Udemy is an e-learning marketplace with over 40,000 courses listed in various categories. They launched in 2010 and have since raised over $170M in venture funding. They command a sizable presence in the online course space compared to several of their main competitors.
My high hopes for Udemy and online course domination started in October 2013 when I first heard about them. I was excited by the opportunity to share my skills and the possibility to generate passive income. Before I got going, Udemy had announced convoluted changes to their instructor revenue share, decreasing it from 70% to 50% which would serve as an early warning of things to come.
Ever since the launch of my first course, Udemy has been a problematic business partner. Their incompetent management team and employees, poor communication habits, and stupid policies yield frustration. Also, they’re a self-serving and non-transparent organization that lacks a sense of urgency (it took two weeks for one of my courses to get published). For these and many more reasons, I’ve stopped publishing courses on their platform as they are no longer a viable way to generate significant income. In the meantime, my courses will remain with no intention of growing my presence or income on their platform.
11 Reasons to Avoid Udemy
1) Instructor and Course Category Bias
You may have come across several instructor success stories such as Rob Percival, who has pocketed more than a million dollars or Victor Bastos (recruited by Udemy) who’s done the same, but these accounts don’t tell the entire picture.
Udemy was founded with a bias toward tech related courses, and you can still see proof of this by visiting their homepage and by viewing their menu bar which lists “Development” courses first followed by business, IT and software, office productivity, etc. Also, check out the courses from the top 10 earners and most of them are technology focused. As a result, the majority of their marketing budget, strategy, and activities have always been and are still geared toward promoting tech courses which put non-tech instructors at a huge disadvantage.
Udemy is directly responsible for the success of several instructors by launching and promoting their courses site wide and giving them frequent and overexposure in marketing campaigns. Their affiliate team has compounded the disadvantage by listing the top courses that affiliates should promote which once again mainly point to technology courses and a handful of non-tech classes. Lastly, the same beneficiaries of this process tend to receive recurring exposure in blog posts and awards leading to further biases.
Yes, of the 20,000 instructors on Udemy, anywhere from 50 to 100 receive preferential treatment, marketing or otherwise, relegating thousands more to the long tail revenue column. Favorable efforts initiated by Udemy beget success which breeds, even more, success leading to a few instructors making hundreds of thousands more than everyone else. Suffice it to say most big money instructors didn’t have large enough followings to generate thousands on their own. Udemy randomly awarded them with an entire platform of customers to profit from.
On the other hand, if you do have a large following, you may be eligible for a site-wide promotion such as those given to Seth Godin and Gary Vaynerchuk (congrats fellows). Udemy is in the business of making backroom deals to help the rich get richer which benefits them and already establish online players. Just think, you launch a course and hope to make a few dollars within 30-days while Seth generates thousands overnight thanks to Udemy red-carpet treatment (Seth also spoke at Udemy Live, likely a paid speaking gig equating to multiple streams of income from Udemy’s coffers or a bundled instructor/speaker deal).
Alun Hill and Jerry Banfield made over a million between the two of them (approx. $1.25M), yet neither of them still teach on Udemy. I suspect Alun left when Udemy’s marketing agenda no longer favored him. It’s believed Jerry got booted off after more policy violations, but who knows for sure. Alun’s story is interesting concerning how he did so well.
In 2014, Alun launched a course about how he made $2,000 a month on YouTube. His course was a hit, and it ignited a genre of “make money online” courses from credible and uncreditable instructors alike. Alun’s fourth or fifth course was about how he made $30,000 a month on Udemy. It too was a hit which prompted Udemy to focus their marketing efforts on him and give him full control of their Udemy Studio (a Facebook group for instructors and students). I remember being in the Udemy Studio thinking that it should be a fair and impartial setting, but the lame duck community managers allowed Alun to promote himself, showcase income reports, and be an authority over everyone else. Udemy treated Alun with kid gloves and gave him carte blanc to act however he pleased. It’s as if Udemy gave him a stake in their company (unconfirmed).
