Lynda.com is an online education marketplace that charges consumers a monthly subscription fee for unlimited access to its entire content library of 4K+ video courses. The mini-courses focus on professional topics including technical, creative, and business skills. While not perfect, Lynda is an example of effective alignment between the business and operating models.
The Operating Model: Assets, Structures, and Processes
- Author Community. Lynda depends on hundreds of external contributors for course content. These contributors are teachers, authors who have written popular books, or recognized authorities. Through this community, Lynda can not only “pick from the best” to fill its innovation funnel, but also grow its course catalog without incurring the “R&D” costs of developing content by itself.
- Application Process. Unlike user-generated sites like Youtube, Lynda requires potential authors to submit applications. The application includes a comprehensive course proposal, an overview of qualifications, and an interview with a Content Manager. This is the first key gate in Lynda’s innovation tunnel, helping screen for end product quality.
- Course Production. The course production process is intense, and represents the second key gate in the innovation funnel. Only authors who are confident in their content choose to invest the time and resources. The authors write out their scripts (which can take months), and then fly to Lynda’s production studio in California to record the course with professional producers.
- Payment. Authors are paid based on course viewership and overall Lynda revenue; therefore, the economic interests of both sides are relatively aligned.
- Publicity and Exposure. The author’s name and face are tied with the course. If well-reviewed, the author benefits from good publicity and emotional reinforcement. There are powerful intangible incentives to avoid producing bad content.
- Fun and Challenging. Authors have claimed that the process is enriching and intellectually stimulating. They enjoy being associated with the Lynda network of educators.
The Business Model: Value Creation and Capture
- Highly Valuable and Curated Content. The type of content on Lynda (e.g., skills building, trade-focused) is highly relevant and practical. Consumers also benefit from Lynda’s breadth of topics. The combination of economic ROI, catalog breadth, selective author curation, and high production quality result in great value creation for the consumer.
- Paywall. For this value, consumers are expected to pay (e.g., $25 per month). This is in contrast with websites such as Youtube, where it is much more difficult to find quality videos, or EdX, where the course catalog may be less skills-focused.
- Subscription-Based, But Unlimited Access. Consumers are expected to pay monthly; they get access to the entire content library, but only if they continue to pay. This is especially compelling if consumers need time to complete courses, and enjoy having unfettered access to 4K+ courses.
Why It Works Well
Lynda has developed a model where it justifies receiving recurring revenue streams without having to fund significant R&D costs. Much of this is accomplished by aligning its operating and business models.
- Virtuous Cycle for Quality Content. Lynda’s business model requires consumers to pay for access; in return, they can expect high-quality content. For its operating model, Lynda specializes in the author selection and content production process. Only the best authors self-select through, naturally increasing the quality of course content. This increases consumers’ willingness to pay, and thereby enhances authors’ willingness to join the network. This virtuous cycle represents a sustainable competitive advantage for Lynda.
- Quality and Breadth, Without Investing. By outsourcing content creation to proven educators across a broad range of subjects via a user-generated model, Lynda avoids the need to hire expensive full-time staff, yet still optimizes for delivering the best—and very comprehensive—content to its consumers.
- Alignment of Incentives. Authors are only paid when their courses perform well; therefore, their economic incentives are aligned with Lynda’s operational objective of building a compelling course catalog. If the website’s overall revenue increases, then its payout to authors increase as well, or vice versa.
- Justifying the Recurring Revenues. The consistent quality of Lynda’s videos, as well as catalog breadth, creates a strong value proposition for the consumers; they feel comfortable “subscribing” to its videos database. This contrasts with a platform like Udemy, which uses a la carte payments to adjust for vastly differing course quality. Subscriptions help build consistent revenue streams, enabling authors to get paid more, and thereby incentivizing increased content quality.
- Lynda.com, Inc. corporate website.
- BecomeAWriterToday.com. “30 Days with Lynda.com – Why It’s Still Worth It”. November 2014.
- Forbes.com. “At Lynda.com, Content is Queen, But the Contributor Model Could Be in Jeopardy”. 8/12/2013.
- BigThink.com. “Better Than Free: How Lynda.com Made a Paywall Pay”. November 2011.
- Wire.com. “A Paywall That Pays Off. How Lynda.com Broke All the Rules and Won”. 6/16/2011.
- BrianThurston.com. “My Experience Creating and Recording for Lynda.com”. 4/30/2014.