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Making This Common Mistake Could Kill the Profitability of Your Online Course
21st April 2016 • The Digital Entrepreneur • Rainmaker Digital LLC
00:00:00 00:14:35

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If we’ve said it once, we’ve said it a thousand times: don’t build your online business on rented land. From the world of online course marketplaces we get yet another example illustrating why this is so important.

In this 14-minute episode, Brian Clark and Jerod Morris discuss:

  • What the recent decision by Udemy means for online course course creators
  • The important difference between online course marketplaces and learning management systems
  • How smart online course creators leverage online course marketplaces

Even if you’ve heard us talk about digital sharecropping before, a reminder is always useful.

Listen to The Digital Entrepreneur below ...

The Show Notes

The Transcript

Making This Common Mistake Could Kill the Profitability of Your Online Course

Voiceover: You’re listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. DCI features an in-depth, ongoing instructional academy, plus a life education and networking summit where entrepreneurs from across the globe meet in person. For more information go to Rainmaker.FM/digitalcommerce. That’s Rainmaker.FM/digitalcommerce.

Jerod Morris: Welcome back to another episode of The Digital Entrepreneur. I’m your host, Jerod Morris, VP of Marketing for Rainmaker Digital. I’m joined today by the founder and CEO of Rainmaker Digital, Brian Clark. Brian, by the time people actually listen to this episode I will have come to Denver and come home from Denver from our company meeting which is happening this week. I’m excited to see you and to see everybody.

Brian Clark: Yeah, it’ll be good to see all the new faces that have joined the company since a year ago and also to spend some valuable white-boarding time. We’ve got more ideas than we know how to process, all for the benefit of you all out there. We’ve got to sit down, get in a room, actually. That’s the only time where it’s challenging to be a virtual company. Every once in a while you want to be in the same room with someone and just write stuff up on the wall.

Jerod Morris: Yeah, I agree. There’s a special kind of energy that happens and we always get a lot out of these meetings ,so I’m really looking forward to it. Really looking forward to it. Let’s go quickly today because I’ve got to go get packed and get ready for my flight tomorrow.

What The Recent Decision by Udemy Means for Online Course Creators

Jerod Morris: I wanted to talk with you about, frankly, a topic that we have talked about a lot in a lot of different ways. You wrote about it a long time ago on Copyblogger, and it remains relevant. That is this idea of digital sharecropping. It came up again recently when Udemy decided that they were going to make a change to their pricing. I believe it was effective on April 4th. They updated their pricing and their promotions on Udemy.

Essentially, what they did is instead of allowing you to basically set your price all the way up to — I think it was about $300 — they made everybody basically pick a price between $20 and $50 in increments of $5. They had some reasons to do this, and I think some of those reasons are defensible from their standpoint. But from the standpoint of online course creators, it’s yet another example of why you really don’t want to build on rented land. Or at least you better do it very smartly with a really smart strategy, because you don’t own the land. Someone could, as Udemy did, just change the policy. Change what you can charge for your course. Which, ultimately, is something that could really kill the profitability of your course. Especially if you’re someone who was selling for $300 and now the most that you can sell for is $50. I’m sure that you have some thoughts on this. Again, just another example of digital sharecropping and why you don’t want to do that.

Brian Clark: Yeah. Since 2007 we’ve warned about Facebook. We’ve warned about Amazon. We’ve warned about Udemy even, specidfically. I’m even losing track of how many examples of this happening, but you know what? I don’t blame the platforms anymore. I don’t like them sometimes, but they’re just doing what’s in their best interest. I’m sure Udemy did an analysis that said, “How do we make the most money?” Well, we make the most money with volume that comes from this price range.

Jerod Morris: Mm-hmm (affirmative).

Brian Clark: So what do you expect? That’s why I tried to gently but firmly say, “Look, people, be smart. It’s not yours. You do not control what’s going on.” But I saw all the gnashing of teeth and complaining from course creators over at Udemy. I’m like, “What did you expect?”

Jerod Morris: Yeah, well, that’s the lesson here. It is disappointing, and I’m sure those people were very frustrated. But don’t you have to go into it assuming that something like that could happen when you don’t own the place that you build on?

Brian Clark: Absolutely. I get that it’s a marketplace and that means there are people there who take online courses. There are people at Amazon who buy ebooks. There are a lot of people in general over at Facebook. Okay, great. There are people there. They’re qualified in a certain way. Be strategic about it.

I saw one person — I think you may have sent me this — she was just harsh. She didn’t take the gentle-but-firm approach toward the other Udemy people. She’s like, “You’re an idiot if you’re selling all your courses on Udemy. You need to treat it like ebooks over at Amazon where it’s a big search engine and people are looking for books and you have a book on a topic. They find your book, they buy it, and then you’re constantly telling them to go to your site throughout the book. “Go get the audio version for free. Get this flow chart. Get this worksheet. Get whatever.”

It’s really just a step in the proverbial funnel, because they’re being strategic about the use of Amazon. Her argument was, “Well that’s what Udemy’s for, too. There are people here that want to learn. They’re going to search and find me. They’re going to pay me money — not much, but some — to begin the first step of the relationship with me. Of course, during that course I would imagine she is constantly pushing them to a website for some reason. Her website, not anyone else’s. To sign up for something free or whatever. To get into a sequence. Or whatever the case may be for her more premium offerings.

Jerod Morris: Yeah, that’s what smart people do. They leverage course marketplaces to help build their own online training business.