Udemy promoted Alun’s courses at nausea for over 12 to 18 months with Facebook ads, multiple placements in marketing campaigns, and top row exposure in their apps, for example, the image below is from an email campaign that featured five of Alun’s courses in a total of 12 spots. This was typical of most email campaigns that were manually created. As you can see, when you have the complete marketing support of an online marketplace, it can lead to making a lot of money. Alun wasn’t making $30,000 a month on Udemy; Udemy was making Alun $30,000 from their database at the expense of other instructors.
What’s funny is that Udemy runs spirited “we are all in it together” events and contests to get newbie instructors to buy into their program, for instance, Udemy Live, an “action-packed weekend” with speakers, panels, etc. Naturally, I didn’t attend this event because I value my time and money. However, I welcome a conference call regarding how I too can receive site-wide promotions and favorable marketing treatment to profit significantly.
Udemy giving preferential treatment to a handful of instructors isn’t wrong; it’s a business decision that produces a few winners and many losers. Also, I have nothing against those who benefit from favoritism as I would welcome it. However, the issue worth identifying is that Udemy isn’t an equal opportunity platform. Unlike Amazon, they don’t offer paid advertising placements that would partially offset their marketing and instructor bias. Therefore, if you don’t get swept up in their marketing focus, you’re on your own while still giving them a 50% to 75% cut.
2) Less Money to be Made
Around the time I had discovered Udemy, they were preaching that the average instructor was making $7,000 a year. They didn’t do much to break this number down except to give this one figure. Udemy had gone silent for close to three years on this amount but now states the amount has increased to $8,000 (not $7,746 or $8,101, but a nice round number). Is that so?
At least 20 instructors have indicated to me that their revenues are down significantly this year, and mine are down more than 80% year over year. Rob Cubbon, a seasoned instructor, calls the revenue situation at Udemy a “crisis” and Lisa Irby is looking onward. The drop in sales has come in the wake of fewer marketing and sales email campaigns and recent changes to their pricing structure.
I don’t believe the average instructor is making “$8,000” when so many instructors are reportedly making less. Secondly, in typically Udemy fashion, the figure lacks detail, for example,
- What’s the time horizon of this data? Since inception? Last year?
- What’s the average number of courses per instructor?
- What’s the breakdown by category?
- Excluding those who have been given preferential treatment, what can instructors expect to make?
- What’s the average profit margin that instructors can anticipate?
Not only is there less money to be made, but profit margins aren’t what they seem. Many instructors focus on the 50-50 revenue split, but by enrolling in Udemy’s marketing program (more on this later), an instructor’s share erodes. When sales occur through Udemy and affiliate marketing initiatives, the split becomes 75-25 for Udemy. As a result, thousands of instructors are likely receiving an average of 30 to 35 cents on the dollar for the work they do.
By not maintaining a 50-50 revenue split/partnership, you end up working for Udemy while having to follow up with students and having to promote your courses to get noticed. You can’t rely on them to market your courses with over 40,000 listed as marketing support is earmarked for a chosen few. Given this realization, Udemy’s platform equates to a video hosting platform followed by a few sales. Conversely, you might be better off experimenting and launching a course off a Udemy which many instructors are now doing.
Note: Selling courses through a standalone platform as opposed to a marketplace isn’t easy. A high degree of marketing savvy is required, and an existing subscriber base helps. You can learn about the advantages and disadvantages of marketplaces here.
3) Below Industry Average Revenue Share
Apple, Google, and Amazon (KDP), to name a few, offer revenue splits of 70/30 to content and app producers. As I’ve noted, Udemy offers a 50/50 split to 25/75 split depending on the transaction type. It appears Udemy values its suppliers less than other platforms.
4) Many Courses Are a Joke
Udemy has a rule that courses must be a minimum of 30 minutes in length. This stipulation has been in place for years, but it’s probably another oversight that hurts their reputation. If the minimum was increased to one hour or more, I’m sure it would weed out many get rich slackers who dump valueless content on their platform, for example, courses on productivity hacks, email account setup, and adding close captioning to videos. These types of courses, which are many, are blog and vlog worthy content masquerading as authentic training. If I find this amusing, I’m sure many customers do as well.
