During these difficult times, it’s important to us that Skillshare continues to be a growing source of income for creatives around the world. This is central to our company mission, and we believe deeply that our teachers are the backbone of our amazing community.
We recognize that being able to anticipate your earnings is more important than ever given the economic uncertainty amidst COVID-19. We want to take a moment to share information about some of the unprecedented dynamics we’re seeing on the platform, as well as share more information on what to expect in the coming months.
In the last 6 weeks, as stay-at-home orders have gone into effect around the world, we’ve seen more people than ever join Skillshare and engage with your classes. At the same time, because of seasonal dynamics we’ll detail later in this post, teacher payments are also up: in March 2020, the royalty pool increased by 10%. However, we recognize that the unprecedented site activity related to COVID-19 brings new questions about what this all means for growth in the royalty pool going forward — and this is what this update will detail in more depth.
As always, we are so thankful that you are part of our community, and we are here for your questions and feedback at [email protected] anytime.
How does the teacher royalty system work, and what’s unique right now?
Teachers on Skillshare earn money in a variety of ways, including monthly royalty payments, referral bonuses, program prizes, and other incentives. In this update, we’ll focus on monthly royalty payments and the unique ways royalties have been impacted by the circumstances of COVID-19.
Each month, Skillshare allocates 30% of membership revenue towards a royalty pool for teachers. The royalty pool is then distributed amongst teachers based on their percentage of the total Premium minutes-watched in their classes. For example, if your classes receive 5% of the minutes-watched by Premium members, you receive 5% of the royalty pool.
Alongside the rise of COVID-19 in recent weeks, engagement (minutes and lessons watched) on Skillshare has reached unprecedented highs, and many teachers are seeing a surge of activity in their classes. It’s no secret that people are turning to platforms like Skillshare to find fulfillment as stay-at-home orders have gone into effect, and we’re seeing both: (a) a significant influx of new members joining Skillshare, as well as (b) existing members watching more than ever before.
These two charts show this increase in new members and overall site activity, with the highest bars related to the rise of COVID-19 in March and April 2020:
How has increased site activity impacted teacher payments?
On Skillshare, site activity and the royalty pool do not always grow simultaneously. In fact, right now we’re seeing that the royalty pool for teachers is growing, but at a slower rate than minutes-watched. In March 2020, the royalty pool grew by 10%, while site engagement grew by 44%. This is good news in the long run, but it is an unprecedented divergence, and it’s worth diving into the two reasons for this unique dynamic.
First, new members who join Skillshare typically start with a free trial. This is great for introducing them to the community, and students have consistently shared positive feedback about this as a way to explore the community before committing to a full membership. However, while that activity is counted towards Premium minutes-watched, those free trial members are not yet contributing to the royalty pool. This is one way minutes-watched can grow while the royalty pool stays the same.
Second, paying Skillshare members are able to watch more without necessarily paying more. This is because Skillshare works just like Netflix or Spotify — students can learn as much as they’d like on one monthly or annual membership fee. Increased activity from those users doesn’t add more money to the royalty pool. This is the second way that site minutes-watched can grow while the royalty pool stays the same.
Why is this good news in the long run? We know that when new members watch a lot of lessons and classes during their free trial, they are more likely to become paying members, which is how the royalty pool grows over time. (This is also happening all the time, as people who previously started a trial join as full paying members.) And, when paying Skillshare members engage at a high rate, they’re likely to go on to tell their friends about how much they’re loving Skillshare — bringing more people to the community, and the cycle begins again.
Right now during COVID-19, this all means that we’re seeing very high site activity, but have not yet seen the full impact on the royalty pool.
What does this mean I can expect for my next royalty payment?
We know that being able to anticipate your earnings is especially crucial right now given the current climate of economic uncertainty amidst COVID-19. This section will aim to provide a bit more visibility into the dynamics we expect to see.
Importantly, we want to stress that while it may seem intuitive to anticipate upcoming payments by looking at the previous month’s amount-earned-per-minute-watched, this is typically not an accurate indicator of earnings. In fact, it’s quite common for the amount-earned-per-minute to decrease while overall teacher earnings increase. This can happen when site minutes-watched activity grows faster than Skillshare’s overall revenue — and that’s exactly what happened last month.
When we look at the March 2020 payment cycle (the payment that teachers received on April 16th), we see that the amount-earned-per-minute-watched dropped from the previous month by $0.01. But, this was accompanied by strong teacher earnings growth: during that time, royalty payments to teachers grew by 10%, largely due to those on January free trials becoming full paying members. In addition, overall teacher earnings growth in that period was even higher: total payments, including referral bonuses, rose by 12%.
Here are a few charts showing these effects in March 2020:
Ultimately, these dynamics suggest a few things for the weeks ahead. And, with this in mind, we want to give you an early look at the expected amount-per-minute-watched coming in your May 16th payment.
- In the next 2 weeks: We expect the total teacher payments to continue to grow from March to April 2020. But, since minutes-watched activity across the platform is continuing to grow faster than the royalty pool, we anticipate that the amount-earned-per-minute-watched in your next payment will likely average between $0.022 and $0.027.
- In the next 6-8 weeks: As free trial members start paying in May and June, we anticipate that total teacher earnings will continue to climb. Note: This is the dynamic we typically see resulting from seasonal growth surges in January. An uptick in new members joining on January free trials is historically met by an uptick in the number of paying members 2-3 months later. Once members begin to pay, this is when we anticipate seeing growth in teacher earnings alongside Skillshare’s overall revenue.
Here’s a chart that further shows this dynamic. The purple line represents members on free trials; spikes represent when there are many members on free trials at once. The green line represents growth in paying members. What’s interesting here is the sequence of events: generally, after a spike in the purple line (growth in free trials) we always see a spike in the green line (growth in paying members) after the duration of the trial (typically 2 months).
What does this mean for the future of teacher earnings on Skillshare?
One of Skillshare’s core strategic pillars is “Teacher success is our success.” Over the past 3 years, monthly total teacher earnings have grown 3.2x, and the number of teachers earning over $200 per month on Skillshare has grown by 2.9x. We are working hard to ensure these numbers continue to climb in the months and years to come.
Looking ahead, we will also be revisiting the data that we share with our teacher community and exploring ways to give you more visibility and insight into your earnings.
We are so thankful that you are a part of our community, and we always value your feedback. Please reach out anytime with questions and feedback at [email protected].
The Skillshare Community Team