Is there a business model for MOOCs? Report from #emoocs2014

emoocs 2014 panel

Panel discussion at #emoocs2014 with MOOCs providers

 

MOOCs have just appeared and the big question has already been raised: are they sustainable? In other words, are they pedagogically adequate, institutionally relevant and financially viable?

 

MOOCs are rupturing the norms of how we have taught and learned until now. They enable a fresh approach to continuing education. They demonstrate the irrelevance of existing quality standards. They demand a new approach to certification…

 

One of the questions that comes up again and again refers to the business model. What is the business model for MOOCs? How much do they cost? What are the revenues? Simple questions but difficult to answer.

 

The cost of offering a MOOC

 

I participated in a panel that gathered representatives from edX, Coursera and FutureLearn: three “platforms” delivering MOOCs and creating partnerships with some of the world’s leading universities. A startup like Coursera, a non-profit organization like edX or a private spin-off like FutureLearn created by a public university won’t face the same financial constraints nor share the same financial goals.

 

Costs of production of MOOCs are largely underestimated; a minimum of 30.000 Euros per MOOC seems to be the lowest acceptable figure. Looking at the number of MOOCs produced in Europe in the last few years, this would mean that over 15 million Euros have been invested in MOOCS. It’s hard to believe unless you consider that most of the costs to produce MOOCs are hidden. Unfortunately, you don’t create a sustainable business with hidden costs.

 

Aware of the costs, such as the design and production costs that are likely to increase to match the learners’ growing expectations, the main platforms are looking for a win-win situation where they and their partner universities can recoup their investments. We are just talking about breaking even at this stage with no clear perspectives, except for edX who has announced that they expect to break even at the end of next year.

 

Why MOOCs need a model

 

Ideally, a MOOC business model would benefit from a higher completion rate (more students follow the course to the end), from a wider audience not covered by the traditional higher education institutions (continuing education,) and from lower maintenance costs as the platforms go to scale.

 

However, things also have to change on the revenue side. A free course is… free. So how do you make enough money to at least cover your costs? It depends on who “you” represents. There is no one single MOOCs business model. There is one for delivery platforms and another for universities. As in the publishing business, there is a model for the distributor and one for the publisher.

 

Potential business models

 

We discussed “B2C” and “B2B” models.

 

The B2C model is based on certification; students must pay (35 Euros for instance) to get their attendance certified. The more you raise the value of the MOOCs certification for future employability, the more revenues you will get. It is not clear though who will benefit from these revenues: the platforms or the universities or both. But the B2C approach shows that MOOCs are opening up new type of activities. Certification is one and there will be others like tutoring for instance.

 

The B2B approach is based on public-private partnerships; having ministries, NGOs or companies pay for MOOCs for different purposes. A large multinational with tens of thousands of employees will certainly consider a MOOC for corporate training, but in that case, is it still a MOOC? Universities and industries could collaborate to create the contents of a MOOC that will better focus on the skills required for future employability. But MOOCs must demonstrate that they are capable of training people for the job market. Large corporations could decide to “sponsor” MOOCs as part of their corporate social responsibility strategy, but is it compatible with the universities’ ethical code?

 

The bigger picture

 

All in all, the question of MOOCs’ business model is an iceberg.  Just a small part is emerging right now and we all focus on the distribution side. Yet MOOCs are more than distributing courses. They are also about:

 

  • Teaching students
  • Producing rich media content
  • Analyzing data
  • Managing a community of learners
  • Issuing certification

 

Each of these items has their own modus operandi and many new actors are emerging. When you look at the attendance at the EMOOCs 2014 summit, you realize the contribution MOOCs are making to innovation in education: they made it possible to think of education as a place where entrepreneurs and investors can bring new ideas and resources. Unthinkable a few years ago!

 

The first applications we received for the Open Education Challenge are confirming this trend. Many applicants are working on the creation of on-line courses and delivery platforms, services linked to employers, etc. The MOOCs story is already being revisited by entrepreneurs, ready to change the model once again… 

Pierre-Antoine Ullmo's picture
Pierre-Antoine Ullmo

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