Even MORE MOOC MOOC MOOC! Chronicle article explains the business model

And once again, here I am near the lake, checking in on my online class (which I like to think of as SO-POC– that is, a “small online partly open class” because anyone out there is welcome to visit, join the discussion, do the assignments, whatever, but I won’t grade your work or give you credit if you aren’t enrolled at EMU), and checking my email when I see this from The Chronicle of Higher Education, “Inside the Coursera Contract: How an Upstart Company Might Profit From Free Courses.”

CHE obtained a copy of the contract between Coursera and one of its partners, the University of Michigan.  Of course, even what’s here is kind of a “let’s throw stuff against the wall and see if it sticks” sort of plan/model.   To quote:

Coursera is following an approach popular among Silicon Valley start-ups: Build fast and worry about money later. Venture capitalists—and even two universities—have invested more than $22-million in the effort already. “Our VC’s keep telling us that if you build a Web site that is changing the lives of millions of people, then the money will follow,” says Daphne Koller, the company’s other co-founder, who is also a professor at Stanford.

Here’s the part of the contract that talks specifically about making money; there are eight ideas listed so far:

  • Certificates, which a student would purchase some kind of certificate or badge or whatever (presumably after completing a course, which is a different model than tuition, which is paid up-front) that isn’t actually credit but which the student post some place.  As in on their LinkedIn account, they have a “badge” that says they passed Listening to World Music.  (BTW, since that one starts in 3 days and I like world music, I might sign up).
  • Secure assessments, which is basically the same thing as certification– students would take (and pay for) some kind of test.
  • Employee recruiting.  This one is kind of interesting; basically, this would allow potential employers to “data mine” Coursera looking for successful students based not on a degree but on skills students might demonstrate through one of their courses.
  • Employee or University Screening.  I think what this means is that if I was applying for a job where my knowledge of World Music was critical, a company could use my score in the “Listening to World Music” course as a way of making a hiring decision.  It also means that if a university wanted to give an entering student a waiver for something, they might be able to use performance in that class– in other words, I wouldn’t get credit at such-and-such a university maybe, but I wouldn’t have to take a gen ed class in World Music.  Or something.

Just to stop here for a second:  it seems to me that each of these business plans depends on the rest of the business world decides that it is going to validate and/or accept MOOCs as a legitimate educational/certifying enterprise.  Given the current reliance of the corporate world for a bachelors degree as an entry point into white collar jobs, that seems like kind of a bold assumption to me.

Anyway, back to the list:

  • Human-provided or manual grading.  To quote, “Company will provide access to (paid) human tutoring, grading, or other forms of human academic support.”  I’m not sure I understand this, but I think it means that maybe students would take these courses for free but they’d pay some kind of tutor.
  • Corporate/university enterprise model.  Basically, Coursera would sell access to its courses to companies for in-house training and/or to “non-University academic institutions (e.g. community colleges)” (swear to God, that is a quote) with the goal of offering a high quality course at a lower cost than these non-University institutions.

So, let’s dwell on this for a moment.  The first idea is corporate clients would contract with Coursera for training.  This isn’t that far-fetched to me, but “training” is not the sort of thing that elite institutions do, and it certainly isn’t what’s likely to happen in that World Music course.  Rather, most businesses are looking for employee training along the lines of what’s going on lynda.com or similar sites– and by the way, those places are making money and they rely on an individual instructor/contractor model, not an elite university model.

The second idea is to sell these “quality courses” to community colleges.  First, the way this is presented in this contract is patronizing at best, but second and more important, there’s already a large enterprise doing this at community colleges and universities alike. It’s called “the textbook industry.”  Now, Coursera courses might turn out to be great, but like textbooks, they don’t teach themselves.

  • Sponsorship, which is simply running ads along the classes.  I don’t see how that makes anyone a ton of money, though that’s Google’s business model.
  • Tuition, which is basically reverting to the model that exists for higher education right now.

Two last thoughts here.  First, I am certainly not a business person and the people starting this all seem like smart cookies to me.  But I have to say this is starting to look like pets.com

Second, I think this passage from the CHE piece is spot on:

When I (meaning Jeffrey Young, the CHE writer) showed the Coursera contract to Trace A. Urdan, an analyst at Wells Fargo Securities who focuses on education-related companies, he found it “ironic” that major universities are embracing online education when they have been dismissive of earlier efforts by for-profit companies like the University of Phoenix.

“These are two of the most arrogant types of institutions—Silicon Valley companies intersecting with these elite academic programs,” he says. “Neither of them considers that anyone else has come to this place before they’ve arrived. They say, We’re here now, so now it’s sort of legitimate and for real.”

I guess time will tell if that arrogance is going to pay off.

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32 Responses to Even MORE MOOC MOOC MOOC! Chronicle article explains the business model

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