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Online Course Marketplaces and Their Business Models: Everything You Should Know

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Online Course Marketplaces and Their Business Models: Everything You Should Know 1

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Estimated reading time: 14 minutes

Nowadays, anyone can share their knowledge with the world if they have a passion for teaching. Some people even use it as a side hustle. In fact, The overall global eLearning market is expected to hit $350 billion by 2025. (Source)

And with the COVID-19 pandemic having significantly increased demand, the global e-learning market will reach USD 390.6 billion by 2026, growing by 11.7% annually over 2020. (Source)

So, if anything, the e-learning industry turned out to be one of the most promising industries.

Therefore, if you want to invest in an e-learning business such as an online course marketplace, right now is the best time to test the waters. But, to build a stable business, reach a wider user base, and grow revenue, you need a plan and business model.

And choosing the right online course platform and business model for your online course marketplace is extremely important. If your business model is broken, the business is bound to fail sooner or later.

But this article will help you get some more perspective.

In 14 minutes, you’ll learn about the various business models for Online Course Marketplaces and how to select the right one for your needs. Click to tweet

Types of Digital Learning Platforms

Many types of digital learning platforms or online course platforms exist to facilitate online learning in the modern world. Some examples include – Online schools, Universities, Employee Training portals, and Course Marketplaces, among others.

Online course marketplaces have seen massive growth in recent years mainly because they offer a wide range of courses.

But no matter the type of Online Course Marketplace, they usually have the same goals i.e –

  • Democratizing learning to help people learn a new skill,
  • Gain certifications from world-class educators,
  • Help students get better grades,
  • Improve job prospects and career opportunities, among other things.

The difference is in the type of audience they cater to, the type of courses, and their business model. Some are a one-man show, while others involve courses created and taught by many instructors. For this article, we’re going to focus on course marketplaces. Mainly, sells courses created by many instructors and on diverse subjects. Since there are many such sites, we will talk about the 5 most popular online course platforms.

So grab your cup of coffee. We have a lot of reading to do.

Let’s begin?

5 best online course marketplaces (as ranked by Google)

Here’s a list of the top 5 online course marketplaces as per our Google search. Many of these may sound familiar if you’re in the online learning space for quite some time. Let’s check them out:

#1. Udemy

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Online Course Marketplaces and Their Business Models: Everything You Should Know 2

First of all, there is Udemy, which is unarguably the most successful name in the world of course marketplaces. Udemy has 213,000 courses in 75 languages led by over 70,000 instructors for 57 million visual learners globally as of 2023. A big reason behind its success is the first-mover advantage. It was the first website of its kind to be launched in early 2010.

It has also got the perfect mix of the right features and the right business model. They offer courses in almost every niche like – Business, literature, health, lifestyle, art, design, and technology, among other things.

Udemy allows anyone to easily come and teach. People can create courses on any topic they’ve expertise in. They don’t have to worry about site maintenance, payment processing, student management, and other tasks that they would have to do if they created their own education site.

Their courses can include everything – images, videos, animations, PDF files, audio files, ZIP files, – anything it takes to create a great course, and learners can learn from it. The instructors can also hold live classes for their courses.

#2. Coursera 

Coursera

Coursera was launched in 2012, and since then it has challenged Udemy by creating a massive open online course (MOOC) marketplace by providing professional education and skill development programs in different languages. The major difference between Udemy and Coursera is that the latter is supported by established universities as well as Fortune 500 companies.

Coursera is better for those seeking accredited certification. Udemy is better for learners who want access to a massive range of professional, as well as fun, courses.

These companies, colleges, and universities provide courses with certifications that are accepted and received with respect around the world. Universities offering their programs on Coursera include Yale University, Illinois University, Rice University, Duke University, Imperial College London, and the University of Michigan. Companies offering corporate training programs through Coursera include IBM, Google, Facebook, PwC, Adobe, MasterCard, and Southwest Airlines. 

Coursera claims to have 113+ million learners on its platform, and 7,000 campuses, universities, and companies training them. That makes it the most successful course marketplace ever created. Usually, Coursera offers courses that are four weeks to twelve weeks long. But, now they’re also offering full-length Bachelor’s and Master’s degree programs that take 3-4 years to be completed.  

