Questions About Udemy’s Shift Toward Subscriptions

During the most recent earnings call (Q325), Udemy leadership shared the following:

"The momentum in consumer subscriptions is strong, so we are accelerating that push. This means we are intentionally reducing transactional course sales in favor of recurring subscription revenue, which will slow near-term segment growth. In addition, as we direct more customers toward annual subscription products, a meaningful portion of that revenue will be deferred to future periods. We believe this short-term impact is the right trade-off for building a more predictable, higher-value business that better serves our learners' long-term success. Finally, we are updating our profitability targets to reflect increased strategic investments in our transformation. At the same time, we are focused on maintaining strong cash generation and operational discipline."

As instructors, we’re deeply invested in Udemy’s success — which is why we carefully read every message from the leadership team. We truly want Udemy to thrive and believe that instructors and the company share the same journey and goals. And as the saying goes, true partners are those who aren’t afraid to ask the tough questions. I’d like to ask the following:

"Intentionally" reducing transactional course sales effectively accounts to another rev share cut for instructors, doesn't it?

By shifting the sales mix from transactional sales (35%) to subscriptions (15%), instructor revenue will effectively converge toward the 15% level.

How are Udemy incentives and Instructor incentives aligned in this situation?

From our perspective, it feels as though the further Udemy moves toward a higher-value subscription model, the more challenging things become for instructors.

Does Udemy consider the impact this sharp change in instructor income may have on the value of the catalog in the mid and long-term?

Reducing instructor payouts may boost Udemy’s revenue in the short term. However, Udemy’s B2B growth was built on a highly engaged instructor community and the world-class content catalog they created. If top instructors begin to withdraw from course creation, what impact will that have on the quality of the catalog—and, ultimately, on B2B and subscription sales?

I hope most members of the Instructor Community recognize the significant challenges posed by today’s competitive environment. Overcoming them will require exceptional vision and bold, strategic decisions. Currently, Udemy's business holds both tremendous advantages and significant shortcomings. I hope that by openly discussing these difficult questions, we can work toward finding the right solutions together—transforming this situation into a true win-win partnership rather than a one-sided relationship.

Thank you!

Best,

Ned

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Comments

FedeGaray

I deeply appreciate Ned’s thoughtful reflection and share many of the same concerns.

The recent earnings call highlighted a clear and intentional shift toward subscription-based growth and deferred revenue. From a strategic perspective, this may strengthen Udemy’s long-term business model, but it also invites important reflection on how this transition affects instructors — the creators of the very content that drives the platform’s success. Ensuring that our incentives remain aligned is essential to sustaining both quality and motivation.

Many instructors are beginning to diversify their focus and direct creative energy toward other projects, which may gradually lead to fewer updates and less new content across the catalog. This would represent a missed opportunity, as the strength of Udemy’s model has always come from the dynamism and continuous renewal of its courses.

Udemy’s care and openness toward the instructor community are truly valued, and I believe that same spirit of collaboration can guide how we approach the evolving revenue structure. Rather than seeing this transition as a loss, it could become an opportunity to rethink how instructor contributions are recognized and supported within the subscription ecosystem.

I remain confident that the Udemy team is fully aware of these dynamics and genuinely interested in finding the right balance — one that sustains the company’s growth while continuing to inspire instructors to invest their best work into the platform’s future.

Boris035

@365Careers - I'm so glad to see you here, expressing our concerns. After all, since "365 Careers" is one of the champions among Udemy instructors, I hope your (and our) voice will have more relevance now.

Boris

AlexGenadinik

@FedeGaray Very professionally stated! Great job!

And @365Careers - thank you for raising this issue.

The challenge that I see is that even though the management team is very well aware of this issue, and have had many months to address it, they have not even said a word in any of the updates.

JosephPhillips

Not addressing the issue of falling instructor revenue, in my opinion, is the message. Or the message is, too bad. If you don't like your revenue, some other instructor will.

January is coming and instructor revenue will be cut again. I don't see a path to keep shareholders and instructors happy, and when people aren't happy, they should look elsewhere…

AlexGenadinik

@JosephPhillips that sounds like a masterclass in "How to destroy Udemy in 1 day" :)

Alienate instructors and guarantee investor unhappiness, and new CEO in under 2 years.

