Updating instructor business terms for the next chapter of growth

As we look to the future, we’re always thinking about you, our instructors. How do we keep expanding the Udemy ecosystem to connect more students to your collective expertise, not just through the next promotion or even the next year, but for the long haul?

To enable sustainable growth for instructors and Udemy, we’re making updates to our instructor terms and promotional programs. These include simplifying our revenue share model and expanding the terms of our subscription program.

1. Updates to the marketplace revenue share model

Before we dive into the details — we don’t expect this change to have a notable financial impact for most of you. The new model is designed to enable new types of marketing and allow us to invest in long-term growth. In the short term, some of you may see your effective revenue share adjust up or down, but most will see your share remain consistent.

What is the new model, and how will it affect instructors?

Starting May 3, we’ll introduce a “blended” share of 37% for sales not driven by instructor promotions, and keep the existing 97% rate for instructor-driven sales. This will replace the 25% and 50% rates previously assigned to paid and “organic” channels, respectively.

We designed this change to be as seamless as possible for instructors. The new share is derived from the actual historical average share for all paid and organic sales. So, we don’t expect the new revenue share model to cause significant changes to most instructors’ take-home revenue.

So, why are we revisiting the way we approach revenue share?

As we’ve continued to grow, we’ve encountered limitations with our current model.

• It drives the instructors blended share down as Udemy continues to do more effective, large-scale paid marketing. As our marketing investment has grown each year, the aggregate instructor share on paid and organic sales has moved further from 50% toward 25%.
  
• It causes inconsistency in earnings per student — instructors earn just half as much from an affiliate sale as an email-driven sale, even though the costs to support those students are the same.
• As regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) introduce restrictions on cookies and other methods of digital tracking, the variable return of the current model threatens our ability to invest in everyday marketing channels like click-based advertising.
  
• The old model disproportionately encouraged investment in short-term, conversion-driven marketing. We want to invest in promising new channels that drive long-term value but don’t necessarily result in immediate sales, such as TV advertising or category-level promotions.
  

How will the revenue report be affected?

When this new model goes live on May 3, you’ll still see your sales broken out by channel in your revenue report, and you’ll still see your revenue per sale post within a few hours of each transaction. Later in 2021, we’ll make improvements to the revenue report as we keep investing in new marketing channels and adjusting our attribution model accordingly. We’ll ensure you can continue to understand your courses’ performances across different channels.

As part of this change, we’ll also clean up the way we handle the 3% transactional fee described in our existing terms. In the past, this fee was inconsistently applied across different sales, markets, channels, or devices. Moving forward, we’ll ensure we apply it consistently.

As always, you’ll be able to see a detailed breakdown of any taxes, fees, and currency conversions applied to a sale in the “Purchases” list within your revenue report.

What will happen to the Marketing Boost Program?

The Marketing Boost Program was introduced when our paid marketing promoted a small number of curated courses at any given time.
Now, in a typical month, Udemy sends millions of visitors to thousands of unique courses.
Even courses opted out of the Marketing Boost Program frequently get sales from the traffic sent by this marketing, though they’re not directly promoted.

On May 3, the Marketing Boost Program will be retired, and we’ll open up the opportunity for direct paid advertising to all courses on Udemy.

As usual, how and where your courses appear in Udemy’s external marketing will depend on factors like the potential reach of their topic, their level of social proof, and their performance in current or previous campaigns.

2. Expansion of the subscription program

In April, we’ll begin piloting a version of the Udemy for Business subscription for individual consumers in the English market. Our new terms will extend the Udemy for Business program to include subscription offerings for individual learners.

The pilot will help us understand how a consumer subscription affects learning habits, the health of our marketplace, and your earnings. If we see students responding well, subscribing, and engaging with the new subscription option, we’ll expand the pilot.

The pilot is an extension of the existing Udemy for Business subscription program. So, if you’re opted into Udemy for Business when the pilot launches in April, your content will automatically be considered for inclusion.

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What’s next?

We know there’s a lot to understand as you consider the impacts of these upcoming changes on your own business. We’ll be sharing more about the subscription pilot as it launches in April, and updating you throughout the year as we test, learn, and evolve the program. We’ll also send a reminder about the new revenue share model before it’s implemented on May 3.

While we don’t expect any of these changes to dramatically alter most instructors’ businesses in the short term, we know it’s important for you to be able to understand them fully. If you’d like to review the changes in detail, we’ve published the upcoming versions of the Instructor Terms and Promotions Policy in our Help Center. You’re welcome to ask questions in the Instructor Community or at [email protected].

As you continue to build your business on Udemy, we know you’re counting on us to keep building, growing, and improving, just as we’re counting on you to share your knowledge with the world. We’re looking to the next chapter of Udemy with these changes, and we’re excited to continue improving lives through learning alongside you for many years to come.