Udemy has become a lightning rod for hundreds of wannabe millennial entrepreneurs and Wikipedia Warriors whose knowledge, experience and subject matter expertise is thin at best. This makes for a platform of uncreditable instructors who are only seeking profits in exchange for easily searchable content. These instructors don’t care about content and the student experience. Placing yourself among these folks could damage the perception others have of you.
5) Shady Marketing and Affiliate Program Activities
Ninety-nine percent of third-party affiliate programs work on the premise that a company (advertiser) will compensate their affiliates (publishers), for example, Amazon pays their affiliates. However, Udemy’s bizarre affiliate model forces instructors to sacrifice a portion of their profits to reimburse affiliates. So while their affiliate program is good for affiliates since they can make up to 50% per sale, instructors receive lower commissions through affiliate-based transactions further eroding their profit margins.
Given my background in affiliate marketing, I knew Udemy was up to something shady. Their affiliate program, part of their “Udemy Marketing Boost Program,” is optional so instructors can opt-out which I did a while ago due to this reasoning.
Udemy and affiliates promote the same instructors over and over as discussed. If someone clicks on an affiliate link, organically finds my course, and buys it, this would count as an affiliate sale. I would be okay with this if my courses got their fair share of marketing support, but they don’t. Therefore, I was likely giving up revenue through Udemy’s marketing boost program when most of my sales occurred organically through search results. This is critical because 25% of profits was at stake and it didn’t make sense to hand over that amount while Udemy focused on promoting its favored few. I decided to opt-out which resulted in an immediate increase in my revenue.
Secondly, I shouldn’t have to give up any revenue in an affiliate sale; it’s Udemy who should abandon their share as I’ve already provided the product to be sold. Udemy receives 50% of each sale, and they want instructors to chip an extra 25% for marketing. However, it’s Udemy who is supposed to foot the entire bill on marketing their company. Udemy glosses over key facts on their affiliate program page which states, “the advertiser pays a “commission” to the affiliate website for promoting and passing through the qualified sale.” This definition is correct, and Udemy would be the “advertiser” in this case, not me, the instructor. It seems Udemy’s greed outweighs their common sense and industry best/fair practices.
6) Inconsistent Policy Team
So many innovative policies come out of Udemy that it’s hard to keep track of what does and doesn’t make sense. Also, it appears their policies apply to some instructors, but not all (at least not in a timely fashion or without complaints).
Udemy is trigger happy regarding new policies, but awful at following up. The number of times I’ve found other instructors to be in violation months after policies were introduced is laughable. For instance, they proposed new course title standards over three months ago, and not all instructors/courses comply. These new rules don’t want instructors to “use direct or indirect references to monetary promises, making money, income, etc. as being the purpose of your course.” As you can see below, Udemy has failed at policy implementation.
Udemy was happy to allow “make money online” courses to dominate their platform and marketing activities in 2014 and 2015, but now they’ve pivoted away from them. Instructors with these types of courses are now making a lot less including me. You never know which way the wind will blow at Udemy from month to month.
Dealing with their policy team isn’t a pleasant experience. For example, Udemy introduced a few policies concerning external communications with students in Q3 2015. Regarding educational announcements, Udemy states, “Linking to your blog where students can read a useful post, and there is an option for students to sign up for more information on the side” is allowed. When I stated in an educational announcement that students could visit my site for new posts, I got a strike. Conversely, other instructors were doing the same as me and didn’t get penalized (double standard?). When I followed up with Udemy, they said, “The problem with the announcement link is that on your website you direct students to check out the articles. One of the first articles on the page is about paid products. In the future, we would ask that you provide links directly to articles that have only free and relevant content.” By “paid product,” she was referring to affiliate links on my site and some of which are affiliate links for Udemy courses.
After some back and forth, it was obvious the person I was dealing with didn’t understand blogging and how bloggers make money. The nonsensical strike remained as a result of Udemy not understanding its policy language and by enlisting an inexperienced employee. More importantly, the strike led to more misunderstandings on their behalf and a temporary ban on my internal marketing activities which cost me hundreds in lost revenue.
