MasterClass Business Model In A Nutshell

Started as an attempt to transform education, MasterClass finds top talents and turn them into instructors. With a straightforward membership model of $180 per year, the streaming online education platform gives access to all its courses and the new releases on the platform. In 2020, it got valued at over $800 million.

Origin story

In an interview for 7×7 Aaron Rasmussen and David Rogier, highlighted their feelings about the education world:

I had been speaking with people in education, both in and outside the traditional school system, and found that people felt they were getting ripped off.

From there they started to redefine the concept of educaiton. During the web era, several companies have approached the change in education is several ways. MasterClass philosophy was that of enabling top talents to bcome instructors.

As they pointed out in the same interiew:

What does the most ideal online education look like? Learning from well-known instructors who have mastered a particular skill on one seamless platform. We’ve been working on MasterClass ever since!

So how did they convince the first celebrities to produce a class on their platform, when none knew them? David Rogier explained: “Honestly, lots of cold calling, persistence, great advisors and a little bit of luck.”

They also used some of the connections they had but as the founders reported the key ingredient was timing and the willingness of the top-class expert to wanting. todo it.

For instance, David Rogier reported how Kevin Space said he felt like it was his responsibility to “send the elevator down” for the next generation of actors.”

Of course, it helped the fact that, after initial traction, MsterClass also got well funded. Which definitely helped convince top experts to join the platform. As Hollywood Reported explained, “instructors make about $100,000 upfront when they begin working with MasterClass and receive 30 percent of the revenue their classes generate.“

This was back in 2017 when the platform was still at the beginnings. We can imagine that depending on the instructor and celebrity MasterClass has several levels of deals, to make it attractive for them to contribute a course on the platform.

Idea validation

David Rogier highlighted on Quora that when they were launching, to reduce the risk of failure, or perhaps to avoid spending years of their life and massive financial resources, they went through a process of idea validation, which consisted in asnwering four questions.

Those for questions can be used really, as a sort of business model framework to launch the business:

1. Hypothesis/Question: Could we get the best in the world to teach? Test/Expected Result to Validate The Hypothesis: get one to say yes (Dustin Hoffman)
2. Hypothesis/Question: Could we make great classes? Test/Expected Result to Validate The Hypothesis: make a test one (they filmed their parents teaching quilting and divorce tips — David Rogier’s dad was a family law attorney)
3. Hypothesis/Question: Would people want to take the classes? Test/Expected Result to Validate The Hypothesis: surveys, user interviews, and market comps.
4. Hypothesis/Question: Would all the math work (e.g. would CAC be at least less than Net Revenue)? Test/Expected Result to Validate The Hypothesis: try to sell an online class on how to CACs look. We tested everything we could (and still do)!

MasterClass’s mission and strategy

MasterClass’s mission is “to ignite the greatness in others” and it does that by “enabling anyone in the world to learn from the very best.”

MasterClass philosophy and strategy is skewed toward finding the top talents in several areas and transform them in instructors for the masses, where the educational experience is kept as much as possible as “one-to-one” meaning MasterClass tries to make it interactive via developing also online tools that help students learn better.

For instance, at once Rogier recounted how when developing the course with Christina Aguilera they had the chance to develop a proprietary technology to evaluate and measure the pitch of the voice, thus practice during the course.

Value Proposition:

• World-Class Instructors: MasterClass offers access to renowned experts and celebrities in various fields, including entertainment, sports, business, culinary arts, writing, and more. Users can learn directly from industry icons such as Martin Scorsese, Serena Williams, Gordon Ramsay, Margaret Atwood, and other accomplished individuals, gaining insights and inspiration from their expertise and experiences.
• High-Quality Production: MasterClass delivers engaging and professionally produced video lessons that combine instructional content, storytelling, and cinematic elements. The platform’s high production values, including high-definition video, professional lighting, and immersive visuals, enhance the learning experience and captivate users, fostering an enjoyable and immersive learning environment.
• Diverse Curriculum: MasterClass offers a diverse curriculum covering a wide range of topics and subjects, catering to different interests, skill levels, and learning objectives. From creative arts and entertainment to lifestyle and personal development, MasterClass provides comprehensive and curated courses designed to empower learners to explore their passions, develop new skills, and pursue their goals.
• Lifetime Access: Subscribers to MasterClass gain lifetime access to the platform’s library of video lessons, enabling them to learn at their own pace, revisit content as needed, and explore new topics over time. The flexible and on-demand nature of MasterClass allows users to customize their learning experience, fitting education into their busy schedules and lifestyles.

How does MasterClass make money?

MasterClass is a streaming platform, that has a simple membership revenue model. The annual membership is $180 per year and provides unlimited access to all classes and new classes as they launch with a 30-day free trial.

 As TechCrunch reported back in 2018, sales had more than doubled from 2016 to 2017, reaching probably the 50-100 million range, and probably this growth apace has kept growing also in 2019.

