After years of panning for gold in video streams, MOOCs may have finally hit pay dirt.<\/p>\n
From the very first, when tens of thousands came out of nowhere\u2014like monarch butterflies migrating in the fall\u2014to enroll in free online university classes, the big question marks hanging over massive open online courses \u00a0was how can they survive without making money and will free MOOCs last?<\/p>\n
Launched with piles of cash, top MOOC providers [Coursera](https:\/\/www.coursera.org\/) and [edX](http:\/\/www.edx.org\/) just ploughed ahead, inexplicably delivering free classes to millions of people without knowing where the money was going to come from. Company techies, who had figured out how to stream classes worldwide, were way ahead of C-suite executives who were still scratching their heads about how to extract cash from millions of online learners.<\/p>\n
One [cynical blogger joked](http:\/\/www.creativitypost.com\/education\/monetizing_moc) that giving away your product is not a very effective business model. It \u201cdoes not, in general, result in much income.\u201d\u00a0<\/p>\n
[Writing in _Fortune_](http:\/\/archive.fortune.com\/magazines\/fortune\/fortune_archive\/2000\/02\/21\/273860\/index.htm) during the dot-com boom, financial tech observer Erick Schonfeld recognized that what internet-based company CEOs \u201ccrave above all else is eyeballs\u2026eyeballs mean customers.\u201d But focusing on eyeballs alone, he cautioned, makes it hard to grasp the real business question: \u201cIs there a chance they will ever turn a profit?\u201d\u00a0<\/p>\n
To everyone\u2019s jaw-dropping surprise, by the end of last year, MOOCs had attracted [58 million learners](https:\/\/www.class-central.com\/report\/mooc-stats-2016\/), representing a colossal number of eyeballs.<\/p>\n
After filling its war chest with $145 million following three rounds of venture funding, the biggest MOOC provider, Coursera, kept hunting for the right strategy to make its vigilant investors happy\u2014that is, turn a profit and pay handsome dividends. For edX, the nonprofit MIT-Harvard joint venture financed with a combined $60 million investment from\u00a0sustainability\u2014not profit\u2014is the name of the game.<\/p>\n
After five years of looking for the right formula, both seem to have uncovered how to turn all those eyeballs into cash, a weird 21st century alchemy. Meanwhile, Udacity, the third big MOOC company, took another path to generate revenue, offering \u201cNanodegrees,\u201d a neologism, representing a group of career-focused, non-credit courses in such hot new fields as self-driving cars.<\/p>\n
Long before they hit on the right money-making scheme, Coursera and edX had set the stage for big things by successfully recruiting many of the world\u2019s top universities to join them. Their stunning success laid the foundation for everything that has followed.<\/p>\n
It was a staggering achievement to have been able to entice, not only some of the most noted, but also among the most conservative, risk-averse institutions to share their formidable brands with these upstarts. It was an especially _Odd Couple_ arrangement\u2014MOOCs, after all, are online courses, commonly dismissed by most selective universities as an inferior form of education. \u00a0But\u00a0Yale, \u00c9cole Normale Sup\u00e9rieure and Peking University, together with more than 700 other of the world\u2019s elite universities, signed on.<\/p>\n
**The Sweet Recipe**<\/p>\n
Three key ingredients account for transforming MOOCs into potential money-making machines. Here is their sweet-spot recipe:<\/p>\n
**Step 1:** Convert your random catalog of disaggregated courses, across nearly all of scholarship, into distinct bundles of connected classes in targeted fields, say, cyber security or machine learning. It\u2019s particularly sweet if they happen to be in appealing STEM or business fields.<\/p>\n
**Step 2:** Make sure your bundles carry college credit, and brand them with gravitas, with such seductive titles as \u201cMicroMasters.\u201d Best of all, offer full or partial degree programs.<\/p>\n
In an interview, edX CEO Anant Agarwal acknowledged, \u201cCredit is the gold coin of education today.\u201d MOOC credit bundles can often be stacked like Legos, giving students the flexibility of going just far enough to earn a partial degree; but if they wish, go on to earn a full degree.<\/p>\n