We have been with Udemy for 10+ years, and it's truly sad to see something you worked so much on just get destroyed not as much from outside forces, but internal collapse and poor decisions.

JosephPhillips

@AlexGenadinik - me too, approaching 1,000,000 people in my classes. I've earned a ton here… feeling really discouraged and sad to experience this, and hear the same from other instructors. It's been a good ride.

AlexGenadinik

@JosephPhillips like Mr. Rogers says from Sesame street, don't be sad that it's over, but grateful that it happened ;)

Luckily most of us don't have to worry about money.

Although it's worse for many Udemy employees who will have to face downsizing from this looming disaster.

ThomasMitchell

The VAST MAJORITY of instructors DO have to worry about money. It's why they're here to begin with.

AlexGenadinik

I think the way to make more money is to get off this forum and focus on other real work. Udemy is going to keep decreasing until either 0 or something else happens. But it's out of our hands

ZaneVella

Hello Ned,

First, allow me to introduce myself. I am the new head of Content and Instructor strategy on Udemy’s leadership team reporting directly to our CEO Hugo. I joined just over two months ago and my background is a mix of technology, education, and entertainment across both large-scale companies and entrepreneurial roles.

I’ve been fortunate to meet many instructors over the past months, in person and virtually, and I look forward to meeting you as well. Meeting instructors and sharing dialog like this has been critical in understanding Udemy, our current challenges, and to inform our planning so thank you for asking the hard questions.

I will share some immediate replies here to your questions, but I want to assure you that we are aware of the complicated dynamics in play and are committed to finding the right balance of company growth and a thriving instructor community. We are hard at work on several tangible initiatives that will address this balance and reaffirm our deep partnership and commitment to our instructors. More specifics on that as soon as confirmed, but for now to your questions:

"Intentionally" reducing transactional course sales effectively accounts to another rev share cut for instructors, doesn't it?

Our shift toward subscription-based growth is imperative in a world of significantly increased customer acquisition costs. In short, it’s more expensive than ever to bring learners into the ecosystem, and in all of our interest for them to keep coming back. This means evolving the way learners engage with Udemy beyond a single course purchase, and we are seeing great promise in this as Hugo shared in Q3 results. Our North Star is to increase the overall number of learners that are subscribed, and the overall time they are learning on the platform, with the objective to increase the LTV of the learner for both Udemy and instructors alike. So while I understand why you’re seeing that as an “effective rev share cut”, please know it is an investment in trying to achieve more predictable earnings, more ongoing leaner engagement, and higher lifetime value per learner.

How are Udemy incentives and Instructor incentives aligned in this situation?

We also understand that this transition is taking time, and that we need a solution to better align incentives during the transition while the overall subscriber pool is growing. As I mentioned above, this work is underway and we are also tapping many instructors’ creativity and business acumen for suggestions and feedback how to grow and retain subscribers together.

Does Udemy consider the impact this sharp change in instructor income may have on the value of the catalog in the mid and long-term?

Very much so Ned, in many dimensions. It also makes us think a lot about how we need to align incentives with the outcomes that both learners and our enterprise customers need, and what new forms of content this may take in addition to our existing course formats. There’s a lot of pressure on learners these days to learn new skills fast, and for skill acquisition to be a constant, on-going process.

Know that all across Udemy we deeply recognize that it is our instructors, your creativity, and your insights into what learners want and need to learn that is a unique differentiator for us all.

So yes, we do recognize the significant challenges of today’s competitive environment, and the dynamics impacting instructors, and are working hard on solutions. I believe we have the vision and see the bold strategic decisions happening. We are committed to the true win-win partnership that has made Udemy a success, and adapting to the future together.

Thank you again and I look forward to collaborating in the future.

Oneness

@ZaneVella

Thanks for taking the time to introduce yourself and for writing such a detailed message. It’s really good to see someone from the leadership team engaging directly with instructors. Many of us appreciate that, especially given how uncertain things have felt lately.

That said, a lot of instructors are struggling right now. The shift toward subscriptions might make sense in the long run, but at the moment it has caused large drops in income for many of us. For a lot of instructors, subscription payouts just don’t come close to what course sales used to bring in. It’s becoming very difficult to keep producing and updating content at the same level when the effort no longer matches the reward.