Given the new funding round in 2020, the company might be worth more than $800 million.

Marketing Strategy:

• Celebrity Endorsements: MasterClass leverages the star power and influence of its celebrity instructors to attract attention, generate buzz, and differentiate its offerings in the competitive online education market. Celebrity endorsements serve as a key marketing hook, enticing users with the opportunity to learn directly from their favorite icons and role models.
• Content Marketing: MasterClass invests in content marketing initiatives to showcase its course offerings, highlight instructor profiles, and provide valuable insights and educational resources to its target audience. Through blog posts, articles, videos, and social media content, MasterClass engages with prospective users, builds brand credibility, and drives traffic to its platform.
• Social Media Engagement: MasterClass maintains an active presence on popular social media platforms such as Instagram, Facebook, Twitter, YouTube, and LinkedIn to engage with its audience, share course previews, testimonials, behind-the-scenes content, and user-generated stories. Social media engagement fosters community interaction, word-of-mouth referrals, and brand advocacy among users.
• Affiliate Marketing: MasterClass implements affiliate marketing programs to expand its reach and acquire new subscribers through partnerships with influencers, bloggers, content creators, and affiliate networks. Affiliates promote MasterClass courses to their audiences through custom tracking links, earning commissions for referred subscriptions and driving incremental revenue for the platform.

Distribution Channels:

• Online Platform: MasterClass operates as an online learning platform accessible through its official website and dedicated mobile applications available for iOS and Android devices. Users can sign up for subscriptions, browse course catalog, watch video lessons, track progress, and interact with instructors and fellow learners through the platform’s digital interface.
• Mobile Apps: MasterClass offers mobile applications tailored for smartphones and tablets, providing users with on-the-go access to its library of courses and instructional content. Mobile apps enable subscribers to stream video lessons, download course materials for offline viewing, and participate in learning activities seamlessly across different devices and locations.
• Email Marketing: MasterClass utilizes email marketing campaigns to communicate with users, deliver personalized recommendations, and promote new courses, features, and special offers. Email newsletters, promotional announcements, and targeted communications help MasterClass stay connected with its audience, drive engagement, and encourage subscription renewals and upgrades.
• Partnership Integrations: MasterClass may collaborate with third-party platforms, media outlets, educational institutions, and corporate partners to expand its distribution reach and reach new user segments. Integration partnerships, co-marketing initiatives, and cross-promotional campaigns enable MasterClass to leverage existing networks, amplify brand exposure, and attract prospective subscribers.

Key takeaways

• Started as an attempt to enable a different format of education, where top experts are turned as instructors to teach a large number of people, MasterClass is a streaming platform, with a simple subscription model.
• The site grew as the founders managed to get in the first celebrities to offer their courses on the platform, from there it also got funding allocated for growth.

Key Highlights

• Company Overview: MasterClass is an online education platform that offers streaming courses taught by top experts in various fields. It was founded in 2013 by Aaron Rasmussen and David Rogier.
• Education Transformation: MasterClass aimed to transform education by enabling renowned experts to become instructors and teach their skills to a wide audience.
• Membership Model: MasterClass operates on a straightforward membership model. Users pay an annual fee of $180, which provides unlimited access to all courses and new releases on the platform. A 30-day free trial is also offered.
• Origin Story: The founders identified issues in traditional education and wanted to create an ideal online learning platform. They persuaded top experts to become instructors through cold calling, persistence, and luck.
• Instructor Attraction: MasterClass attracted instructors by offering upfront payments (around $100,000), revenue share (30%), and the opportunity to “send the elevator down” by sharing their expertise.
• Idea Validation: Before launching, the founders validated their idea by answering four key questions: getting a top expert to agree to teach (Dustin Hoffman), creating a test class, gauging interest through surveys and user interviews, and assessing financial viability.
• Mission and Strategy: MasterClass’s mission is to “ignite the greatness in others” by enabling people worldwide to learn from the best. The platform emphasizes interactive learning and tools to enhance the educational experience.
• Revenue Generation: MasterClass generates revenue through its membership model. Users pay $180 annually for unlimited access to all courses and new releases. The platform’s sales doubled from 2016 to 2017 and likely continued to grow in subsequent years.
• Valuation and Funding: MasterClass’s valuation reached over $800 million in 2020 after a successful funding round. The company’s growth is attributed to its unique approach to online education and its ability to attract top instructors.
• Sustainable Growth: MasterClass’s success can be attributed to its focus on high-quality instruction, its interactive approach to online learning, and its ability to consistently attract new users with its diverse range of courses.

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Read next:

• Platform Business Model
• Apple Business Model
• Digital Business Models
• Types Of Business Models
• Business Strategy Examples

Read also:

• Freemium Business Model
• Slack Business Model
• YouTube Business model
• Venmo Business Model
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• Amazon Business Model
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