**Step 3:** Hang a steep, discounted tuition price tag on your credit-bearing bundles. All the while, add millions of new learners each year by continuing to deliver free courses, admittedly, without the new bells and whistles offered to your paying customers. MOOC providers say they mostly split revenue with their academic partners, 50-50, but also negotiate separate deals with certain schools, often 60-40.<\/p>\n
Once they got the ingredients right, it didn\u2019t take long for an expanding menu of delicious new for-credit bundles at discounted tuition to come tumbling out of MOOC kitchens. When I looked at the edX site recently, it listed 16 MicroMasters; but because things were moving so fast, the company\u2019s website team didn\u2019t have time to update its offerings. Practically overnight, edX now offers 35 from premier schools\u2014MIT, Columbia and Michigan, among a dozen or so others in the U.S. and elsewhere.<\/p>\n
MicroMasters \u00a0give students who pass five graduate-level MOOC courses, plus a proctored final exam, the chance to apply for an accelerated, on-campus masters that is about a third less expensive than the on-campus equivalent. At MIT, a student who completes the master\u2019s entirely on campus pays $67,000; someone who earns a MicroMasters and then caps it off with the residential program pays just $45,000.<\/p>\n
At Coursera, its MOOC ovens were also working overtime. Just two weeks ago, in addition to its existing partnership with the University of Illinois\u2014a joint venture in an iMBA and its recently announced Master\u2019s in Computer Science in Data Science\u2014it launched a new iMSA, a Master\u2019s in Accounting, also at Illinois, plus a new Master\u2019s in Innovation and Entrepreneurship with the \u0116cole des Hautes \u0116tudes Commerciales (HES) in Paris, one of the top business schools in the world and Coursera\u2019s first degree with an international partner.<\/p>\n
Coursera CEO Rick Levin, who moved to the company after serving as President of Yale, said that students can now \u201cget a great education at a fraction of the cost\u201d of earning degrees on campus. For example, at the University of Illinois, tuition for the residential Executive MBA is $97,000.\u00a0But Illinois’ MOOC iMBA\u00a0is a bargain basement $22,000.<\/p>\n
In a [recent post](http:\/\/spectrum.ieee.org\/tech-talk\/at-work\/education\/can-moocs-cure-the-tuition-epidemic), I commented on how MOOCs might help contain the academic tuition spiral.\u00a0edX, too, is in the degree-granting business, with two new master\u2019s just launched with GeorgiaTech.<\/p>\n
Five years into MOOCs, neither Coursera nor edX are in the black, but by stirring the three key ingredients\u2014bundling, credit and discounted tuition\u2014there\u2019s a good chance that their trajectory is now set, moving from pin money to real money.<\/p>\n
Steward Brand, who founded the _Whole Earth Catalog_ in the 1960s, is said to have originated the slogan [\u201cInformation wants to be free,\u201d](http:\/\/fortune.com\/2009\/07\/20\/information-wants-to-be-free-and-expensive\/) an idea that eventually sparked the open-source movement, a near cousin of the first \u201cO\u201d in MOOCs that stands for “open\u201d\u2014 or free. For the millions who benefited from the generosity of free MOOCs, which happily still continues, it\u2019s poignant to see some of the\u00a0optimism of those early heady days succumb to the hegemony of the marketplace.<\/p>\n
\u201cOn the one hand information wants to be expensive, because it’s so valuable,\u201d Brand declared. \u201cThe right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.\u201d<\/p>\n
Original URL: https:\/\/www.insidehighered.com\/digital-learning\/views\/2017\/04\/12\/three-steps-making-moocs-money-makers<\/p>\n","protected":false},"excerpt":{"rendered":"
After years of panning for gold in video streams, MOOCs may have finally hit pay dirt. From the very first, when tens of thousands came out of nowhere\u2014like monarch butterflies migrating in the fall\u2014to enroll in free online university classes, the big question marks hanging over massive open online courses \u00a0was how can they survive … Continue reading MOOCs Find Their Sweet Spot<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":665,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-666","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/bobubell.com\/index.php?rest_route=\/wp\/v2\/posts\/666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bobubell.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bobubell.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bobubell.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bobubell.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=666"}],"version-history":[{"count":0,"href":"https:\/\/bobubell.com\/index.php?rest_route=\/wp\/v2\/posts\/666\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bobubell.com\/index.php?rest_route=\/wp\/v2\/media\/665"}],"wp:attachment":[{"href":"https:\/\/bobubell.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bobubell.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bobubell.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}