Income from MOOCs
EUA has published its second Occasional Paper on the topic of Massive Open Online Courses (MOOCs).
Authored by Michael Gaebel, Director of the Higher Education Policy Unit at EUA, it also looks in detail at a number of issues related to the development of MOOCs that are directly relevant for universities.
The full paper can be downloaded here.
Income from MOOCs
Obviously, the MOOC companies have to cover costs, and finally, if for-profit, generate revenue. One possibility to generate income is “crowd-funding”, an approach used by Udemy which charges fees under US$100 for its courses. In case the course would attract a large number of learners, this could be attractive to the lecturers, as they would receive 70% of the income.
Certification fees are frequently mentioned as the potential income source. Some institutions and providers started to certify the completion of courses for a moderate fee. But unless large numbers of learners decide to take a certificate, this would hardly become an income source. At the time, Coursera’s fee was around US$50, but it also offered fee waivers, for those who could not afford it.
For a growing number of courses Coursera is now offering a fee-based “signature track”, which awards certificates. This requires learners to undergo biometric identification verification (via photo ID and unique typing pattern) right at the beginning of the course. Coursera emphasises that the certification is a pass validation offered by the institution and Coursera, and not a credit award.64 Coursera continues to offer the course for free.
The Universidad Nacional de Educación a Distancia in Spain offers under “UNED Abierta” (Open UNED) a broad range of validation options for its MOOCs, starting with a participation certificate for €15, whereas certificates which award ECTS require an exam and come at a slightly higher cost. Testing and certification of MOOC participants, who for individual courses remain low in number and disseminated widely around the globe, is also a growing domain for specialist companies, such as Proctor U and Pearson.
The latter is cooperating with edX. An edX representative announced recently the “post-MOOC” area, as its members start experimenting with SPOCs – small private online courses with fixed enrolments.66 A contested issue is still whether credits and degrees can or should be awarded via MOOCs, and what would be the implications. In this regards a MOOC Masters of Georgia Institute of Technology is awaited with a lot of suspense. The issue is not so much the feasibility – the open universities have offered credit and degree-earning online courses for many years – but whether this course will meet demand and render economic benefit. Universities – in particular in the US – are under growing pressure to secure and diversify income streams. And Georgia Tech is not the only institution that considers a digital learning offer that would either lower costs, or generate additional income. Transforming its OpenCourseWare website into a pay-per-view e-learning application was one of the approaches that apparently the Massachusetts Institute of Technology (MIT) has considered as an additional income source in times of global financial crisis.
But even if Georgia Tech and a few other well-known institutions are to succeed – there is still some recollection of the failed attempt some time ago to make online learning profitable – this will not provide a general answer to the higher education sector of how MOOCs are to be financed and can even make revenue.
It would also not create sufficient return of investment for the big platforms. While not excluding the possibility of income from certification of participation, completion, credits and degrees, it is hard to imagine that this would be the only, or even the main income source, given the considerable investments that have been made. edX was established with a US$30 million investment from both Harvard and MIT. These costs are probably partly returned through cost contribution of the 30 participating universities (for example, it is known that Amherst College has been invited to join edX for US$2 million for a period of five years – given that edX has now around 30 partners), partly written off as investment, including reputational costs. edX and Coursera have developed different models of charging institutions for the use of platforms and services, and how to share any additional income, but while one is for-profit and the other not-for-profit, they have probably not yet developed sustainable business models.69 In September 2013 it was announced that edX and Google joined forces to launch MOOC.org in 2014 – a platform that would allow a wide range of course producers to be shared – including teachers and businesses to “make contributions to the online education space, the findings of which will be shared directly to the online education community and the Open edX platform.”
Google has launched several instruments in the area of teaching and learning, most recently a MOOC course builder. There have been comments that this is a somehow unexpected alliance, a highly exclusive not-for-profit university platform and a multinational internet operator, and it will be interesting to see what the business project is going to be. In July 2013, Coursera announced that it had raised another US$43 million in venture capital, on top of the US$22 million it banked last year. Among the participants are LearnCapital, a Silicon Valley venture firm, the World Bank’s International Finance Corporation, and also Laureate, an international operator of for-profit universities. Doug Becker from Laureate stated in an interview that he would expect MOOCs to reduce the cost of higher education by at least one third, and if they only earned 1% of that benefit, it would “still be a very nice business”.
In an interview with Forbes Magazine, the Coursera CEO Daphne Koller stated that a stock market launch might be inevitable, given the outside investments. The alternative would be selling, which she would like to avoid, as this might imply that Coursera’s goals would change.
This points once more to the question of the actual motivation for MOOCs: is it to make learning more economical, or to improve it – or both?. Download the full paper here.