# Building for the future: upcoming changes to instructor business terms

• Posts: 580

Funny to see all these pathetic attempts to guesstimate the revenue change. There's only one certain thing here: the timing couldn't have been ANY worse.

As a software engineer, the most important lesson you learn is that estimates are always wrong. We'll soon see how this change actually affects us.

• Posts: 2,228

@KarolyNyisztor
Just out of curiosity, why "the timing couldn't have been worse." I don't understand.

• Posts: 580

>> Just out of curiosity, why "the timing couldn't have been worse." I don't understand.

COVID-19, financial crisis--just to name a few reasons for bad timing.

• Posts: 82

I am trying to see how anyone's revenue can go down by 25%. As per my calculations, the worst case scenario is -13%; that's when all your revenue come from Organic. Am I missing something ?

• Posts: 580

How about increasing our revenue share? What a weird idea, isn't it?

Actually, Apple did exactly that: they reduced their commission rate from 30% to 15% on paid apps and in-app purchases.

Developers enrolled in their App Store Small Business Program can "invest more resources into their business to continue building quality apps that customers love."

• @VirajShetty265
....

Your math is wrong. Let's assume someone is opted out of promos:

50% (current cut of organic) - 37% (new cut) = 13% reduction

13% reduction ÷ 50% (original cut) = 26% less income

• Posts: 580

Let me break it down for you.
This scenario implies an organic sale with no promotion or affiliate involved.

• Current revenue share: 50%. Udemy sells your course for \$10; you end up getting \$5.
• New revenue share: 37%. The same course sells for \$10. You'll get \$3.7.

\$3.7 is 74% of \$5. That is, 26% less.
• Posts: 2,228

I am going to say something that is likely to make me very unpopular. All of the calculations being done are not very meaningful because they completely leave out the major factor, the cause, of the change. Of course you can calculate that with the change from 50 to 37% and 25 to 50% you may come out a little better or worse. That's the easy part. It is almost irrelevant because you are not calculating the cost side of the business, only the revenue share side of the business. You are leaving out half of the relevant facts, and that is largely because we do not know those facts.

Let me give an example.

Let's pretend you are a farmer and your product is bushels of corn. You are the creator. You sell to a chain of stores who place your corn in their store and sell it to customers. We will ignore the middle men, futures contracts and all that to make it simple. Let's imagine that you have costs to produce a bushel of corn. You have a bank loan on the land you use, you buy seed and fertilizer, you buy a tractor and other equipment to plant and harvest the corn, and of course, you have labor. Let us assume that if you add up all of your costs per bushel of corn, the costs come to \$5. And, lets assume you have been selling your corn for \$10 a bushel. So, you are getting 100% above your costs, or you have a gross margin of 50%.

Now, on the other side of the business is the sales and marketing of your corn. Let's assume that the store is able to sell your corn for \$20 a bushel. So they are splitting the revenue with you at a 50% rate (like organic sales). But, the store also has costs in addition to the \$10 they pay you. They have rent on property, marketing, insurance, transportation costs, and labor. So, from the \$20 selling price they have to deduct your \$10 plus another (just guessing) \$9 for labor, rent, advertising, etc. In the real world retailers have a profit margin of around 2%.

To really analyze an adjustment in the percent that the farmer receives and the store receives you MUST know what their relative costs are.

Now lets relate this back to Udemy.

To produce a course on Udemy, what are our costs? Most importantly is the value of our time and expertise. This varies a lot across instructors given the different expertise and experience. What other costs - camera, lights, software... not much else. In fact our costs are very low and they don't change, with the exception of time responding to students questions.

Now, on the Udemy side: they pay for servers or server time; they have hundreds of employees, office rent, and they pay for marketing/advertising costs.

Most instructors are assuming a fair division of revenue is 50%, but without understanding the costs or the coming changes to costs. I am not increasing the costs associated with my courses. Udemy, on the other hand, when they increased their take from UFB sales from 50% to 75%, they proceeded to open new offices in Brazil and other countries, and hired hundreds of employees, and advertized the UFB service. Those increased costs were justified by the additional revenue and by the additional 25% share. You may say that I, as an instructor I gave up 25% to pay for the additional investments by UFB. Like all investments it was a gamble. Some instructors walked away claiming it was unfair. I stayed, assumed the risk, and my net revenue increased by 400%. The bottom line is, does your net revenue increase or decrease... but not from a fixed sum, but from the revenue after the investments are made.

The premise of the new change is not simply about the percent division of a fixed sum of revenue, which is what everyone has been calculating. That is a small factor in the business equation. The most important factor (and we don't have this information) is that Udemy is going to significantly expand their marketing to TV and other ads to increase total traffic to the site. Their costs, as with UFB, are going to increase. My costs are not going to increase one penny. That is what this is all about. It is about the changes Udemy is making on the cost side of their business. If you or I were going to make an equivalent increase in our costs we would have a different argument.

FWIW.

