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Got MOOC?: Online Open-Enrollment Courses a Potential Cash Cow for Investors

Got MOOC?: Online Open-Enrollment Courses a Potential Cash Cow for Investors

By: Louis Conrad on September 20, 2012
 

MOOC: The acronym is everywhere. On The Chronicle of Higher Education, on HigherEdJobs.com, in The New York Times. MOOC, MOOC, MOOC. You can't get away from it!

But what is a MOOC, and what should you know about them? MOOCs are massive, open online courses. Companies like Coursera and Udacity host them. And if you should know anything about them, you should know that they have taken center stage.

Why all the attention? Well, MOOC companies have made it clear that they intend to change the face of higher education. The future is online, they say, and students want an affordable, accessible educational product. So the media has taken notice, as have many others.

What are the MOOC companies? Though not quite legion, there are thousands of them. Among them include the following big players:

  1. edX - A nonprofit effort run by MIT, Harvard, and Berkeley. The leaders of this company say they want to build their business slowly. In fact, it's not quite a business; edX gives away its software platform that anyone can use it to run a MOOC.
  2. Coursera - Unlike edX, Coursera peddles knowledge for cash. The company model is to sign contracts with colleges that agree to use the platform to stage free courses. Coursera gets a percentage of any revenue.
  3. Udacity - This is another for-profit company, which works with individual professors rather than institutions. It intends to offer only computer science related courses.
  4. Khan Academy - This service hosts thousand of YouTube videos. It does not provide content from universities, but it does offer practice exercises. It's content is directed at secondary education students and is mostly computer science--based.
  5. Udemy - Anyone can set up a course with Udemy. Instructors charge a small fee, which they then split with the company. Many of Udemy's instructors have no university affiliation.

All these companies have great visions for shaking up higher education. But what's the business plan? For many universities, it seems like there isn't one. Some propose that universities use these companies to screen applicants. Students would test their mettle in the MOOCs before moving on to their main course of study. This would work especially well for elite institutions, which always seem to be on the lookout for the perfect student. Such an admissions procedure would bypass the more traditional admissions process, which is rife with potential for cheating. But when you're talking talent scouting on a global scale. When Stanford hosted a course that attracted 160,000 students, over 1,000 of those students had perfect to near-perfect scores on homework and tests.

Another option: Using the MOOCs as a way for students to pursue a course of study at an elite institution before moving on to a traditional university to finish their degrees.

A simpler way to monetize the MOOC experience would be to follow the iTunes model and charge $1.99 a course. With hundreds of thousands of people signing up, universities would rake in the dough in no time. Such is the option suggested by some pundits. Others believe traditional universities should serve as clearing houses for the coursework completed by MOOC participants. They would charge a fee for assessing the students' course of study and offering a degree should the appropriate requirements be satisfied. So you could take courses via a MOOC from a number of elite universities and then go onto to get your bachelor's degree from a more traditional university.

All this is speculation, however. Even the MOOC companies don't know how they will make money. Coursera, in their contract they offer universities, outline eight potential business models, including having company sposor courses. Yup, that means advertising. Coursera's approach is typical for Silicon Valley start-ups, which usually hew to the philosophy of starting fast and then worrying about making money later.

If money does come in, then universities will receive 6 to 15 percent of the revenue, depending on how long they offer the course. Coursera claims no intellectual property rights to the courses. But what about professors, shouldn't they get a piece of the pie? Seems only fair. But, once again, companies have yet to figure out how that's going to happen.

MOOCs are still new on the scene. What will happen, and how they will make money, is anybody's guess. But one thing is sure: They have attracted the public's attention.

 
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