You mentioned that this shift is meant to lead to more predictable earnings and higher lifetime value per learner. That goal makes sense in theory, but what instructors are experiencing now feels very different. There’s less stability, less transparency, and a lot of uncertainty about when or if things will improve.

The bigger concern is that many instructors are starting to leave the platform. Full-time creators who used to rely entirely on Udemy are now returning to traditional jobs or moving their content elsewhere. This isn’t just an isolated trend anymore, it’s becoming systemic. At this rate, Udemy risks losing some of its most experienced and talented instructors, the same people who helped build the platform’s reputation. If this continues, it will affect everyone. Learners will have fewer high-quality courses to choose from, the overall catalog will shrink, and Udemy’s standing as a trusted learning destination could weaken over time.

We understand that the market is changing and that Udemy needs to adapt. Instructors want to be part of that growth. But we need to see a clearer plan for how we fit into this vision. We need transparency around how subscription revenue is calculated, a realistic timeline for improvement, and some short-term support to help instructors through this period of transition.

Critical points worth highlighting based on my own research reading the forums:

1. Subscription growth comes at the instructor’s expense. The transition away from transactional sales has directly reduced instructor earnings without offering a comparable or reliable income stream to replace it. The financial burden of this “investment phase” is being carried almost entirely by instructors.

2. Revenue is becoming unpredictable. Many instructors used to be able to forecast income based on course sales, promotions, and student patterns. Subscription payouts are far less transparent and fluctuate without clear explanation, making it impossible to plan financially.

3. The incentive to create is weakening. When earnings per learner drop dramatically, motivation to produce high-quality or niche courses decreases. Instructors start prioritizing other platforms or projects where effort and reward are better aligned.

4. Experienced instructors are leaving the platform. Full-time instructors who once relied solely on Udemy are moving to platforms like Skillshare, YouTube, or self-hosted sites. This “brain drain” means Udemy risks losing the very expertise that built its credibility and content depth.

5. The quality and diversity of content will decline. As income falls, fewer instructors will take the time to develop comprehensive or specialized courses. Over time, learners will notice the shift in course quality and variety.

6. The instructor community is losing trust. Many feel that decisions are being made without adequate consultation or transparency. Without a sense of shared purpose or mutual benefit, the partnership feels one-sided.

7. The subscription model is opaque. The exact calculations behind payouts, learner engagement weightings, and performance metrics are unclear. Instructors have no way to understand or influence how their work is valued.

8. Udemy’s brand depends on instructor success. Learners don’t come to Udemy for Udemy, they come for the instructors they trust. If those instructors leave or disengage, learner loyalty and brand perception will suffer.

9. Short-term income drops have long-term consequences. Some instructors are scaling back updates, cutting support for students, or abandoning unfinished projects because they simply can’t afford to keep investing in the platform. This weakens course quality across the board.

10. Innovation is slowing down. When creators are worried about surviving, they’re less likely to experiment with new topics, formats, or teaching methods( Based on your experience, you should know this). That stifles innovation, which used to be one of Udemy’s biggest strengths.

11. This shift risks changing Udemy’s culture. Udemy was built on empowering individuals to share their expertise with the world. Moving to a system that primarily benefits platform metrics over instructor livelihoods changes that identity, from a partnership to a platform-first model.

12. Learners’ engagement metrics don’t reflect real teaching impact. The subscription model rewards time watched or activity metrics, not necessarily learning outcomes. Instructors who teach efficiently or whose lessons are concise and effective may actually earn less.

13. Long-form, in-depth courses are being devalued (Me for example i have a masterclass that is over 45 hours long). In the subscription model, short courses that maximize “minutes watched” often earn more. This discourages comprehensive, carefully built courses that take months to produce.

14. Marketing control has been taken away from instructors. Previously, instructors could drive their own promotions and build audiences through sales and coupons. Under subscriptions, Udemy controls the customer relationship and data, cutting instructors off from their own student base.

15. Instructors are losing ownership over their audience. Subscription learners often don’t even realize which instructor they’re learning from. It turns instructors into background content providers rather than recognizable educators with personal brands.

16. The subscription model favors quantity over quality. When payouts are based on watch time or engagement, there’s an incentive to produce more courses quickly instead of focusing on deep, transformative learning experiences.

17. Instructors are being asked to take on platform risk without support. Udemy’s pivot is essentially a business experiment funded by instructor income losses. Instructors bear the downside risk but have no assurance of sharing in the long-term upside.