• @LawrenceMMiller
... I think most people get that. Well, at least I do. People, including me, are doing calculations based on what info we have today. Sure, if traffic to my courses triples as a result of Udemy's moves, that's a win - but we don't have that info yet, so people perform calculations to get a baseline of where we are right now, with the information we have right now.

• Posts: 2,228

@Anonymous
I agree. As with any change, there is associated risk. A year or two from now we may be able to assess that risk.

• Posts: 18

I'm going to preface this statement with the fact that I do appreciate being able to use Udemy to get started in this world. I've been fairly negative due to recent events (not just with this change, but some other issues I've had with Udemy), but the fact is I have made money and I'm happy about that. That being said, anyone defending this decisions as a way for Udemy to survive is GROSSLY disillusioned.

Udemy is a for profit company. They have a board. They have investors (that have invested \$296.5 MILLION dollars). Their goal is pure and simple: it is to spend as little as possible to make as much as possible. PERIOD. End of story. The community champions who think Udemy is out there to make sure we make as much as we can may have some great experience as they've been on the platform for a long time, but newer instructors will have a different experience. Udemy has a lot of evergreen content that will continue to fund the old guard and they have no reason to spend more money on newer instructors.

If Udemy cared about the instructor's ability to make more money, you wouldn't have a literal competition with them regarding coupon codes. We would be able to set whatever coupon codes we wanted, we'd be able to share them however we wanted, etc.

Instead, they have an extremely smart system that involves us not being able to compete with their prices without cutting our own, driving down our margins and raising theirs by pure volume alone as we provide most of the support for these students.

On top of that, Udemy's instructor support is abysmal at best. We have:
1. No support system other than an email address and no way to follow up or see status.
2. No modifications to our metrics, which are paltry.
3. One type of quiz and no other features.
4. A review system that is absolutely horrible and allows for students to accidentally leave terrible ratings without review. And no process, other than chasing down the student on Linkedin, to rectify this. This literally affects sales, a single 1 star review can brick a new course for weeks. Not to mention the 48 hours before new ratings come in while waiting.
5. Shady practices such as not allowing students that are referred to gift your course without stripping the referral code from the purchase on the last step.
6. 48 hour+ delay to even see our reviews
7. 30 day no questions asked return policy where students constantly return courses and exchange for lower prices
8. No way to even modify notifications to strip out udemy for business enrollments from paid enrollments. This seems small, but it's so small that a company with a \$296.5M cash infusion should be able to fix it.
9. Having to manually request 1080p for your videos recorded in 1080p. Literally setting you up for failure.

This is just a small sample of what I've seen in the forums. Now, THIS BEING SAID, I'm happy to be here making money. Is this a long term solution? Possibly not, especially given the new terms and Udemy's blatant disregard for Instructor satisfaction. I'm not saying the support people themselves are necessarily bad, they're just doing their jobs and their hands are tied. I'm also not saying that Udemy has no right to do these things, they absolutely do, but until we stop taking these things for granted because we made a little money last month, this trend will continue.

Now, if anyone asks me if I recommend Udemy? Absolutely. It's a way to cut your teeth and get into this world. But is it a permanent solution? Absolutely not. They're too volatile and the process just isn't always enjoyable.

So please, Udemy community leaders, consider what the new instructors are going through. You weren't faced with a massive percentage cut when you started. And many of you probably didn't start because you had just lost your living due to a global pandemic. And finally, please stop supporting a VC-funded company blindly just because they helped you make some money. They did it for themselves and their investors. You might have some pull if you've been around here forever, but we don't.

• Posts: 2,228

@derekm1215
I respect your view and your experience, which is obviously different than my own. You are right that I, and others, didn't start here because we lost our job due to the pandemic, and you are right it is undoubtedly more difficult to build up a student base if you are the tenth or twentieth instructor on a topic than if you were one of the first. That is all very true.

But, just a couple observations, and this is not to discount your opinion.

You only have one course published. I have said this many times in this forum, you can't succeed on Udemy with only one course. Everyone starts with one course, but those who are successful build up five, ten or twenty courses on related subjects. I was on Udemy for two years, from May '14 to September '16 before I made more than a couple hundred a month. Then, I published one course that really hit the mark and things began to increase.

I do want to correct the record. We have seen several changes in pricing and sharing over the years. And, I think we are probably more accepting of this change because we have seen that the previous changes were followed by increases in our revenue.

You said "Their goal is pure and simple: it is to spend as little as possible to make as much as possible. PERIOD. End of story." I guess you could say this about any and every business. I can say that about my own business. But, and for me this is a big "but" I do think businesses have a purpose beyond just making money. This is probably not the place to dive into it, but I think the democratization of knowledge, is a worthy/noble purpose. It is transformative on a global scale. I love the fact that someone in Yemen can take my course on management for a few dollars, the same knowledge that I used to share in corporate training for thousands of dollars a day, and it can be transformative in their life, is a really terrific thing. We all want to make money, but it isn't only about that.

