Why does Udemy keep the majority of your revenue?

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Why does Udemy keep the majority of your revenue?

I understand that Udemy has to make money somehow, but just for promoting your course they take a 63% revenue share per sale that comes through promotions? That's ridiculous. Udemy should be giving a majority of the course sales revenue to the people who made the courses.

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You're not factoring in everything that Udemy does, and how much your net revenues would be if you ran your own school.

Udemy does much more than just promoting an instructor's course. They provide the platform and marketplace with an astronomical amount of traffic, ads/sales/promotions, technical support, payment processing, taxes, etc. all which cost money.

If you launch your own school on, let's say Teachable or Thinkific, then those are all things you have to handle yourself. Since the average price for a course on Udemy when they run a sale is around $10 USD, we can use that as a use case and factor in expenses on an instructor's own online school:

  • Credit Card Processing Fees: 6% or $0.60
  • Online School Platform Monthly Costs: 5 to 10% of Each Sale or $0.50 to $1
  • Google or Facebook Ads PPC: 10 - 40% of Each Sale or $1 to $4
  • Cost of Your Time for Tech Support & School Admin: Varies Per School (based on how you value your time), let's say 10% or $1 per sale
  • Net Revenue: $3.40 to $6.90, or 34 to 69% of course sales price. So if we split the difference, the average would be around 51.5% of each sale.

So, if you ran your own school (and I didn't include all the minute costs), you wouldn't even keep a majority of the course sales revenue as they're eaten up by operating costs and expenses.

Also, from my understanding Udemy protects instructor’s content by encoding videos, and has a team which manages a Piracy Detection Program. I see this protection as a great benefit and is well worth having

https://support.udemy.com/hc/en-us/articles/229232227-Instructors-How-Does-Udemy-Protect-Your-Conten...

 

https://support.udemy.com/hc/en-us/articles/229604108-What-Should-I-do-if-I-Find-a-Course-on-a-Pirat...

ScottDuffy
Community Champion Community Champion
Community Champion

Well the short answer is that "creating the course is the easy part, selling the course is the hard part."

 

You might not like that answer (or agree), but that's the reality for any content creator in any industry.

 

Why do singers/bands only get 10% of their record sales? Why do book authors only get 5% of their book sales? Why does Amazon only pay 6 cents per hour for videos watched on Amazon Prime?

 

The reality is that Udemy is doing the hard part. I work for myself with no employees. Udemy has 800 employees working to sell my course. That's a scale that I can't achieve myself.

This is a very good post especially pointing out what other creative people are being paid when they publish something. I had a discussion at some point with a friend who was a publisher and I asked him what I would get if he promoted my book and the answer was less than 10%. I was shocked but that's how it works.

@AlexCollin149 Every creator thinks he/she deserves the majority of the revenue for the sale of their work. But, it never works that way. An author of a book, and I am one, may work for five years on what they believe to be a brilliant book that everyone should read. If they get a publishing contract at all, which is increasingly hard to get, the royalty will be between 5 and 15% of the sales. You can, of course, publish your own book, just like you can publish your own course, but you will have a very difficult time developing a market, in either case.

 

The exact same is true for those who create music, plays, films, etc. That is just how the world works. Note that Udemy is not exactly earning "excess profits", in fact they are not yet profitable at all. 

 

Lawrence M. Miller
Author/Instructor

I understand totally AlexCollin149. I have one course at top price tier, $199. I received $1.93 revenue share for selling 1 course as part of promotions. The argument regarding Udemy's expenses is null and void. Udemy would not exist without the course content creators. The percentage is outrageous in instances like this. Also, there is not a way to participate in promotions with a specific course, and not participate with another course. If you opt-in all your courses become part of the promotion where you get pennies on the dollar. Course creators should be able to choose which of their courses participate and leave out the ones they do not want in the bargain promotions. Udemy publicly states how great it is for content creators here. I disagree. I believe they are disrespectful in handing back what I described above. I think they can do better, but unless they hear from the content creators it will remain the same.

Just a reminder that Udemy has not made a profit since they started going.

If you want a platform that you can host on, they need to charge sufficiently to cover their costs.

Their loss in 2022Q4 was $22.8 million - see https://investors.udemy.com/news-releases/news-release-details/udemy-reports-fourth-quarter-and-full...

Phillip

Well, I have made courses before that are self hosted and I have used other self hosted services that don't do any promotion for you. 

The amount of time, work and energy I used to spend on advertising was crazy. Add to that managing students and sometimes follow up emails and such. It really does take away from the time I had to make tutorials. 

Right now I don't think about that. I think Udemy marketing and active student base makes them worth their cut. 

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