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Published on 2014/04/17
Is There a Sustainable MOOC Business Model?
Peter Stokes | Managing Director, Huron Consulting Group
If last year was a tough one for MOOCs and their various stakeholders — the platform companies, faculty members and sundry market cheerleaders — it can only have been a consequence of the absurd expectations for MOOCs, both as an agent of change and as a harbinger of educational doom.
Perhaps 2014 will turn out to be the Year of Thinking Sensibly.
Sebastian Thrun may have won some new admirers when he copped to Udacity having “a lousy product,” but it’s hard to see how the remark helped his own cause or that of the MOOC movement generally. Ditching the world of free education for the crowded marketplace of corporate training seems like a pretty damning judgment on free education.
Once credited with legitimizing online learning (notwithstanding the two-decade legacy of online learning that preceded them), MOOCs can now fairly be accused of delegitimizing online learning, as faculty at institutions as diverse as Harvard, Duke, Rutgers, San Jose State and others have pushed back against online learning initiatives of one stripe or another. Perhaps the bad publicity MOOCs garnered in 2013 is having a negative impact on the view of online learning more generally. But then, maybe MOOCs are just misunderstood.
Just as quickly as the media thronged around the hypothesis that MOOCs would revolutionize higher education, they subsequently turned to the question, “MOOCs: what are they good for?” In spite of these wide swings on the pendulum of public opinion, the MOOC providers nevertheless continued to go about their business. And there does appear to be some actual business there.
A few weeks back, I participated in a panel discussion at SXSWedu called, “The Search for Margin in a MOOC World.” Is it possible to make money with MOOCs, we panelists were asked to ponder. The simple answer is, yes. ALISON, founded in 2007 and one of the less well-known MOOC providers, has had a profitable ad-driven business model up and running for some time. And, very recently, Coursera co-founder Andrew Ng reported that his firm has generated $4 million in revenue through its “signature track” offering. While that’s a modest return relative to the firm’s $85 million in venture capital funding, it’s not a bad figure for a startup that’s just two years old. Can it be a $100-million business or a billion dollar business? It will take more time to learn the answer.
Sal Khan of Khan Academy, for one, might provide some hope to those rooting for the success of these firms — by positing that another set of firms also struggling with a question mark over their futures might turn out all right: publishers. “Right now,” he recently observed in the Harvard Business Review, “there might be 100 million people using their books. They have no idea who those people are. They have no idea how they’re being used, where they’re being used, when they’re being used. If they can change that — and obviously, the way to do that is through more virtual materials than a physical paper book, especially for things like textbooks — then all of the sudden, they can have that relationship … And that relationship could be valuable.”
So, is the MOOC business model sustainable? Watch this space.
Author Perspective: Administrator
I agree with Stokes that it’s time to discuss MOOCs rationally. The pendulum has indeed been out of control, but it appears we’re nearing a level-headed discussion of the value of MOOCs. I, for one, err on the side of supporting MOOCs as a potential disruption in higher ed that, even if short-lived, has forced us to reconsider what we do and how to do it more efficiently.
It’s interesting to read about the perspective of some of these higher ed innovators. Clearly, the billions that have been invested in MOOCs, by private providers, demonstrates their belief in a solid business model for this type of course. I will definitely be watching this space in the months to come.
I don’t know if I’m quite as optimistic that MOOCs have a future in higher ed. I wonder if any of you read another piece in the EvoLLLution today about one man’s unsuccessful attempts to complete a MOOC. He details what I believe to be a common experience for MOOC takers and that, to me, signals that it’s just a fad — albeit a longer-lasting one than others.
MOOCS can best be viewed in neutral terms, neither good nor bad, but rather as a disruptive force in higher education. As such, they are pointing us toward a future in which three things are imminent: 1 higher ed will have to drive the quality of the experience up while driving costs down 2 e-learning will be a greater part of the mix and 3 innovation must spawn changes in the delivery of education where teachers interact but technology powers this in new hybrid ways.
I agree with Ron. The value of MOOCs ultimately will, on top of the things he mentioned, create a wider understanding of the value of prior learning.
I think in order to have that impact, though, they must succeed and remain successful for about a decade, until their model becomes more widespread and they have their intended impact on the market.
From that perspective, I think they need to find new marketplaces to compete in and get away from trying to compete directly with university courses. Instead, the courses should be designed in such a way that unviersities can use them to enrich their courses.
Perhaps a question to pose is whether MOOCs can be an efficient mechanism to deliver higher education to the masses? Who has interest in educating the masses? What are they willing to pay for this?
In Africa, South Africa in particular, the government is but one of the major interest parties and the honours will be with the MOOC provider to identify such entities and join hands with them. MOOCs could get funding, the same as traditional universities from such institutions as the government, but they’ll have to prove their value add by results.
They could design their courses to target societal challenging projects and this will give then credibility. Companies’ social investment departments could also be interested if the MOOC’s courses have a societal impact. Advertisers & marketers who have the course attendants as a target market could also be lured as funders.