Video Professor - Business Model

Business Model

For CD-ROM lessons, Video Professor used a continuity sales model, similar to the model for mail order book clubs. The subscription started when a customer ordered a tutorial on a subject of their choosing. This tutorial was often free except for shipping and handling. The customer then periodically received other tutorials on subjects chosen by Video Professor automatically, until the subscription was cancelled. The cost ranged from $60–$399 per tutorial. For online lessons, the same lessons are provided to the customer through streaming media. These lessons are billed on a per-month basis; access to all lessons is available for a monthly subscription fee of approximately $30.

Video Professor also used this business model in conjunction with social media gaming services such as OfferPal and SuperRewards. Users are offered in game currency if they sign up to receive a free learning CD from Video Professor. The user is told they pay nothing except a $10 shipping charge. But the fine print, on a different page from checkout, tells them they are really getting a set of CDs and will be billed $399.99 unless they return them. According to Michael Arrington, the founder of TechCrunch, Video Professor is an Internet scam.

The company has been criticized for its CD-ROM sales and advertising practice. Some complaints center on an alleged lack of clarity regarding the nature of the continuity sales model and the "free" CD-ROM. Others are based on the lack of choice the customer has in subsequent offerings. The company says that such complaints are rare, and promptly resolved. According to Video Professor it is standard policy to take 30 business days to issue a refund on any returned items.

In the state of Colorado, by business, the top 10 complaint-getters for 2009 were:

1. National Energy Rebate Fund 627
2. DirecTV 169
3. Claim Specialists, Inc. 161
4. Timeshare Rescue 124
5. GNS, Inc. 119
6. Video Professor, Inc. 112
7. At the Beach 109
8. Dazzle Smile 103
9. Dish Network 73
10. Qwest 60

By business, the top 10 complaint-getters for January and February 2010 were:

1. National Energy Rebate Fund 130
2. Dazzle Smile 87
3. At the Beach 78
4. Hort Financial Services 54
5. DirecTV 51
6. Dish Network 27
7. Corporate Acquisitions Group 22
8. Qwest 19
9. Vacation Ventures 19
10. Video Professor, Inc. 15

The company is now focusing on its Video Professor Online lesson delivery where lessons are streamed directly to the customer's computer, with the customer having temporary access to the entire learning library versus owning individual lessons. Video Professor, Inc. is currently undergoing "reorganization," and has placed most of its employees on unpaid furlough. Their phone lines are also shut down. Consequently, existing customers are unable to contact the company for refunds, cancellations, technical support, or customer service. Despite knowing the company’s demise was imminent. Video Professor continued to accumulate debt with advertising and marketing companies. This as well as other unethical business practices has the company’s management under heavy scrutiny and criticism. Video Professor has also lost its rating with the Better Business Bureau

In 2009, Video Professor tried and apparently failed to raise $10 million in cash. Despite its omnipresent cable television commercials in recent years, Video Professor's sales went from $140 million in 2006 to less than 1/3 that two years later.

In May 2010, Video Professor apparently closed its doors, possibly for good. No one is responding to customers' calls, emails or letters, and neither the company nor John Scherer has acknowledged or responded to at least one recently filed lawsuit challenging the way in which they market their products through television advertising. Lawyers who have previously have represented Video Professor in court have not responded to recent inquiries. John Scherer's Denver area home is up for sale, and he has not blogged on his own blog or Video Professor's blog, or tweeted through his "VidProf" Twitter account, since late April 2010.

The company's corporate headquarters in Lakewood, Colorado are also for sale at a price of $2.875 million. This is exactly $1 million more than the company's purchase price of the building in 2002. According the company website at www.videoprofessor.com, Video Professor is now owned in part or full by Falan Funding Corporation which is based in Scottsdale, AZ. It appears that customers who didn't receive refunds prior to the ownership change will lose their money and not be refunded.

John W. Scherer, former CEO of Video Professor has just launched a new website promoting himself as a public speaker and as talent for commercials. Video Professor itself no longer uses Scherer's image in its own online advertising, although it did for a few months after the company's assets were sold in early 2010.

Scherer's Denver mansion is also up for sale for just under $3 million.

Video Professor, Inc. has changed its name to Content Distributing, Inc. and filed for bankruptcy in Colorado Dist. Bankruptcy Court (Case No. 10-34729 MER).

The holding company Falan Funding is owned by Robert Elliott Alpert. The Arizona corporation File Number for Falan Funding is F-1459848-0.