#3. edX

edX

edX is the result of a joint effort led by Harvard and MIT. As a result, edX offers online courses created by these two universities and dozens of partner universities and corporations.

Most courses on the platform are free (except for some courses that offer specialization). So if you want to receive a certificate then you need to pay between $50 – $300.

edX claims to have 40 million learners, 230 partners (universities and companies both included), more than 3500 thousand courses, and over 15,000 instructors.

Some of the well-known partners include – the International Monetary Fund (IMF), Microsoft, Tech Mahindra, General Electric, Arizona State University, Georgia Institute of Technology, the University of California San Diego, and the French Government. 

edX runs on its own custom LMS, which it has open-sourced for other institutions that want to offer higher education programs in a similar manner. 

#4. Khan Academy

Khan Academy

Khan Academy started as a YouTube channel in 2006. Later, its founder Salman Khan, who had been tutoring only his cousin and some of his friends using videos decided to put the videos online after increasing demand.

3 years later, in 2009, Khan Academy got its official website. It became much more than a YouTube channel run by just one educator. Today, it has got more than 10,000 unique videos covering the curriculum of all subjects for all classes from class #1 to class #12. Initially launched only for US-based students, the site has now also expanded to India, Mexico, and Brazil.

Khan Academy is different from the rest of the websites on our list because it focuses on supplementing academic education. While all other course marketplaces provide courses based on professional education and skills, Khan Academy focuses more on school education.

And that’s what makes it the most successful course marketplace ever created – it claims that it has got over 70 million users. With a team of over 200 subject experts who create course content based on various subjects. It also has a full-fledged school called Khan Lab School in California, and an app called Khan Academy Kids to tutor the kids preparing for kindergarten.

#5. Skillshare

Skillshare

Skillshare offers courses mainly in the field of arts, like – animation, writing, music, photography, graphic design, UI/UX design, etc. However, some professional courses are also available, like web development, business analytics, freelancing, entrepreneurship, leadership, and marketing. Some courses are available for free, but if you want to access all the courses you can purchase a premium membership that costs $19 per month (or $99 per year, if you purchase on annual basis).  

Skillshare started in 2011 as an in-person tutoring platform. In 2012 it converted into a course marketplace with only 15 self-paced courses.

Today, they have a library of 35,000+ courses with over 12 million users to learn and 8,000 teachers to teach. Hence, Skillshare has done a remarkable job in acquiring the market for vocational skills. And is now the largest digital learning platform for creativity with a wide variety of online courses.

Business models of online course marketplaces 

Each course marketplace mentioned above uses a different business model to generate revenue. So, we’ll explore every model and its pros and cons to help you determine which one is best suited for your e-learning business.

Let’s start…

#1. Pay Per-Course model

Example: Udemy, Coursera, edX

This is the method of choice for most course marketplaces. It’s simple – you or your instructors create courses, define a price, and the learner can directly purchase it. There’s a long list of successful course marketplaces that have been built on this method (you can see the examples). Here’s a short summary of its pros and cons:

Pros:

  • Allows you to maximize your revenue. As the number and diversity of courses increase on your platform, so does your revenue.
  • Upselling is easy – you can bundle courses of the same niche together to create course bundles, which can be sold at high prices.
  • Learners are not overwhelmed by the amount of course content that they need to consume. This works especially well in those circumstances where one needs to learn a very specific skill, and they want to be assured that they’ve learned it well (i.e. a company training its employees). 
  • Earning is easy – you can run a successful business even with a handful of learners who are willing to pay a high price. 

Cons:

  • You, or your instructors, need to find out the right selling price every time when they create a course. 
  • Requires continuous creation of new content in order to keep earning.

Further Reading: How to create a course marketplace like Udemy

#2. Subscription-based model

Example: Skillshare

This basically means applying the Netflix model to e-learning. You make all course material on your platform available to everyone who has paid a certain membership fee. Depending on your needs you can create 2-3 tiers of subscription or just one tier. The major pros and cons of this business model are as follows:

Pros:

  • A steady source of income with monthly renewals
  • Easy to implement and easy to track your growth
  • Affordable subscription fees mean a lower barrier to entry. And once they’ve entered your ecosystem, they’ll be definitely willing to pay more if you’re providing value.

