"I am Serena Williams, and this is my Masterclass." When I heard this line, I couldn't believe my ears😮. Serena Williams was teaching tennis🎾? In an online course?🤔
The video ended with these words, but YouTube's algorithm didn't give me time to recover from my shock. It served another video- this time it was Gary Kasparov who had an online course about chess.
By this time, I was curious about the company behind these ads- Masterclass. In today’s article, I will prove why Masterclass isn’t an edtech company. Then, I’ll share an exciting insight💡 into its business model.
🕹Online learning from the world’s best:
David Rogier started Masterclass in 2015 with 3 classes- Serena Williams for tennis, Dustin Hoffman for acting, and James Patterson on writing. At that time, the edtech market was already oversaturated- Udemy, Coursera, Udacity, Skillshare, Lynda, etc. All these products are based on the same concept- lots of videos🎥 focused on a particular skill recorded by an instructor.
Masterclass differentiated itself through its USP- the celebrity instructors⭐. After all, who better to teach a skill than those who are at the top of that field? Plus, their course videos had Netflix-level quality, which was unusual in ed-tech courses.
Today, Masterclass is valued at more than $800 million💰 and it offers more than 85 classes. The pandemic gave a huge boost🚀 to its subscriber base. And their celebrity instructor⭐ list now includes superstars like Gary Kasparov, Dan Brown, Penn and Teller, Natalie Portman, and Gordon Ramsay🤩🤩
🕹Masterclass can’t compete with Udemy/Coursera:
Just because the instructors are celebrities doesn't change the fact that Masterclass’ concept is very similar to its competitors like Udemy and Coursera. People are coming to Masterclass to learn certain skills; skills which they can learn on Udemy and Coursera as well.
Theoretically, Masterclass will easily win over its competitors where skills are concerned💪. After all, the instructors on Masterclass are very experienced and successful. Naturally, they’ll be able to give the best knowledge to students. Therefore, Masterclass is the best option for people who need to learn a particular skill🎯
Sadly, this theory fails in the real world.
I was surprised to find so many negative reviews of Masterclass courses😮
It’s like someone studying violin but not holding a violin — just looking at videos of how to play a violin... It’s silly to put on your resume that you’ve studied acting because you’ve taken this course…You’re expanding your mind, but I wouldn’t consider that taking an acting class.
It’s not a master class, or a class of any kind…It’s tips and anecdotal information — a very cool thing professionals have done to share stories about their art. But it’s not training.
Hans Zimmer talks about what went into scoring The Dark Knight and Sherlock Holmes, but that’s not quite the same thing as teaching film scoring.
A person taking this class isn’t going to learn much about the technical aspects of making a film…
Malcolm Gladwell’s analysis of why his stories work can be instructive, but it’s not what you’d think of as a writing course.
“Make sure you get the racket under the ball,” Serena Williams says in a MasterClass that is just technical enough to be useless to a novice and inane to anyone who has taken a tennis lesson.
Even the CEO of the company has said that taking a Masterclass won’t train you in that skill.
If you want to learn how to use your DSLR camera, this is not the place for you.
-Masterclass CEO David Rogier
These negative comments highlight the biggest problem⚠ with Masterclass: Doing a Masterclass course won’t train you in that particular skill. Sure, the instructors are good, but they are mostly talking about their experiences. Plus the average length of a Masterclass course is 1-2 hours, hardly enough to receive proper training.
Clearly, this is a very serious problem⚠ for Masterclass: its courses can’t compete with the quality of Udemy and Coursera. Edtech is a very competitive market, right? Since competitors have better course quality, people won’t use Masterclass.
🕹My Doomsday prediction for Masterclass:
Based on the points above, I made a doomsday☠ prediction for Masterclass. Let me walk you through it-
- Masterclass must be spending a lot on signing up all these celebrity instructors.
- But the courses aren’t very educational.
- The edtech market is highly competitive. When people will see that the quality of Masterclass courses is bad, so they will switch to another service.
- Therefore, lots of spending but little revenue for Masterclass.
Conclusion- Masterclass is doomed☠ to fail, and it will shut down soon.
Fortunately, Masterclass raised a new funding round soon after, and my doomsday☠ prediction was proven wrong. Obviously, investors are not idiots. They would have taken a pretty good look at Masterclass’ finances before investing. This means people are paying for the courses. So, it’s safe to assume the company has a solid future⚡.
But I couldn't figure out the problem in my doomsday☠ prediction. If the courses on Masterclass aren’t very educational, why are people paying for them?
I went through those 4 points again and again but I couldn't find the problem.
🕹Here’s why Masterclass isn’t an edtech company:
To understand the problem in my prediction, I asked a few questions to myself:
👉What is the business model of Masterclass?
Celebrities teach courses, and people pay to learn from them.
👉What do we know?
The courses aren’t very useful or educational, but people are still paying for them.
👉What does this imply?
People aren’t paying for the courses, they’re paying for something else.
👉Apart from the courses, what else might attract people to Masterclass?
It’s instructors- the celebrities.
People are paying Masterclass for access to these celebs!
👉Why should people pay Masterclass for access to celebs?
Because people get access to the exclusive content made by the celebs.
Now we’re getting to the point. People aren’t paying Masterclass for the educational content❌
You see the mistake I made in my doomsday☠ prediction? In the 3rd point, I assumed that Masterclass was competing in the edtech market.
The edtech market is highly competitive. When people will see that the quality of Masterclass courses is bad, so they will switch to another service.
This assumption was wrong.
This proves that Masterclass isn’t an edtech company, and it isn’t competing in the edtech market.
🕹If Masterclass isn’t an edtech company, what is it?
At the end of the questions, we concluded that people are paying💲 for access to the exclusive content of these celebs.
Did you notice something? This phrase “people paying💲 for access to exclusive content” is the business model of Patreon, a company that is at the forefront of the creator economy. Patreon lets people pay💲 their favorite creators for access to exclusive content.
Since Masterclass has a similar business model to Patreon, it implies that Masterclass is also a “creator economy” company💡. When you look at the company from this angle, its business makes a lot of sense.
- Creating a Masterclass means these celebrities are creating “exclusive content”.
- All these celebrities have a huge fanbase. The fans will pay💲 Masterclass for access to this exclusive content, and celebrities get a cut of this revenue.
- Therefore, Masterclass provides a way for these celebs to monetize their huge fanbase.
First, we looked at Masterclass’s model- celebs as teachers. Then, we looked at the negative reviews and concluded that the educational quality of Masterclass courses is bad compared to its competitors. Based on this, I made a doomsday prediction that Masterclass will shut down soon, which was immediately proven wrong. We proved that Masterclass isn’t an edtech company since people are paying for it despite the bad courses.
After we proved this, we arrived at the key insight into its business model- Masterclass is a “creator-economy” company. It is enabling these celebs to monetize their huge fanbase by providing exclusive content.
I hope you found this helpful✌
This article originally appeared in Integral, a newsletter to get smarter about Indian startups.