Skillshare Payment Model Changes. How To Adapt In 2017.

[February 2017, we have a new blog post discussing several further changes Skillshare have made in 2017]

In this blog post we’ll look at the current payment calculation, including why it was considered to be inadequate, the new earnings calculation, whether a teacher can expect to earn more or less in 2017, and a method I’ve created to maximise Skillshare earnings in 2017.

(for the video version of this class, please click here)

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Skillshare Payment Model Bombshell

On December 15th 2016, Skillshare dropped a bombshell on its teachers. As from January 1st 2017, which was about two weeks away, the mechanism by which teachers payments are calculated would change. This announcement set off a huge amount of debate, discussion and conjecture in our Skillshare Mastermind Facebook Group, as you can see from this activity chart..

Skillshare Mastermind Facebook Group activity
Skillshare Mastermind Facebook Group activity

 

First, let’s start with an earnings overview, for people who aren’t familiar with Skillshare.

Skillshare’s Current Payment Model

Skillshare operated on a membership model. In exchange for a monthly payment ($12/month, or $96/year), members are designated as “Premium” and can access all classes on the Skillshare site, currently numbering about 12,000, of which most are only available to Premium members.

Teachers create the classes, and are currently paid according to a revenue share split. Skillshare totals up the revenue from Premium members each month, retains 50% for staff costs, website costs, coding and marketing, and pays the rest to teachers. Individual teachers earn a percentage of the teacher royalty pool based on the number of premium enrollments in their premium classes in a month. For example, if Skillshare earned $200,000 from membership payments in a specific month, the payment to teachers would be $100,000. If there were 100,000 premium enrollments in premium classes in the month, each premium enrollment would be worth a dollar. A teacher who gained 1,000 premium enrollments in that month would earn $1,000.

Current Skillshare Payment Calculation
Current Skillshare Payment Calculation

 

While this system is quite simple, it’s not predictable. If we use the same example, but there were just 50,000 premium enrollments in the month, each premium enrollment would be worth $2, and each teacher would’ve earned double! It’s easy to see that potential teachers could be put off teaching on Skillshare due to the unpredictable payment system.

Why would Skillshare change this sytem?

Skillshare showcases new classes that “trend” well on highly visible pages within the website. They calculate which new classes are best using a trending algorithm which takes account of reviews, enrollments and project submissions for each class. Recently, Skillshare changed their trending algorithm quite dramatically (see our explanatory class, here), to take account of the percentage of students who complete a class. We called this the “Class Completion Modifier” (CCP). We believe that the old trending score is multiplied by the percentage of students completing the class to derive a new trending score. Skillshare haven’t publically revealed this information, but we’ve deduced it by recording how well classes with different attributes trend.

One consequence of changing the algorithm was that short classes are rewarded and long classes are penalised, due to it being much easier to complete a short class than a long one. With the minimum class length being 10-minutes, it was certain that teachers would switch to short classes, with the more enterprising ones creating a “series” of short classes to maximise their income from enrollments.

It’s likely that Skillshare saw the creation of a series of multiple short classes as a way of “gaming” their payment system. What’s interesting is how they reacted. They didn’t just increase the minimum class length to 20 or 30 minutes, they did something more dramatic.

How the new payment model works at Skillshare.

From Jan 1st 2017, Skillshare will still split the membership revenue pool with teachers, but teachers will earn based on “premium minutes watched” in the month, as a percentage of total premium minutes watched. So, the “per enrollment” payment is being replaced with a “per minute watched” payment. Whereas the old “per enrollment” payment was between $1 and $2, and averaged about $1.50, the guidance from Skillshare is that the “per minute watched” payment will be between $0.05 and $0.10 per premium minute. Skillshare say that the only way to opt-out of the new payment calculation is to email them to have your content removed from the site.

Skillshare payment calculation from Jan 1st 2017
Skillshare payment calculation from Jan 1st 2017

Will teachers earn less?

This is an interesting question, and it largely depends on what kind of classes the teacher was teaching, and how good they were.

  • Teachers who created poor classes, and accrue few “minutes watched”, will see their earnings tumble. While bad classes may have generated enrollments, they’re not as likely to generate many “minutes watched” before the student abandons the class. This group of teachers will likely lose most of their income under the new payment calculation.
  • Teachers who taught short classes (10-15 minutes) will earn less, because even if a premium member watches a class completely, and using $0.10 per premium minute for the calculation, a class under 15 minutes won’t earn the same as an old premium enrollment worth $1.50. Of course, not all students watch 100% of a class, so the actual earnings will be significantly less.
  • Teachers who put good, long classes on Skillshare may benefit. Under the old system, a 2-hour class would only earn $1.50 from a premium enrollment. However, under the new system, a 2-hour class watched to completion would earn 120 (minutes) * $0.10 (value per premium minute) = $12, an eight-fold increase.
Changing Payment Calculation
Changing Payment Calculation

 

Should I create long classes?

Teachers immediately started debating whether or not to create long classes, and, if so, how long? Are “bite-sized” classes dead now? There was talk of a “sweet spot”, where a class would be short enough to trend, but long enough to earn decent money. We don’t think the sweet spot exists. In fact, we called it the “sweet spot trap“. Why? Well, if a class is 30 minutes, it could be too long to trend well and too short to earn significant payment. Classes of 30-40 minutes could “fall between two stools” and neither trend well nor earn much money.

If you have a loyal, fanatical audience on Skillshare or social media, and rarely release classes, it’s possible that your audience would watch all of your new 40-minute class and it would therefore both trend and earn you some money. In that case, 40-minutes could be called a “sweet spot”, but we think most teachers probably don’t have the benefit of a large, loyal fanbase.