Cons:

  • High churn rate. You may spend hundreds of dollars to gain a subscriber, only to lose him/her a few months later. The churn rate remains a major point of concern for all businesses based on a subscription-based model. 
  • Requires even more content than the per-course model – the learners must feel justified about paying you on a monthly basis. 
  • You need to have a large number of subscribers to earn a decent amount of revenue (unless your subscription prices are high and subscribers are willing to pay them on a monthly basis). 

#3. Free (ad-based) model

Example: Academic Earth, OpenStudy

Usually, blogs and news websites usually this model. But an eLearning business can also benefit from Ads. The only thing you need to do is find some relevant places where ads can be embedded on your website. Ads can also be included in the course material like videos, PDF files, etc.

The pros and cons of this model are as follows:

Pros:

  • Implementation is straightforward. You don’t need to get a payment gateway, integrate it with your site and take care of building optimized checkout pages. 
  • A/B testing is also easier – you need to perform it only for converting visitors into subscribers and not for converting them into customers.
  • The impact – you can teach a large number of students with this model because none of them will have to pay anything. 

Cons:

  • Less revenue – you make far less money with this business model than you would make with a subscription-based or per-course business model.
  • Ads affect the user experience of learners. The more ads you include, the more distractions you create for your learners. 
  • You need to have a lot of learners in order to break even, let alone the idea of earning a profit. 

#4. Free (donation-based) model

Example: Khan Academy

Finally, you can also run your e-learning business completely on the basis of donations. If your courses target a large market and provide high value to students to solve real-life problems, then this model is can be a huge success. Many successful e-learning businesses and informative sites are built on the basis of donations (i.e. Wikipedia).

Here’re the pros and cons of this model:

Pros:

  • A major advantage of this model is that you get to validate your business idea right in the beginning. If there’s a sizable market willing to pay for an e-learning portal for your niche, you won’t have any problem collecting the donations required to get started. Then once your site is live, those same donors can become your first few learners and start spreading the word.
  • Running a course marketplace based on donations is also beneficial for your brand. Ask any marketer and they’ll tell you that mission-focused businesses that exist solely for the purpose of bringing a change are much easier to market than businesses that exist largely for the purpose of making a profit. 
  • You can also tap the talent of experts who are best in their respective fields while building a business based on this model. Many of them will be willing to contribute without asking for generous payments from your end. 

Cons:

  • The biggest disadvantage of a donation-based business model is that your financial standing depends on the mood of donors. In most cases, your business ceases to exist once there are no more donations or grants. 
  • There’s also a limit on how rich you can get from such a business. If people get a feeling that you’re using the donations of business for your personal benefit, things can quickly go haywire. 

Final Thoughts: How to choose the right business model for your online course marketplace?

Now that you know about the proven business models, it’s time to decide which model is best suited for your business. The answer depends to a large extent on your requirements and what you’re trying to achieve. Here’s some basic advice:

  • If you want to maximize your revenue, and there’s no problem in creating fresh course content every month, go for the pay-per-course model. If you don’t want to create the content yourself then you can allow instructors to do it on their own, just as Udemy does. But keep in mind that your income will fluctuate regularly with this kind of business model and you’ll have to find a way to keep gaining more and more customers monthly. Marketing strategy matters a lot for the success of this model.

  • If you want a stable income, you can opt for a subscription model. This model will help you earn recurring revenue, which is a crucial part of success for any business. But your content must provide maximum value to make this model successful, which requires creating even more content than pay per course model on a regular basis. Because if subscribers can’t justify the price that they’re paying regularly to your platform, why would they want to keep paying?

  • If you’re not sure about whether or not your e-learning idea will work, and want to test if there’s a sizeable market for your business or not, you can opt for a donation-based model. There’s a good chance that if you can raise enough money to get started then you can also earn enough from a donation-based e-learning business to lead a good and fairly successful life. Khan Academy has proved that. 

  • As far as the ad-based business model is concerned, we would not advise anyone to adopt it as their primary source of revenue. It’ll be good if you combine it with pay per course or subscription-based model to extract some value out of your free courses, but it’s not a very sustainable model for creating a thriving e-learning business in the long run. 

We hope this article helped you understand online course marketplaces and their business models in depth.

If you need more help you can get in touch with our experts or leave a comment below so that we can respond.

Happy Teaching!


Nitansha Tanwar

Nitansha Tanwar

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