Are Online Courses Still a Good Business Model in 2020 & Beyond?
Are you thinking of launching an online course? Or are you already building an online course business and wondering what the future holds?
There are some big changes happening in the online course landscape. Your chances of surviving and succeeding in this space will depend on whether you understand these changes... and how you respond to them.
In this post, you'll discover the 6 things you need to know about the future of the online course business model and the 1 thing you need to succeed in 2020 and beyond.
1) Online Courses Are a Growth Market
By all indications, this is a growing and thriving market. Here are just some examples to illustrate the point:
- Coursera, an online education platform, is estimated to have generated more than $100 million in revenue in 2019.
- Masterclass, a relative newcomer in the market, recently raised $80 million in a fourth round of funding.
- Udacity is currently valued at over $1 billion.
- Niche course platforms like Brilliant, MindValley and ClickMinded have been cropping up and succeeding at various scales.
Course platforms like Skillshare, Masterclass and others have been experiencing significant growth in the past years, based on Google Trends:
What we can see clearly from this data is that a lot of money has been flowing into online course businesses. In addition, interest in online courses seems to be at an all time high.
All of the above is data related to large online course platforms. That's because this data is available publicly in some cases and relatively easy to estimate in others. It's much harder to know how individual, small scale course creators have been faring.
For individual course creators, all this growth has it's upsides, but also serious downsides, which we'll get into as well.
2) Online Courses Are Being Normalized
Not too long ago, a major obstacle any online business faced was that people didn't know whether they could trust them with their credit card details. Buying things online wasn't the norm and only early adopters dared take the leap.
Soon enough, buying stuff online became just as mundane as popping down to the local shop. In fact, for many, it became the norm.
Online courses have experienced a similar transformation. Online courses are becoming a common and normal form of education. Paying for an online course feels less risky or shady than it did even a few years ago. And not least, thanks to better technology and course platforms, the customer experience is often a lot better than it used to be.
All of this is good news for any online course business, whether large or small, mainstream or niche.
3) Creating Online Courses is (Technically) Easier than Ever
If you wanted to launch an online course 3+ years ago, you faced some serious technical challenges. How can you set up a course area, connect it to a payment processor, make sure only the paying customers get access and so on? How do you create, edit, encode and upload video content for your course?
Instead of having to jump through countless hurdles, there are now easily accessible and affordable solutions for all these problems.
And as a course creator, you have far more options open. You can choose to publish on a platform like Udemy or Skillshare (where you'll likely reach more customers, but earn less money), you can use an all-in-one course platform like Teachable or Podia or you can roll your own solution using WordPress and a plugin like our own Thrive Apprentice.
This is good news for course creators because it means you can focus on your content instead of dealing with technical headaches.
So far so good. Unfortunately, it's not all good news...
4) There's More Competition & Price Pressure Than Ever
A downside of all these developments is that for course creators, there's now more competition than ever.
One of the results of all this competition is price pressure. Udemy is a good example of this. While there are higher-priced courses selling on Udemy, it's also clear to see that on almost any topic you can imagine, you'll find dozens if not hundreds of courses on offer for around $10 each:
Another example is Skillshare, where you can get access to an entire course library for as low as $9/month.
As a course creator, you have to be aware that potential buyers may be weighing your course against a $10 alternative on Udemy or against a course they can get at no additional cost with their Skillshare subscription.
5) Platforms Will Move to Monopolize the Market
The nature of Internet businesses is that markets tend to consolidate towards as much of a monopoly as they can get away with. See: Amazon, Google, Facebook. The winners in a market exploit network effects and economies of scale to capture the majority of a market and buy up or crush competitors.
This will be happening in the online course space as well. Businesses like Masterclass and Skillshare are based on a subsciption model and aim for wide appeal. Their goal is to capture as many potential buyers in the online course market as possible and extract as much value as they can (we'll see some interesting pricing shifts happen, once their growth slows down).
This is good for the winning platforms, but not for individual course creators. On a platform that's buzzing with competition and that attracts customers at a low subscription cost, it's difficult to make a living as a creator.
6) The One Thing You Need to Succeed as a Course Creator...
All of this leads to one conclusion above all: as a course creator, the most important thing you must focus on in 2020 and beyond is differentiation.
Whatever you do, don't create a generic online course!
If you want to make a good living as a course creator, you need to be able to command a reasonable price for your work. Ideally, you can create high value courses that you sell for $100, $200, $1,000 or even more. It's generally much easier to convince 1,000 people to pay you $1,000 each than it is to convince a million people to pay you $1 each.
With a generic offer, you simply cannot command a high price, because there's no reason to pay you $100+ for a generic course when I can get one for $10 elsewhere.
The most important question you must address is "why this course instead of a competing one?"
And you must address this question in your course content, in your marketing material, on your sales page, in your ads...
Course creators who can create highly valuable programs and frame those programs as unrivaled will win.
This is exactly what we've done to succeed with course launches. We've launched a productivity course, an SEO course and an online business course with great success, in the last 12 months. A lot of the marketing we did for these courses was about emphasizing all the ways in which they are unique and different from competing products out there.
And it paid off. Although we don't have a control group of generic courses to compare against, it's not difficult to see that people who sell generic courses on crowded platforms aren't nearly as successful as we've been with our courses.
Over to You
So, that's my take on what's happening in the online course business space and how to succeed in the future. What are your plans in 2020 and beyond? Do you plan to start selling online courses? Do you already sell courses and are you planning to do anything different this year?
Let me know by leaving a comment!
P.S.: If you want to learn my exact strategy for a lean and rapid online course launch & discover my pricing "secrets", click here to learn more!