Friday, March 25, 2016

Udemy “rushes to the bottom” once again

Udemy has finally figured out that their kamikaze marketing, which is to say huge discounts and an affiliate program that leaves instructors with almost nothing at times, has only facilitated a “rush to the bottom” of prices in a manner typical of digital products (products that can be copied infinitely at practically no cost). They appear to blame this discounting on the instructors, but I think Udemy leads the way, and that can be seen in instructors like myself who do not participate in the crazy marketing or in huge discounting and manage to sell our courses for reasonable prices.

Unfortunately, Udemy’s new strategy is to squeeze the prices of all online classes into the range of $20-$50 in five dollar increments, with no discounting of more than 50% allowed.

The idea that a limited maximum list price is miraculously going to establish trust in a course selection rife with crap, with get-rich-quick schemes, with vague junk, is difficult to understand.  Hardly surprising that Udemy talks to instructors frequently about production quality, sometimes about "engagement", rarely about actual quality of course content.

This affects me because five of my courses were less than $20, and one was more than $50, and actually selling for nearly its price. If I lower the price of that course, I will lose money on each sale. What instructors are told is that they might sell enough at the new price to make up for the lower prices.

It's that whole "I'll make it up in volume" mentality that  led to the massive discounting in the first place!

Much of the discussion about this amongst instructors and with Udemy representatives is at cross-purposes, because there are two quite disparate groups: one group participates in Udemy's kamikaze marketing (huge discounts) and affiliate network (where the instructor gets a very small piece of the pie). Udemy has always encouraged instructors to be part of this first group, and you must opt out if you don’t want to be part of it.

The other is a much smaller group of people who opted out of these "deals" and stuck to a pricing model more akin to books or even to business-priced training. 

The first group sells classes at an average of less than $15, the latter sells at prices close to the actual list price. The first group often doesn't understand when the second says that the $50 price ceiling is going to take money out of their pockets, because the first group is rarely able to get so much for a class no matter what the list price - list prices run to several hundred dollars. 

The former simply don't understand that it isn't necessary or inevitable to sell courses at $10-15. The former group has been participating in the "race to the bottom" pricing we've also seen in video games (as an example - it’s something else, like online courses, that can be offered for nothing because it costs nothing to make another copy).

It’s the same “get rich quick” mentality that has stained Udemy for the two and a half years I’ve been associated with it.

Udemy doesn’t entertain the thought of allowing the classes that were selling for more than $50, to retain their higher prices.  As usual, everyone must conform, all-or-nothing, “devil take the hindmost.”

Unfortunately, the people who *avoided* the kamikaze marketing and the inflated  claims that Udemy and many instructors institutionalized, the people who are already doing things "the right way",  are the ones being punished by this arbitrary upper price limit. As my own example, the10 buys in January and February for my $59 course have been at $55. To reduce that LIST price to $50, and still be able to offer coupons, I'd be losing $9-10 per sale using the new price scheme. Given the niche nature of that class, I don't see how it can be likely to get significantly more student volume.

Matt Trigg put it this way: “You're just trying to drive instructors who don't use Udemy promotions off the site then. Have you been taking business advice from Donald Trump?”

Cynics (perhaps) would ask this: Is the goal to stop extreme discounting; or is it to make it hard for instructors to offer significant discounts so that a larger proportion of $$ sales will be organic (full price), which is to say, more sales will make Udemy $$$$ (instructor-discounted sales make nothing for Udemy)? When legitimately "expensive" courses are forcibly reduced in price, the instructor clearly has less coupon leverage. That's the elephant in this room.

I’ll give Udemy credit, they have people talking individually to instructors who are unhappy with the changes. I talked with one for over half an hour. But there’s no prospect of change.

How will this work out? The instructors who can sell at higher prices are going elsewhere, or dividing their courses (I’m doing the latter). Udemy will look better for avoiding the astronomical pricing that was attached to some courses (I recall seeing $399). 50% is still a very large discount. I have no idea whether overall sales will improve.


Anonymous said...

I had a course that was making ~$2000-$3000 per month and I was a race to the bottom person simply because I didn't have the time or desire to market my own course. Post changes my revenue is down 75%.

It seems to me these changes have hurt everyone and I'm actively looking at alternatives to hosting my course there.

Lewis Pulsipher said...

I sometimes wonder if Udemy is trying to encourage westerners and not rely on non-westerners for their revenue. Udemy users are in large proportion non-westerners, who often don't have much spare income and thrive on very low prices. Westerners might be enticed into spending more to learn.

But it doesn't seem to have worked, does it? The odd thing, to me, is that those who didn't rely on very low prices (like me) have suffered severely as well.My revenue is down 70%.

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