The trouble with Udemy
Posted by Susannah Harrison on July 26, 2018
Udemy is an online platform that hosts eLearning courses. It provides the basic tools for users to turn their content into eLearning courses, which are then sold to customers and downloaded via the Udemy website.
In some ways this model is a smart one. Instructors are provided with the tools to turn their creative content into an online course through Udemy, and the course’s presence on the platform means it can be found by interested parties who search for that subject.
It can work out very well; in 2015, the top 10 Udemy instructors made over $17 million in total revenue.
However, these lofty statistics do not represent the whole. The way that revenue is divided on Udemy takes much of the profit away from the creator of a course.
Dubious revenue model
Udemy markets its platform to instructors on the premise that they will make a significant profit from using it. On a closer look at the way they divide up the course revenue, this starts to look less likely.
When the instructor promotes their own course, and their customers use their own coupon or code to purchase it on Udemy, they receive 97% of the revenue from the sale. This is a generous margin, but to get the benefits of this the instructor must devote significant resources to marketing and make sure that the customers they attract remember to use their code.
Udemy gets a 3% margin on this model, but importantly it gets free promotion from the instructor. As the instructor markets their own material they also bring paying customers to the Udemy website.
A more common model of revenue assignation is ‘Udemy Organic’, in which customers find the course through organic search on Udemy. In this case, the instructor will only receive 50% of the revenue.
Paid User Acquisition Channel Sales
The third option is that Udemy will market your course for you. On this model, half of the profits go to the Udemy affiliate who is employed to advertise the course, and the remaining 50% of the revenue is split evenly between Udemy and the instructor. Though the instructor doesn’t have to carry out their own marketing, and the course may will gain more exposure than through organic search, a measly 25% of the profits will only pay off for the instructor if huge numbers of people end up buying their course.
instructors receive only 25-50% of revenue on courses sold without an instructor coupon
Udemy even specifies that any purchases made within seven days of the customer clicking on an affiliate link count as a Paid Acquisition sale, even if they use an instructor coupon. Even when an instructor promotes themselves to a customer therefore, the sale could easily still come under the 25% revenue category rather than 97%.
Learning courses seem to be perpetually on sale on Udemy; a ‘summer sale’ just reduced courses across categories to £11.99. This might be a good marketing move for Udemy, but leaves an even slimmer portion to the course creators.
During the course sales, which are very frequent, it is almost impossible on the website to find courses that have not been reduced. If a potential customer does manage to come across a course that is not on sale, it will be unfavourably juxtaposed with ones that cost half the price or (usually) much less. This means that instructors lose out massively by refusing to include their course in the sale.
On top of all of this, when customers buy courses using the Android or iOS app for Udemy, Apple and Google charge a 30% fee on the total sale of the course even before it is divided up further.
During one of Udemy’s frequent sales therefore, a single course bought via the Udemy app would make its creator £4.20 if the customer found it through organic search, and just £2.10 through Paid Acquisition. If your course was priced at £200 before the sale, as many are, this would be a stark fall in revenue.
Udemy came under fire in 2015 for profiting from pirated material on their website. As a large part of the revenue from each course goes to Udemy, they profit from courses that are built with stolen content and sold via their website.
Troy Hunt writes courses for Pluralsight (a learning platform for technology skills) and raised the issue that much of his intellectual property was being uploaded and sold illegally by Udemy users. On making his issues known on Twitter, Hunt found a plethora of respondents who had similar issues with Udemy and piracy.
Udemy seems to profit from pirated material on its platform
Central to Hunt’s argument was the discrepancy in how Udemy present their enterprise. On the one hand, Udemy justify their refusal to check the uploaded courses for pirated content by characterising themselves as an open and detached platform like YouTube, which can only be expected to check through material after receiving an external complaint. On the other hand and unlike YouTube, Udemy still brands themselves as a discriminating provider of high quality, ‘expert’-led learning material. How can they claim this without performing even simple copyright checks?
Though Udemy avoided legal consequences for this, disclaiming responsibility to vet each course for pirated content, this is still a major issue for course developers. Harrison Kinsley, an entrepreneur who creates online programming tutorials, posted a video in June 2018 which denounced Udemy’s piracy policy as well as its revenue model.
Implications for content creators
Because of these public issues, customers might start to take courses they find on Udemy less seriously than those found elsewhere. The uncertain status of Udemy as a respected platform may undermine the content delivered on it.
There is an undeniable dynamism to the concept of learning material published without restrictions. That said, paying customers might feel more comfortable sourcing their learning content from a more selective online marketplace, that checks its products more rigorously, than one that is comparable to YouTube in its range of quality.
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