As to all the other flaws in the Udemy system, I will only say that Udemy, like all businesses, is a work in progress.

• Posts: 47

If all that is down will benefit instructors revenue then its very good step

• Posts: 61

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• Posts: 12

Génial !

• Posts: 12

This is just awful and is compounded by the usual Udemy obfuscation, using an undefined term such as "blended share".

For me, it means a a reduction in income of 26% (as I will now get 37% rather than 50% of sales, as don't do any independent promotion). If I wanted to spend my time on independent promotion, rather than course creation, I'd put the course on my own shop on Thinkific, rather than a "department store" such as Udemy.

I opted out of promotions long ago because I don't want my high value courses selling for around \$10, which is what happens when one signs up to to promotions.

To be frank, it just looks ridiculous to see a course with \$150 dollar price-tag selling at \$10. It says, "the real price is \$10 but I'm pretending it's \$150, so you think you have a good deal"...transparent nonsense. So that's not for me.

This is a real kick in the teeth for high value providers who now have to seriously consider their options.

• Posts: 2,228

a) I am not sure why you think your courses are of higher value than many or most other instructors. They are not. Your longest course is four hours. Give me a break! And, no, you do not have more experience, have not written more books, etc. etc.

b) There is nothing "obfuscated" about blended share. It is perfectly well defined. You are blaming Udemy for your mistake of not opting in to promotions. So, opt in. Many of us are making between 10k and 100k a month on Udemy because we understand the concept of volume. If you spend three years writing a brilliant book, it doesn't sell for what you think it is worth, it sells for the market price. If it sells well, you can make a lot of money. But, you will only earn 15% of the revenue and that isn't much. Udemy is a mass marketing machine and they do it very well. You should have understood that.

c) You should also know that courses are not selling for \$10 when on sale (in the U.S. or UK). That is out of date. Course prices are determined by statistical analysis based on demand, length, ratings and other factors that determine value to demand. The average revenue per sale has been going up as a result of this methodology. The exception to this is the selling price adjusted for economic conditions in less wealthy countries. This is a value-based policy. I have no objection to my 18 or 14 hour course selling to a young business student in Zambia for \$1.50 if that helps lift them up.

d) at the same time you can sell your courses on your own platform. You will soon learn that attracting traffic to your site and selling for your desired price is not so easy.

• Posts: 12

@LawrenceMMiller
Quite a lot of untested assumptions in that reply but thanks for your friendly input, always good to hear what the community champions have to say.

• Posts: 43

Hm... I'm not sure about this. I am putting the brakes on spending time on my new course while I see how this pans out. I suspect it will have a BIG impact on Instructor revenue...

Everybody wants to make more money, including Udemy, and it has to come from somewhere. Let's watch this space.

• Posts: 15

I can see we having a serious conversation here. I wish you, aren't “lost” on the life path you go along.

Actually i want to ask some question too. About most people suspicious the system of "Direct paid advertising". I quit my day job due to negative threatment from senior, only have some limit of bucks to spend in this investment.
Dear @KatieBent
I would like to know...

• This work as like normal advertisement? No guarantee of fixed sales is it? work as like traffic?

• If we don't have money, can we still seeking systematic promotion of "cut the tax of purchase"like present instead of "paid for promotion" . Cause if the cut the tax of purchase system is gone... I think this is quite trouble for me or for us in someway, I trust the tax cut promote, cause i can Guarantee that, I am not losing anything. I know this is for long term result, but, how effective this is - Everyone is still remain mystery in this.I want join this long term result but, where is the money i should get, to put into this investment without a day job as a full time udemy instructor?

• I quite confuse with this"direct paid advertising" the word of "Direct" mean from who?
Oh this question is funny when i think it, I don't know why... ... :smileylol:

• Posts: 2

My sales have plummeted to about one third of normal since the beginning of April. Has anyone else had the same experience? And does anyone know what to do about it? Is it part of these promotional changes?

• Posts: 2,228

I do not believe that any the announced promotional changes have gone into effect yet.

But, I agree that it is a bit slow. I just don't think they are spending a lot on ads at the moment.

• Posts: 82

I am actually seeing about 30% higher for April 1-9 compared to March (if I average the revenue/day). Udemy is probably spending on Ads for different courses at different times. I doubt whether we can compare this way.

• Posts: 1

Please, I don't really get what's gonna happen on the update

• Posts: 2,228

It is explained at the beginning of this discussion.

Don't worry. Just develop good courses and you will be fine.

• Posts: 2

great

• Posts: 5

Could someone explain this? @KatieBent
@Abbie

That should be 37%, right?

• Posts: 6

I have also observed the same: revenue from the share of revenue via Udemy Organic channel has decreased to 37%, but the share of revenue via Ads Program is still 25% (instead of the promised 37%).

@KatieBent @Abbie could you please explain this?

• Posts: 209

It does work correctly for me. Looking at my sales, the change happened just recently, so perhaps there was a brief transition period?