Rev Share (click to enlarge)
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.
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:
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”.
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?