18. Communication from Udemy often feels one-directional. While updates and statements are shared, there’s limited dialogue or action on instructor feedback. This creates a growing sense of distance between leadership and the teaching community.

All of us want Udemy to succeed. We’ve invested years of effort, creativity, and passion into building this platform. But we need to feel that Udemy is equally committed to our success and financial stability.

Thank you again for engaging with us and for opening this conversation. I truly hope we start seeing some concrete steps soon that reflect a real balance between company growth and instructor sustainability.

Oneness

rasu84

Thank you for taking time to respond.
As you pointed out the increasing cost of customer acquisition led to this radical change in strategy. However, is there any room for innovation to reduce the customer acquisition cost? I came to this platform because Udemy was awesome at marketing my courses in the marketplace (a skill that I lacked) which completely justified the revenue cut that Udemy took. However, I am not too keen to continue making courses to support the current strategy because I have seen this strategy fail before (skillshare).

SivakamiS2017

"All of us want Udemy to succeed. We’ve invested years of effort, creativity, and passion into building this platform. But we need to feel that Udemy is equally committed to our success and financial stability."
This is the most important thing ! Very well said.
Thank you for this thread.

SivakamiS2017

The other thing I wanted to highlight is that although Udemy keeps talking about "new Revenue opportunities", I am not sure how viable any of them really are !
Course Bundles don't really allow us to set a price or do promotions. Maybe these are coming, maybe not, but as of now it's not very useful.
1:1 Connect or Coaching, I don't think has taken off at all … if people are unwilling to buy a Course, why would they want to pay $150 for Coaching ? This makes no sense in the Marketplace.

Col (Dr) Shabbar Shahid (Veteran)

It is a journey where Udemy and its instructors have to travel together. As of now, it seems Udemy is trying to sprint leaving the instructors behind. Why should an instructor devote time and energy preparing a new course fully knowing that it has no scope in market place and no certainity if and when it will be included in the PP and UfB catlogue.

The irony is that to get included in PP and UfB you need ratings and reviews and to get ratings and reviews you first need students. (On an average 10 students results in 1 rating)

Can there be a better example of a Catch 22 situation?

TonyAlicea

Thank you for replying @ZaneVella, it is reassuring after Genefa’s announcement of leaving.

I think we should be careful not to conflate two separate things:

1) Udemy’s decision focus on individual subscriptions.

2) The reduction in instructor revenue share which was accompanied by an explicit promise that instructor revenue would not decrease.

The interest in individual subscriptions is understandable. Customer acquisition costs is clearly a battle in the age of AI-over-Google.

The idea that customer acquisition costs must be subsidized by extraordinary instructor revenue reduction, however, is not how the 15% story was couched (obviously long before you came onto Udemy). The current free trial structure is another way instructors currently subsidize customer acquisition.

In the realities of today’s market, instructors will be forced to measure Udemy’s provided value against the cost of subsidizing Udemy’s growth.

To restate in brief: the current revenue share, free trial policy, and other challenges are changing the instructor relationship from partnership to subsidy. Transparency, communication, and clear explicit action showing that Udemy understands its dependency on good instructors is vitally needed.

LawrenceMMiller

@ZaneVella Your message above is good, but it is buried in this thread. Can you copy it and make it a separate thread so it is more visible. Or, I will. Instructors are anxious to hear your voice, your response, but I fear they won't see it here.

ScottDuffy

"This shift risks changing Udemy’s culture."

Udemy's culture has already shifted. Not a single person from even 4 years ago remains working there in any leadership capacity.

ScottDuffy

Well said, Ned.

I have been thinking about how a lot of what we're experiencing is caused by the rise of AI. AI is everywhere.

Photoshop has AI in it. Google Search gives AI answers. ChatGPT has 800 million weekly users. Even Udemy has an AI assistant. AI is everywhere.

SO WHY WOULD SOMEONE TAKE A COURSE to learn something basic? Just ask AI.

"How to remove noise in Photoshop" is a solved problem. There's no need for a course on it. You simply ask Photoshop, and it will do it. Or Canva has that feature too.

Which leaves only the really advanced skills and skill mastery. Teaching skill mastery for $14.99 is a terrible business model, as well.

We're all collectively in a tough spot. Udemy hasn't figured the way out yet.