YouTube "Paid courses" aim for $1 billion revenue 🤯
The masterplan to capture complete user lifetime value is in action.
Welcome to the 110th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Quick context 🗓
In Q1 of 2023, YT is launching it’s educational player with “YT courses”. The new YouTube embedded player will show content without distractions like ads, external links or recommendations. This is start of orbit changing movement from YouTube’s current advertising revenues of $28.8 billion in 2021.
Basics → How does YouTube make money? 💰
First, YouTube premium subscribers ✨
It crossed 80 million YouTube Music & Premium subscribers globally as of September 2022. Assuming $100 price point annual that translates to broadly $8 billion in revenues. Exact numbers haven’t been released by YT in their company fillings.
Second, advertising revenues 📢
YouTube thrives on video/ banner ads. It’s elder brother, Google, allows it to target users with laser focus accuracy - something advertisers absolutely love. It makes ~ $7 billion every quarter & contributes to majority of overall revenues.
Third, channel memberships 🫂
Remember that “Join” button on Tanmay Bhat’s channel? It allows subscribers access to loyalty badges, custom emoji, private streams for a fixed monthly recurring fee. YouTube gets a cut of this revenue. This is currently a small percentage of overall revenues.
The job to done for “YouTube Courses” 🛠
Largely, YouTube wants to scale the number of revenue lines. And, there are some core problems it’s solving in the process.
Use the “educational intent” insight 💡
Larger edtech companies were born out of YouTube. Unacademy, Physics Wallah are some of the marquee ones in the past few years who make over $100 million revenues every year. And a majority of their user acquisition even today comes from YouTube videos (largely long form videos & live streams).
Solve for the learning experience 🧩
If you have ever watched a educational video on YT, you will always get distracted by other videos, the playlist, ads & so on. Plus, there is hardly any structured learning that allows learners to go lesson by lesson, check their understanding with quick quizzes or go back to specific lessons for revisions.
With YouTube courses, learners can pay for a specific course & consume it completely ad-free, even if they don’t have YouTube premium. That means YT understands it need to start make “sachet selling” than one single subscription.
Increase customer lifetime value 💸
With the “Join” feature, YouTube has some level of conviction of how audience behaviour works across YouTube channels. It’ll use this data with the intent to recommend specific courses plus, it will allow creators to open up high ticket size courses, relatively, to their most loyal viewers.
But, what’s the framework that will make it a $1 billion revenue product? 💷
Launch for top educators first. Solve for perceived value of courses & not do a pricing war with random platforms. Something udemy failed to understand.
Paid courses should feel like a natural extension of free videos and not a push product. If done wrong, it might hurt user average time on the platform.
Solve for depth of learning. By virtue of how YouTube creator monetisation works, YouTube incentivises length of the video than how applicable the video is. This need to move from quantity to quality of learning modules.
Nailing user ratings. Courses thrive on ratings and word of mouth. For YouTube to succeed at this game, it needs to solve for effective feedback loop between learner <> educator.
Focus on community features. Learning is exponential with diverse set of peers. If the community feature could come in to do assignments, live interactions between course learners → magic happens.
That was the “YouTube paid courses” story ✨
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Monetisation is a tricky game 💰
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