The-attack-of-the-MOOCs

TheattackoftheMOOCsAnarmyofnewonlinecoursesisscaringthewitsoutoftraditionaluniversities.Butcantheyfindaviablebusinessmodel?Jul20th2013|NEWYORK|FromtheprinteditionDOTCOMmaniawasslowincomingtohighereducation,butnowithasthevenerableindustryfirmlyinitsgrip.SincethelaunchearlylastyearofUdacityandCoursera,twoSiliconValleystart-upsofferingfreeeducationthroughMOOCs,massiveopenonlinecourses,theivorytowersofacademiahavebeenshakentotheirfoundations.Universitybrandsbuiltinsomecasesovercenturieshavebeenforcedtocontemplatethepossibilitythatinformationtechnologywillrapidlymaketheirexistingbusinessmodelobsolete.Meanwhile,theMOOCshavemultipliedinnumber,resourcesandstudentrecruitment—withoutyethavingfiguredoutabusinessmodeloftheirown.Besidesprovidingonlinecoursestotheirown(generallyfee-paying)students,universitieshavefeltobligedtojointheMOOCrevolutiontoavoidbeingguillotinedbyit.Courserahasformedpartnershipswith83universitiesandcollegesaroundtheworld,includingmanyofAmerica’stop-tierinstitutions.InthissectionTheattackoftheMOOCsJointhighsBitterpillThecostdelsolDrugdealCongestiononthelineThetravelchannelsCrazydiamondsReprintsEdX,anon-profitMOOCproviderfoundedinMay2012byHarvardUniversityandtheMassachusettsInstituteofTechnologyandbackedwith$60moftheirmoney,isnowaconsortiumof28institutions,themostrecentjoinerbeingtheIndianInstituteofTechnologyinMumbai.LedbytheOpenUniversity,whichpioneereddistance-learninginthe1970s,FutureLearn,aconsortiumof21British,oneIrishandoneAustralianuniversity,plusothereducationalbodies,willstartofferingMOOCslaterthisyear.ButOxfordandCambridgeremainaloof,refusingtojoinwhataseniorOxfordfigurefearsmaybea“lemming-likerush”intoMOOCs.OnJuly10thCourserasaidithadraisedanother$43minventurecapital,ontopofthe$22mitbankedlastyear.Althoughitsenrolmentshavesoared,andnowexceed4mstudents,thisisahugeleapoffaithbyinvestorsthatthefirmcandevelopaviablebusinessmodel.ThenewmoneyshouldallowCourseratobuildonanyadvantageithasfrombeingafirstmoveramongarapidlygrowingnumberofMOOCproviders.“Itissomewhatentertainingtowatchthenumberofpeoplejumpingonboard,”saysDaphneKoller,aStanfordprofessorandco-founderofCoursera.Sheexpectsittobecomeoneofa“verysmallnumberofdominantplayers”.TheindustryhassimilarnetworkeconomicstoAmazon,eBayandGoogle,saysMsKoller,inthat“contentproducersgotowheremostconsumersare,andconsumersgotowherethemostcontentis.”SimonNelson,thechiefexecutiveofFutureLearn,disagrees.“Anyonewhothinkstherulesofengagementhavealreadybeenwrittenbytheexistingplayersismassivelyunderestimatingthepotentialofthetechnology,”hesays.Certainly,thereisplentyofexperimentationwithbusinessmodelstakingplace.TheMOOCsthemselvesmaybefree,butthosebehindthemthinktherewillbeplentyofrevenueopportunities.Courserahasstartedchargingtoprovidecertificatesforthosewhocompleteitscoursesandwantproof,perhapsforafutureemployer.Itisalsostartingtolicensecoursematerialstouniversitiesthatwanttobeefuptheirexistingoffering.However,ithasabandonedfornowattemptstohelpfirmsrecruitemployeesfromamongCoursera’sstudents,becausecateringtothedifferentneedsofeachemployerwas“notascalablemodel”,saysMsKoller.ForUdacity,incontrast,workingwithcompaniestotrainexistingandfutureemployeesisnowtheheartofitsbusinessmodel.Ithastie-upswithseveralfirms,includingGoogle.ItrecentlyformedapartnershipwithAT&T,alongwithGeorgiaTech,toofferamaster’sdegreeincomputerscience.Coursematerialswillbefree,butstudentswillpayaround$7,000fortuition.EdXistakingyetanothertack,sellingitsMOOCtechnologytouniversitieslikeStanford,bothtocreatetheirownMOOCofferingsandtomakephysicallyattendinguniversitymoreattractive,byaugmentingexistingteaching.Thislectureisbroughttoyouby…Alison,anIrishprovideroffree,mostlyvocationaleducationfoundedin2007,beforeMOOCsgottheirname,isgeneratingplentyofrevenuebysellingadvertisingonitssite.“AdspropelledradioandTV,whynoteducation?Thereisalotofmisplacedsnobberyineducationaboutadvertising,”saysMikeFeerick,Alison’sfounder.AnotherimportantcategoryofMOOCprovidersarepublishers,saysRobLytleoftheParthenonGroup,aconsultancy.HesaysfirmslikePearson(part-ownerofTheEconomist)thatruneducationalbusinessessuchastextbook-publishingmaythrivebyofferingfreeMOOCsasawaytogetpeopletobuytheirrelatedpaidcontent.Besidestheuncertaintyoverwhichbusinessmodel,ifany,willproduceprofits,thereisdisagreementoverhowbigthemarketwillbe.Someseeazero-ornegative-sumgame,inwhichcheaponlineprovidersradicallyreducethecostofhighereducationanddrivemanytraditionalinstitutionstothewall.OthersbelievethiseffectwillbedwarfedbythedramaticincreaseinaccesstohighereducationthattheMOOCswillbring.MrFeerickpredictsthatthemarketwillbecommoditised,spellingtroubleformanyinstitutions.ButAnantAgarwal,thebossofEdX,reckonstheMOOCproviderswillbemorelikeonlineairline-bookingservices,expandingthemarketbyimprovingthecustomerexperience.SebastianThrun,Udacity’sco-founder,thinkstheeffectwillbesimilarinmagnitudetowhatthecreationofcinemadidtodemandforstagedfiction:hepredictsatenfoldincreaseinthemarketforhighereducation.ScepticspointtotheMOOCs’highdrop-outrates,whic