MasterClass Business Model | How MasterClass Makes Money?

MasterClass is an online learning platform based in San Francisco for creative professionals.

Naturally, you are not required to go to San Francisco to attend a Masterclass. You can access Masterclass courses through a computer or mobile device and consume materials on the go. Simply launch the online course and begin.

MasterClass Business Model is based on charging its users for the courses offered by the instructors.

MasterClass was founded in an attempt to change education by recruiting outstanding talent and transforming them into instructors. 

With a simple annual membership fee of $180, the streaming online education platform provides access to all its courses and new releases. It was valued at more than $800 million in 2020.

You’ve probably figured by now that MasterClass is an online education platform. This is a 2014-founded American firm. Yanka industries conduct business under the pseudonym MasterClass. Aaron Rasmussen and David Rogier started this company. 

What is MasterClass?

MasterClass is an online education platform that features video lectures and presentations from industry leaders in various industries. Serena Williams, Gordon Ramsey, and Martin Scorsese teach acting, athletics, filmmaking, and cooking classes.

MasterClass business model is centered on charging clients a monthly subscription fee for access to the platform’s more than 80 courses. Consumers can also pay $90 for access to a single course.

MasterClass Business Model

MasterClass was founded in 2014 by two American entrepreneurs and has enjoyed significant success with students worldwide. It has raised more than $230 million over six years and amassed a valuation of $800 million.

Company NameYanka Industries
Company TypePrivate
FoundersDavid Rogier
ProductMasterClass
Founded DateOctober 2014
HeadquarterSan Francisco, California, U.S
Websitehttps://www.masterclass.com

How Does MasterClass Work?

A MasterClass is a self-paced online education platform that features pre-recorded lectures taught by (celebrity) professionals in various subjects. 

Students enrolled in this course will receive a class workbook, interactive assignments, and community service opportunities, along with the video content.

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What sets MasterClass apart from other EdTech sites such as Udacity or Udemy is its emphasis on celebrity educators. The portal features educational information such as the following:

Steph Curry teaches a basketball course. Acting classes taught by professors such as Samuel L. Jackson and Natalie Portman, as well as Gordon Ramsey’s cooking classes

Among many others. The MasterClass platform is currently home to over 80 instructors with courses. Most classes feature between 20 and 25 videos, totaling between 2 and 5 hours of video content.

Most instructors are restricted by time, so students receive the bulk, if not all, of their feedback from their classmates in a private group.

Students may be allowed to submit their course work for instructor review in various cases. As an example, Williams allegedly visited a student for a private tutoring session in 2015.

MasterClass is accessible through any current online browser, as well as through its Android and iOS mobile applications, as well as through Amazon Fire TV and Roku.

How Does MasterClass Make Money?

MasterClass earns money by charging students a monthly subscription fee for unlimited access to its courses.

The All-Access Pass package costs $180 per year (or $15 per month). Customers can also pay a one-time price of $90 to access a specific class separately.

This high price point results from the emphasis on video production quality and the deals struck with teachers. The Hollywood Reporter reports that instructors are paid $100,000 upfront and 30% in royalty fees.

The company’s thesis is opposed to that of its competitors. While platforms such as Udemy have thousands of instructors, MasterClass selects only the finest in their profession.

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This generates word-of-mouth for MasterClass (“This dish was inspired by a class I took with Gordon Ramsey”), which is aided by instructors’ strong social media followings and the coverage their courses receive in news publications.

As TechCrunch reported in 2018, sales more than doubled from 2016 to 2017, perhaps hitting the 50-100 million range, and this rate of growth has likely continued into 2019.

Additionally, MasterClass makes no guarantees regarding job advancement. Rather than receiving hands-on advice, it is geared at the more casual learner who may like to understand an instructor’s thinking. 

After all, a two-hour lesson taught by Serena Williams is unlikely to improve anyone’s tennis game significantly.

What is the Funding and Valuation of MasterClass?

Crunchbase reports that MasterClass has brought in $236.4 million in venture capital funding over six rounds.

MasterClass reached a valuation of more than $800 million during its most recent Series E, which the firm announced in May 2020.

Atomico, Institutional Venture Partners, New Enterprise Associates, and Fidelity Management are among the MasterClass notable investors.

What is the Revenue of MasterClass?

MasterClass is a privately-funded startup in hypergrowth mode, so sales and profit figures are not publicly disclosed. It is likely that the company is losing money and growing its customer base with existing funds.

Success Story Of MasterClass

David Rogier (CEO) and Aaron Rasmussen created MasterClass in 2014 (as Yanka Industries) (CTO).

CEO Rogier’s entrepreneurship aptitude was evident even from a young age. He designed and sold a search engine at the age of 13 for an undisclosed sum. 

He held several managerial positions during his time at Stanford after graduating from Washington University in 2005.

He met Rasmussen in 2009 after mutual acquaintances suggested they meet for coffee. They quickly clicked and spent the next few years experimenting in various business ventures.

Rogier worked for his former professor Michael Dearing, co-founder of seed investment firm Harrison Metal and the first investor in MasterClass, after completing his MBA.

MasterClass Business Model

MasterClass was born after months of extensive study and user interviews. Rogier attributes the inspiration for MasterClass to his Jewish grandmother, who survived Nazi Germany and went on to become a pediatrician (despite being rejected by over 30 medical institutions). She continually reminded him that the only thing you cannot lose is your education as a child.

MasterClass launched in 2015 after nearly two years of sales pitches, filming, and website construction. 

This was the first class that Hoffman taught for the company (it was discontinued in 2018 after claims of sexual misconduct against him). He covered the basics of acting.

Platform success was evident from the beginning. MasterClass announced that it had sold over 30,000 courses in its first four months and had more than 100,000 students.

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The company’s platform continued to grow in terms of course material and user base. The youngest and oldest students ever recorded, for example, are eight and 104 years old, respectively. Today, the company offers more than 80 courses on its platform and serves people worldwide.

Meanwhile, pitching new potential instructors has become easier for the EdTech startup, thanks to the increased popularity. 

Nowadays, MasterClass rejects nine out of ten applications from potential instructors’ agents simply because they lack sufficient hands-on experience.

While the company’s prognosis appears to be as bright as ever been, it has grown in the absence of CTO Rasmussen. 

He left MasterClass in 2018 to found Outlier.org, an EdTech firm based in Brooklyn that offers college classes that earn students actual college credits.

What Is the Mission and Strategy of MasterClass?

The mission of MasterClass is to “spark greatness in others” by “allowing everyone in the world to learn from the very best.”

The philosophy and strategy of MasterClass aim to identify the best talent from a variety of fields and turn them into instructors for the masses, with an emphasis on “one-to-one” education, which means the company develops online tools that help students learn.

Rogier commented on how the opportunity for developing a proprietary voice assessment and measurement technique came about as they developed the course with Christina Aguilera. They then practiced these techniques throughout the course.

Key Takeaways From MasterClass Business Model

MasterClass is a streaming platform with a simple subscription model. The streaming platform has a simple subscription approach, and MasterClass was originally formed to experiment with a new education model by using top professionals as instructors.

The service gained in popularity as the creators secured the first celebrities to offer courses on the platform, and it also received finance for growth.

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