The Difference Between Online Course Marketplaces and Learning Management Systems

Jerod Morris: I think it’s important to draw this distinction between online course marketplaces and learning management systems. Apparently there are a lot of people that get confused by this. I think maybe that’s where this issue comes up with people being disappointed by what Udemy did. If you go to Udemy and you think you can put your course up here and you own everything and you’re going to own the terms of engagement with the customer forever, well that’s just not a good understanding of where you are and what a place like Udemy is. It’s a marketplace.

Yes, there are going to be lots of people there who are looking for online courses. It will get your course out in front of those people. Maybe you’ll be featured in a Udemy newsletter. There’s different ways that you can help get some quick attention. But the difference is, when you have a learning management system and you’ve built a course on your own website and you own it, you can charge whatever you want. You can build an email list and own that email list. You can base your communications with people based on how they actually interact with your site and with your content because you own all of that.

It’s important that people understand the differences between the two. If you’re going to be very smart about it and strategic about it, there is a place for an online course marketplace in your overall online training business strategy. But you’ve got to eventually get them back to your own site. To your own learning management system. Again, so that you can own those terms of engagement with the people. So you can set your own prices. Because that’s what’s eventually going to allow you to maximize your profit in the long run.

Brian Clark: I’ve warmed up a bit to the value of an ebook at Amazon, or maybe a low price course at Udemy. But here’s something you also have to realize: you don’t create credibility and authority by teaching a course. No one’s going to select your course in Udemy when you’ve got no credentials to back up what you’re teaching. On the other hand, Brian Harris calls this the ‘Learning Out Loud’ method. Tim Farris does this. He basically experiments, he learns, and he shares, which builds an audience, which creates his authority and expertise, and which means he can teach any course he wants. Again, if you’re an established, credible authority or instructor on a topic, then sure, why not throw something into Udemy. But if you’re just starting out, that’s not going to work for you. You’ve got to learn out loud and build an audience, which is content marketing.

Even though, again, I can see the strategic benefit of it, it’s not someplace that you run to right away. When you’re further down the line, I would say, where we are — thanks to 10 years of Copyblogger. I’m not even sure that you would want to mess with that channel. But never say never. You may talk me into it.

How Smart Online Course Creators Leverage Online Course Marketplaces

Jerod Morris: Just to provide a concrete example, let’s use The Showrunner as an example. We’ve got this course. The last time we launched it was $649 for the course. Obviously, we couldn’t charge that on Udemy, but we were able to charge it ourselves because we knew what the value was and we were able to set the price because we own it. If we were going to do this, and I’m not saying we would, but if we were going to leverage an online course marketplace it wouldn’t be to put the entire Showrunner course in there.

It would be to maybe take a small piece of it — maybe a quick-start guide or a quick course on naming your show, or whatever it would be — something small in there and use that as a way to target people that we already know are taking online courses. But then we’re sending them back to The Showrunner, to listen to the podcast where we do a lot of our learning out loud like you talked about. Then get them into the course. But certainly not to put the whole thing there and bank on that as the entire revenue strategy.

Brian Clark: Yeah, you should try that. I’d be interested in seeing if that got some results. It depends on a lot of variables. Do people go to Udemy to learn something like podcasting, or is that more of an open web thing? It’s just really hard. Experimenting with that type of stuff. Especially when you’re repurposing content you already created. There’s not a whole lot of brain damage or risk involved in that you’re wasting your time. You’re just repackaging something and putting it in a marketplace and seeing what happens. That’s a decently smart strategy in my mind and I’d like to see what would happen.

Jerod Morris: Yeah. The big idea here is don’t build everything on a place that you don’t own because ultimately it could kill your profitability if you’re not able to charge what you want. If you don’t own the ability to communicate with your audience members — with your customers — on your own terms and when you want to. Because those are going to be the two big drivers of what you’re able to do on a go-forward basis. How much can you charge? And how much are you able to keep communicating so that you can turn customers into repeat customers? Because if you don’t give yourself that ability you’re chopping yourself off at the legs before you even get started.

Brian Clark: Yeah, and you have to be quite aware that with these strategies with Amazon, Udemy, whatever — some people say, “Well I’m acquiring a customer.” No you’re not. Amazon’s acquiring a customer or keeping a customer. You got your product sold by someone else if they don’t take action based on content that’s inside the product or the course, then you don’t have a customer. Never confuse that.

There’s always a benefit — even if you’re selling a low-price gateway product — to being the point of sale. That’s why content marketing and building an audience — you just can’t stop talking about how valuable it is. Because these other people are relying on someone else to bring the audience, whether it’s Facebook, Amazon, Udemy, whatever the case may be. They’re saying, “I don’t care about having a direct relationship with people.” That’s just a huge mistake but we see it happen over and over online.

Jerod Morris: We do. If you want more insight on how to build your online training business the smart way, Brian actually developed the course about this inside of Digital Commerce Academy, so we encourage you to go to Rainmaker.FM/digitalcommerce and get a free membership to Digital Commerce Academy which will give you access to the first four lessons in Brian’s course, totally free. You can also get free lessons then in the course on marketing funnels along with a bunch of other goodies that are in there. It’s at Rainmaker.FM/digitalcommerce. Go there, get started with your free membership and learn other smart strategies for building your online course the way you should do it. Brian, I think that wraps up another episode. Looking forward to seeing you tomorrow.

Brian Clark: Yeah, I’ll see you tomorrow, which is really a week ago.

Jerod Morris: Yes.

Brian Clark: This time shifting always gets to me.

Jerod Morris: That’s right. We will talk to you all in a week, which is really two weeks from now, from when we record this.

Brian Clark: I think that’s right.

Jerod Morris: I think so. All right, everybody, have a great week and we’ll talk to you on the next episode of The Digital Entrepreneur.