Friday, June 15, 2012

How Will MOOCs Make Money?

Steve Kolowich / June 11, 2012 - 3:00am

Massively open online courses, or MOOCs, do not currently lead to any widely recognized credential. Still, with more than 1.5 million people having registered for MOOCs through Coursera, Udacity and edX, the demand for the novel online offerings is undeniable.

But while demand appears to be high, none of these three organizations -- two of which are for-profit companies that will be expected to generate money for investors and the other of which is a nonprofit that will be expected to stand on its own feet eventually -- currently has a business plan.


The MOOC providers are nonetheless in strange territory. They have staked their future on a vision that makes higher education more free than ever before. And yet their task, eventually, will be to figure out how to make money. [snip].

So far the only revenue stream that the major new MOOC providers have said they will pursue is charging a fee for a certificate. [snip].

But the extent to which revenue from certificate fees can support a MOOC business remains unclear. So far only a small fraction of the students who have registered for MOOCs actually made it to the final exam -- generally between 10 and 20 percent. That means the providers would be relying on a slim sliver of their users for revenue.

But Daphne Koller, the co-founder of Coursera, argues that the scale of the courses makes it so that monetizing 20 percent of registrations potentially sustainable. [snip].

Surveys results from Coursera’s first course -- Machine Learning, last fall -- suggest that relatively few registrants, 18 percent, were looking to position themselves for better jobs. But that was before the company had started divvying out (non-credit-bearing) certificates to students who completed the course. The extent to which the credentials students earned from MOOCs end up carrying weight, in the work force or in academe, remains an open question. [snip].

One of the more provocative potential business models for MOOCs is to bypass credentialing altogether. Udacity has suggested that it might double as a headhunter for companies that might like to hire some of its more impressive students. [snip]


But Koller, the Coursera co-founder, and David Stavens, the chief operating officer at Udacity, contend that even a relatively small proportion of successful matchmaking efforts should generate enough money to fortify the companies’ bottom lines. [snip]

And because the MOOC providers not only found the students but in fact educated them, via a data-rich teaching platform, they would be able to offer employers not just résumés but a deeper set of details on the unique skills of potential hires, says Koller. [snip].


But the MOOC providers might also do well to look beyond courses and credentials to other elements of the college “package” that registrants might like purchase à la carte, says Ann Kirschner, dean of the honors college at the City University of New York.


The MOOC providers could wrap their free courses and assessment with “accompanying content and services, so that it’s not all about the courses themselves,” she says. The companies could potentially make money providing -- or outsourcing -- library resources, tutoring services, and other accouterments of collegiate academic life, says Kirschner. [snip].

If they wanted to stay within their current course-and-assessment wheelhouse, the MOOC hosts could “add layers of more robust assessment” to their courses -- a tier of feedback and human interaction that some students might be willing to pay for, says Paul LeBlanc, the president of Southern New Hampshire University, which has built its own very large national online learning enterprise out of what had been a sleepy private college in New England. This could, in turn, create an additional tier of credibility to the students who succeed in the course under that extra scrutiny ... .[snip].

There are ways MOOC providers could create a premium product around the demand for networking opportunities, says LeBlanc. Once again, they would be taking aim at their more successful, upwardly mobile users. But this time the premium offering would be not be services, but events.


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