7) Fake and Suspect Review Stance
Fake reviews and reviews left by fellow instructors wasn’t an issue in 2013 and 2014 as Udemy focused on expansion. I suspect they knew what was going on and allowed it to fuel their revenue growth. In fact, one of their most renowned instructors offers free web hosting in exchange reviews. By the time 2015 rolled around, Udemy started removing any reviews they considered invalid. One instructor who admitted to buying fake reviews lost 300+ reviews overnight, but he got to remain on the platform and continued to receive favorable marketing treatment. Udemy continues to have review removal rounds further impacting instructors, but I don’t believe this applies to instructors equally and especially to highly profitable instructors.
Why do instructors aggressively seek legitimate and fake reviews? Positive reviews act as social proof to elicit more sales. Also, because Udemy favors a handful of instructors through providing site-wide promotions, those same instructors can attract hundreds of reviews within a short span of time. The rest of instructors who don’t receive special marketing support must fend for themselves to have any chance of competing. This is where Udemy looks foolish. Either make it a level playing field for everyone and leave things as they are while implementing tougher review standards or don’t give a handful of instructors a head start to demolish everyone else. Which is it? Funnily enough, Udemy employees help to game the system by leaving glowing reviews for the same top instructors they favor which equates to a serious conflict of interest.
8) Delay of Tools and Lack of Stability
Six years into the game, Udemy isn’t stable, and changes seem all too frequent. They are always a few steps behind in operations because they focus on themselves first, student/customers second, and instructors last. Consequently, instructor capabilities such as the ability to respond to reviews (and defend yourself) only surfaced last year. The ability to send automated welcome messages and preview emails (yes, preview emails) are just over a year old. It seems the most basic tools and functions take forever to surface on their platform. This is surprising given how many online marketplaces they can learn from. In essence, when you deal with Udemy, you deal with a slow moving and impractical platform.
Udemy has changed their pricing guidelines three times since Q2 of 2015, and twice this year. They appear not to have a steady grasp of their marketplace which negatively impacts instructors. They had trained their customers to buy at discounted prices for years, for example, a $700 course on sale for $10. However, their latest round of pricing sets a floor of $20 and ceiling of $50 which has beat down revenues. A ten-dollar offer on a $20 course has less impact than the same offer on $400 course; the latter is what their customers came to expect, and it did wonders for revenues. I anticipate another pricing change that will further reduce prices and profits, but we’ll see.
August 2016 Update – Yes, you guessed it. Udemy has changed their pricing policies again, and they’ll be bringing back fixed-priced promotions. According to them, “we’ve been listening intently to you and your students. We’ve heard from you that you need more flexibility in setting your prices…” This has less to do with “listening” and more to do with dramatic decreases in revenues (reason #2). The “leadership” team had royally screwed up so hopefully returning to what worked will equate to my revenues reverting to what they once were.
9) Unfair Search Engine Manipulation and Practices
Search engine bias at Udemy is in high gear. They’ve announced that free courses not meeting a minimum rating will be hidden from search and that “we are exploring extending the standard to paid courses in the future.” Two of my courses are subject to this new rule (I’ve since made them private).
Udemy is doubling down on their manipulative practices to give further credence to those they favor and courses that legitimately receive positive ratings. This is one of their most bogus policies because it doesn’t consider the time and efforts invested by instructors. For example, if you spend 20 hours making a course and a few bad reviews sink it, Udemy will hide it.
From my experience, students aren’t professional reviewers and a portion of them leave negative reviews relating to Udemy’s problematic platform, for instance, a one-star review is left because a student has a problem viewing the course on their app or has trouble getting a course completion certificate.
Reviews are meant to guide buyers and can be a factor in search results, but Udemy’s approach to hiding courses borders’ China’s unfair trade practices. If Amazon took the same method to hiding low-rated products from search, best-selling authors Malcolm Gladwell and Rhonda Byrne would be in jeopardy. Not only is their policy unfair to instructors, but customers are getting robbed of taking free courses which may benefit them. Should Google hide Udemy because they received a failing grade from PCMag? Under Udemy’s logic, yes.
