Can a Subscription Model Work for Online Learners and Teachers?...


Can a Subscription Model Work for Online Learners and Teachers? Skillshare Just Raised $28 Million to Find Out

By Tony Wan     Jul 23, 2018

Can a Subscription Model Work for Online Learners and Teachers? Skillshare Just Raised $28 Million to Find Out

Can a “Netflix”-like subscription model really work for online education platforms? Investors who are fond of analogies and comparisons to consumer technology successes are betting on one New York City-based company to find out.

Skillshare has raised $28 million in a Series C round led by Union Square Ventures. Burda Principal Investments, along with existing investors Amasia and Spero Ventures, also chipped in. Of that amount, $8 million was raised as debt (and the rest was equity funding).

Founded in 2010, Skillshare initially offered an online platform for users to find and teach in-person classes. A couple years later, the company pivoted to becoming a subscription model for online courses, which today cover topics ranging from arts and design to business, technology and everyday hobbies for adult learners.

There are roughly 1,000 courses available on Skillshare for free. For full access to the more than 22,000 classes currently on its platform, there’s a subscription fee (either $15 per month or $99 a year). About 30 to 50 percent of this subscription revenue goes to a royalty pool that pays Skillshare teachers based on their share of all the minutes of video watched in a month. The company claims that the average Skillshare teacher makes about $3,000 a year, with top earners raking in as much as $40,000.

Skillshare claims it has more than 5 million users and 6,000 teacher contributors. Its CEO, Matt Cooper, declined to share details about how many paying subscribers it has. Although Skillshare is currently not profitable, he boasted that the company saw 125 percent revenue growth in June 2018 over the same month last year.

The company’s demographics skew toward millennials, with users between age 25 and 34 making up the biggest share. Many of them are self-starters and contract workers, shares Cooper. “We lean heavy towards freelancers and independent workers in roles that require constant upkeep of skills.”

The funding will go toward supporting several product updates. Among them is a “groups” feature, where discussions that were previously accessible only within a course will be publicly discoverable by any user. The rationale, according to Cooper, is to provide another opportunity for learners to find relevant courses. “If you come in and search for any topic or skill, we’d like to surface an ecosystem of courses and discussions about that topic,” he says.

Skillshare Group Feature
Skillshare’s new group feature. Source: Skillshare

Another update in the works are “workshops,” which are essentially bundles of courses packaged around a specific topic. As it stands, each Skillshare course is a standalone offering, with no clear connections or next steps should a learner want to advance further on a given topic.

International growth is also a focus for the company, with 48 percent of Skillshare’s new users signing up from outside the U.S.

To date, Skillshare has raised $42 million—and Cooper hopes this will be the last time he’ll need to turn to investors. The company currently numbers close to 70 employees, and he says “we’ll continue to add staff but would like this to be the last funding we’ll have to raise. Then we’re going to work toward cashflow positive.”

That’s easier said than done, though, given the number of online course competitors that Skillshare finds itself up against. Udemy, founded the same year, now claims to have 24 million students and 35,000 teachers across the world, and recently opened up an office in Brazil this summer. Another household name is, now owned by Microsoft and whose courses are now also offered through LinkedIn.

Skillshare also finds itself jostling with upstarts like Teachable, which earlier this year raised $4 million to help experts create and sell online courses.

For those exploring whether to teach on one platform versus another, major differentiators include business models and the level of support provided to instructors, says Amy Ahearn, an associate director at +Acumen who has built courses on Udemy and Teachable.

Udemy, for instance, assists teachers with marketing their courses, and even produces coupons and ads in some cases, and pays them on a per-course basis. (The exact breakdown can be a bit complex.) It shares with instructors aggregate data about student demographics and what courses they’re looking for, although no personal contact information is shared and communications between teachers and students are restricted to the platform. On the other hand, Teachable offers less direct support to market instructors’ courses, but offers them more data about their students so that they can follow up outside of the platform.

Michael Hegglund, a former dean at De Anza College in Cupertino, Calif., has summarized the various business models of the main competitors in the online learning marketplace industry.

Among the features that gives Skillshare a leg up, Cooper says, is its subscription model, which he likens to an “all-you-can-eat buffet that gives learners an opportunity to get more value on the platform.”

That could be a great deal for students, but perhaps not so for instructors. From her experience, Ahearn says teachers in general do not make as much money on subscription-based platforms as they would on a per-course fee model. (There are exceptions, she notes.) As she recently wrote, “online learning platforms are now granting online instructors smaller and smaller shares of the revenue as they steer business models in the streaming direction.”

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