Bear in mind, if your students on Skillshare are used to receiving a certain type of class from you, whether that’s short, medium or long classes, live demonstrations or slide voice-overs, and if that’s your teaching style, you may not want to change, even if you earn less revenue after the payment model changes. By changing your teaching style or class length you may alienate existing students, and that will negatively impact your earnings.

The “Jupiter Model”.

In the few days since the announcement was made, we’ve read all the comments posted to our Skillshare Mastermind Facebook Group, along with our experience of teaching on Skillshare for a year, and have come up with a model for class content organisation we think will do well in 2017. We called it the Jupiter Model.

The Jupiter Model
The Jupiter Model

How it works is that a teacher would create multiple short classes teaching specific skills, such as explaining which watercolouring brushes to use, or how to set up a canvas. These short, 10-minute classes, would trend well and gain students who would then be encouraged to take a much longer (2 hour), “masterclass” on how to create the perfect watercolour from scratch. In this manner, the teacher would have one main, long, money-making class (Jupiter) and many short, specific classes (moons) driving traffic to the main class. The main class wouldn’t trend well, due to its length, but that would be OK because students would find it via the multiple small classes which would trend well. The small classes wouldn’t earn much money individually, but that would be OK because they’d drive students to the money-making class. By creating both short and long classes, you’d optimise for the new payment method at Skillshare.

Quality is everything.

Of course, the Jupiter Model requires the short and long classes to be of top-quality. A student won’t watch the short classes unless they’re good, and they certainly won’t take the masterclass unless the short classes are of value to them. However, assuming that the teacher is offering quality classes, we believe the Jupiter Model is the best way for Skillshare teachers to organise their content under the present trending algorithm, and the upcoming payment calculation.

For Udemy Instructors

One repercussion of this change is that it will become much more attractive for Udemy instructors to put their courses on Skillshare. Generally, Udemy courses are much longer than Skillshare classes. Previously, Udemy instructors were either putting their full courses on Skillshare, but only earning $1.50 per student, or they were chopping up their courses into multiple Skillshare classes to earn a “fairer” payment for their work. As from January 1st, courses of multiple hours will be rewarded pro rata for minutes watched and therefore will be rewarded more fairly. There will likely be many experienced Udemy instructors beating a path to Skillshare in the New Year. However, they will still need to be able to get visibility for their classes on Skillshare, which is not easy, and long classes are unlikely to trend well.

Skillshare Earnings Data

Let’s talk numbers! (grab come coffee, and feel free to check my maths!)

Our new class currently has 72 premium students and 962 minutes watched.

Under the current system, 72 students are worth $108 (at $1.5 per premium enrollment).

Under the new system, 962 minutes watched are worth $96.20 at $0.10 per premium minute, a 12% loss. At $0.05, the minutes are only worth $48.10, which would be a huge loss.

Note:

1: The premium minutes are updated daily, so they may not reflect the 14 students who joined today, according to Skillshare’s timestamps. Deducting 14 from the 72 gives 58 students, worth $87 at $1.5 per premium enrollment, in which case $96.20 is actually a 10% gain. However, $48.10 would still be a huge loss!

2: Students may watch the class over the next few days or weeks, which would affect the “minutes watched”, but not the “enrollments”, so these numbers may be a little bit biased towards the enrollment earnings.

Conclusions:

I would guess this class has high engagement relative to others, but it looks like it will roughly match the old system for earnings under the best payment for premium minutes, and could be a lot worse if premium minutes are only worth $0.05.

Classes with lower engagement will do worse at $0.10, and considerably worse at $0.05. The only options to make more money are to…

1: carry the high engagement through longer classes, which risks those classes trending badly if they’re not watched to completion

2: use the “Jupiter Model” of multiple short classes feeding into a much longer one.

This data has resulted in some teachers speculating that anything from 75% to 90% of teachers will earn less under the new model. If that’s true, and the teachers are still paid 50% of the “royalty pool” collectively, it means the other 10% to 25% of teachers will do very, very well!

Frequently Asked Questions

Some teachers have questions about the new model, some of which have been answered, and some haven’t. I’ll reprint them here for your convenience:

Q1: What about playing classes back at 0.5x or 2x speed?

A1: Changing the playback speed will change the earnings. Someone playing back a class at 2x speed (double speed) will earn the teacher half of the “normal playback speed” minutes watched, and 0.5x will earn double the normal minutes.

Q2: Will “minutes watched” include viewing a class via the app, even after downloading it to view offline?

A2: Yes.

Q3: Will re-watching a class earn more “minutes viewed”?

A3: Unanswered. [update: the answer is yes] “If a student were to re-watch your class multiple times, the additional minutes-watched would indeed be counted towards your payment.”

Q4: Will a premium student watching a free class count as “premium minutes”?

A4: Unanswered. [update: the answer is no] “Only minutes watched in Premium classes by students with a Premium Membership will count towards royalty payments. Minutes watched in a free class or by a free member through a free enrollment link will not count.”

Q5: Is there a minimum requirement for “minutes viewed” in a month to get paid?

A5: Yes, the minimum is 30 minutes, and it doesn’t carry over to subsequent months. You must gain over 30 minutes in a month to be paid.

Q6: When does the change to the teacher payments model happen?

A6: The new system begins Jan 1st 2017, and the first payment using the new calculation will happen on February 16th, for “premium minutes watched” in January.

Q7: Can you opt-out of the new payment model?

A7: You can email Skillshare and have your content removed from the site if you wish, otherwise you are deemed to have accepted the new payment calculation.

 

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