Summary: This article explains how the Subscriber Share model works, including a description of net revenue.
The ‘Subscriber Share’ Model
"Subscriber share" is the revenue share methodology we use on Envato Elements to allocate 50% of net subscription revenue among individual Authors.
Envato is proud to be one of the first businesses to implement subscriber share at scale. However, we didn't invent subscriber share: it was first proposed as a way to make the revenue share of music streaming services fairer to indie artists.
The core idea behind the subscriber share approach is that a subscriber’s money should go to the content and Authors they actually use and value. This is very different to the traditional "big pool" method for dividing up subscription revenue.
Subscriber share also aligns Author incentives with attracting more subscribers and retaining them over time. It benefits Authors who:
- Make items that are broadly appealing to many subscribers
- Make unique items that do a great job of serving various niches (even those who only license a low number of specific items)
- Don’t spend time making copycat items to try and target the big downloaders
- Take a more sustainable and long-term approach to their content
For a more in-depth understanding of why we chose to pioneer this model at scale read our article on subscriber share.
The only exception to the 50% allocation is for Enterprise subscriptions where we assign a share of 25% of net revenue to Authors. This takes into account the costs associated with growing the Enterprise business, as compared to regular self-serve subscriptions. Read more below.
Elements plan types
Our customers on Elements have the option of different plan types. The most common is our Individual plan. You can learn more about our offering and pricing on the Elements pricing page but here is a brief overview:
- Individual plan: our most commonly purchased subscription, for single users only
- Student plan: the same product as the individual plan, at a reduced price for students
- Teams plan: the same product as the individual plan, but suitable for teams of 2-5
- Enterprise plan: a custom plan suitable for organizations, agencies and teams of six or more. Typically, these plans include custom licensing and tailored indemnification, otherwise it’s the same product offering as individual.
How "subscriber share" works across our different plans
With subscriber share, your earnings as an Author are directly linked to the money collected from each individual subscriber.
For single seat subscriptions, we look at each subscriber in turn and assign you a share of 50% of their net revenue based on how important your items were to them (i.e your share of all item points they used in that period).
For our multi-seat subscriptions (the Teams and Enterprise plans) calculation of usage is based on individual seats within the subscription as opposed to the whole subscription, effective from 1st January, 2024 earnings. As with the original intention of the Subscriber Share model, this ensures that revenue from users is shared based on how important the Author’s items are to that individual user.
The actual revenue share for multi-seat subscriptions differs between Teams and Enterprise plans:
- For Teams plans, we assign a share of 50% of net revenue to Authors (i.e. the same share as our Individual seat subscriptions)
- For Enterprise plans, we assign a share of 25% of net revenue to Authors. This takes into account the costs associated with growing the Enterprise business, as compared to our regular self-serve subscriptions. These costs include increased indemnification and dedicated sales, support and account management.
To illustrate how this works for a multi-seat subscription, using the Teams plan as an example, let’s say there was 1 team subscription with 5 seats. Of the 5 seats in the team subscription, 4 are active and 1 does not download. Therefore only ⅘ of the total subscription is distributed between Envato and the Author. And 50% of that amount is then available for sharing with Authors. See the diagram below:
The 'undistributed' funds from inactive subscribers, are invested in continuing to attract, retain, and grow even more subscribers. These investments will help to secure a strong future for Elements and ultimately benefit Authors by increasing the overall amount and flow of future earnings.
Note: We’ve chosen a round number of $100 for the total subscription price for illustrative purposes. Note also, that ‘shareable revenue’ is the revenue after adjustment fees. See more detail on this below.
How is the Author revenue split?
To help show how the share is broken into downloads and using item points, let's look at a few simple examples using individual-seat subscriptions for simplicity.
Example 1: An Individual Subscriber
For example, let’s say there was only one subscriber, they generate revenue (excluding transactional taxes) of $29 for the month and download items worth a total of 20 item points. The amount available for sharing with the Authors of those items is 50% x $29 = $14.50.
Now imagine that one of the items they used is worth 3 item points. Your items make up 3 points out of the total 20 points used, so you earn 3/20 x $14.50 = $2.18 from that one subscriber for the month.
Example 2: Multiple Individual Subscribers
Now let’s expand that example to say 4 subscribers, each with their own usage patterns:
- Subscriber A is the person in the first example
- Subscriber B is a heavier user overall and uses 3 points worth of your items
- Subscriber C only downloaded your items and none from anyone else.
- Subscriber D didn’t actually use any of your items at all
The amount you would earn from each subscriber in this example is shown below.
This example demonstrates a few important things about subscriber share:
- The more subscribers who use your items, the more you earn.
- The greater your share of a subscriber’s usage, the more you earn.
- If a subscriber uses some items but not yours, you don’t share in their net revenue.
- If a subscriber solely uses your items, you get all of their net revenue.
Please note: The above examples are purely illustrative, and your earnings will, of course, vary depending on the number of subscribers, how much net revenue they generate, and which specific items they use in a given month.
What is the effect of subscriber share on Author earnings?
The total amount paid out to Authors is 50% of net revenue for Individual seat subscriptions and Team subscriptions and 25% of net revenue for Enterprise Subscriptions. Subscriber share simply affects how Authors earnings are allocated among individual Authors.
We chose subscriber share for Envato Elements because we believe it's the fairest possible way to divide earnings.
Collectively, the above incentives have huge implications for how the Envato Elements content library will evolve over time: it’s not about everyone chasing the big “hits” or "blockbusters", but instead, each Author is rewarded for creating unique, diverse, & valuable content that attracts and retains subscribers.
Net Revenue
Net revenue is defined as:
Gross revenue from subscriptions minus taxes (including VAT, GST and other transactional taxes paid by us or the buyer), refunds, reversals, affiliate costs, costs we incur in relation to services offered as part of the Envato Elements subscription (including, without limitation, amounts we agree to pay to third party service providers and other costs we incur in making those services available to subscribers), costs we incur in commissioning or directly licensing content for Envato Elements from non-Authors, discounts and promotional offers, and payment processing fees.
For revenue share calculations, we adjust the subscription revenue received from each subscriber by a set percentage (%) to factor in the overall cost for refunds, chargebacks, affiliate fees, tuts creation, coupons and payment processing fees compared to overall gross revenue. This percentage is reviewed periodically.
Here’s an example to illustrate:
- A subscriber generates $49 gross revenue in a month (excluding transactional taxes),
- The cost of refunds and chargebacks in aggregate across all subscribers was 1% of gross revenue,
- The tuts creation, coupons and affiliate commissions was 4%,
Then net revenue from that subscriber would be $49 x (100% - 1% - 4%) = $49 x 95% = $46.55. We then allocate 50% of this net revenue to Authors using subscriber share.