Udemy continues to reign in instructor SEO capabilities. Once upon a time, instructors could access a keyword field to influence search, but they removed it. Also, the ability to change your course URL to improve your internal and external search ranking was available, but that’s no longer the case. I know how important SEO is and often make changes to my blog and YouTube videos, but not being able to at Udemy negatively impacts my revenue prospects.
10) Weak on Piracy
As I’ve said, Udemy puts instructors last which result in increasing piracy issues and media outlets reporting it. Unfortunately, I’ve found unapproved videos from my courses on YouTube and Vimeo and have since reported them. Also, many courses from other instructors can be found pirated all over the internet. Udemy management drops the ball here and continues to do so.
11) No Instructor Vetting or Validation Process
Udemy doesn’t vet and check to see if instructors are who they say they are. As a result, you get a mixed back of real and fake instructors, the latter claiming to be someone he or she is not. Also, I’ve come across many questionable instructor profiles.
Here’s a course that was recently published and of interest to me since I have a competing course. A few red flags stand out but were missed by Udemy’s approval team (a common occurrence).
- “Frank Goldsmith” created an account under “baizijian” as per the profile URL.
- I believe the name and profile picture are fake since the instructor’s voice sounds more like a baizijian and not a Frank Goldsmith.
- The instructor has opted not to include any external or social media links under his profile picture.
- The course title violates a policy Udemy introduced in April.
Is Udemy Good for Anything and If So, What?
From an instructor viewpoint, Udemy isn’t good for much nowadays, but that hasn’t stopped their funding exploits. Perhaps they’re just a loose with their figures, facts, and pertinent information in investor meetings as they are with instructors. They have a robust tech course catalog to offer students, but comparable e-learning platforms exist in Code Academy, Coursera, and others.
Conversely, Udemy’s the only viable e-learning marketplace to self-publish courses (Skillshare is debatable). So while income prospects are in the doldrums, Udemy’s still a satisfactory option to expand your online presence and increase your search relevance. Also, it’s a decent training ground to acquire course development and video production skills. Launching one or two courses on their platform then weighing your options isn’t a bad idea, but the days of building a six-figure business are over unless you receive preferential measures.
Rating for Udemy and Final Thoughts
It amazes me that Dennis Yang, CEO of Udemy, received an Entrepreneur of the Year Award. When Udemy was about to implode under the founders, they hired Dennis, an outsider, to run the business. He didn’t start Udemy; he was phased in. This is very telling because it suggests the founders were making a mess of things and wreaking havoc. The dysfunctional foundation that began under them has continued under Dennis, Dinesh, and their subordinates.
A few instructors are benefiting from questionable internal practices while thousands of instructors and students are being cheated. This hasn’t stopped the formation of groupie instructors who act as lapdogs and cheerleaders while they barely make ends meet. Some of these goofballs continue to create courses despite decreases in their profits (not good business sense). Others are so lost, similar to many Udemy employees, that they don’t know where to turn or what to do next. These instructors call themselves “Udemy Instructors” not online instructors who happen to have courses on Udemy. They and Udemy are a match made in heaven. To them, I offer this advice.
Udemy is excellent at taking, and they’re likely taking advantage of you (or you’re allowing them to). Now is the time to do a cost-benefit analysis to determine the net gain or loss of your experience. For instance, what is the net gain/loss from attending Udemy Live or hosting a Udemy themed online conversation? Having done the math, I realized Udemy was getting the better me in the spirit of the “house always win.”
Udemy serves as a constant reminder as to why I left the 9 to 5 matrix. You have a bunch of incompetent and inexperienced individuals working together who lack the necessary vision and passion to drive a business forward. Too afraid to strike out on their own, they comprise their career and lifestyles for a false sense of security and togetherness. This results in an inferior experience for the trivial many and undisclosed benefits for the vital few.
I would like to see a complete turnover in upper management so that Udemy can have a chance at becoming at excellent business. It’s ironic that they are an e-learning marketplace with thousands of courses but still miss on the most basic e-commerce fundamentals.