Open online education business models

Mail F Taddéi 28/10/2012

An interesting document available online (agreement between Coursera and the University of Michigan) that provides an insight into their potential monetization strategies. Pg 40-41 are a particularly interesting read.
http://chronicle.com/article/Doc...
oe Tojek, Thinking about learning
4 votes by Olavur Ellefsen, Nicholas M. Cummings, Arpine Grigoryan, and Trey Mitchell
Two possible outcomes that I see may lead to business / revenue models are 1) discovering successful online approaches to teaching and 2) collecting large data sets around student performance in these systems.

Having participated in a number of these experiences, it is clear that they are enhancing and adapting the learning delivery and UX aspects of them as they seek optimal designs. I take http://mechanicalmooc.org/ as an example as it combines 4 of the top properties in the domain to achieve it's goals. Discovery of a truly effective and popular approach will be crucial to future business / revenue.

Given an effective approach, having a large enrollment course provides the institution with large data sets around student performance and behavior in the system around the criteria used to evaluate performance for that course. This data is extremely valuable for enhancing the performance of the course through techniques such as predictive modeling. Large enrollment courses provide these big data sets more rapidly than traditional courses in the schools and are invaluable in understanding and optimizing the performance of teaching, learning, persistence and attrition, which are critical to these institutions.
Peter Baskerville's answer to:
Online Education: Will the courses provided by organizations like Udacity, Coursera and edX remain free forever? If so, what is their business model and revenue stream?
View All 4 Answers

Peter Baskerville, Wrote an article on Open Online Learn...
49 votes by Aakash Prasad, Clément Delangue, Yusuke Kaji, (more)
An often found consequence of the 'Build first - Monetize later' mantra is that a business model and revenue stream develops in an innovative way that has not yet been discovered. This was the case with the most high profile 'Build first - Monetize later' company, Google, who developed a completely new monitorization with Adsense.

Having said that, the following extract https://www.documentcloud.org/do... sourced from the agreement between Coursera and a university, outlines 8 possible monetization strategies that these for-profit technological companies could adopt:

Certification - students pay money to receieve a certification after they have achieved competency from their free learning. (i.e. a badge or pdf document provided by a university or from a recognised badging system)
Authentic assessment - students pay money to have their learning assessed and certified at a physical testing site. i.e. assessment centers
Recruitment - companies pay money to access student course results to identify potential employees that match the company's recruitment needs.
Screening - companies and educational institutions pay money to gain access to student records to verify that a level of knowledge or expertise has been attained. This would allow access to the company's recruitment processes or ensure a university course acceptance.
Human tutoring - students pay a tutor to help them achieve the desired learning outcomes from the free courses.
Corporate learning - companies pay money to get customized courses using the free content and to access special features that help their employees gain necessary skills.
Sponsorship - sponsors pay money to have their appropriate advertising appear beside course materials. (i.e. textbook publishers)
Tuition fees - students pay tuition fees for advanced level learning (afer completing the free introductory course) or gaining specialised skills relating to high paying jobs.

Sustainability is not assured with these organisations until they can find an economic model that rewards all stakeholders and resource investors at a comparative level with other investment offers in our society. So, for the chance to make learning accessible to all and to usher in a second industrial revolution or even neo-renascence period, I offer a few more income models that I think the economic hard-heads would be happy to see included in the 'free' online education startup business models:

Freemium - Where you split the learning options along the lines of Bloom's Taxonomy and make free those courses that target "Knowledge & Understanding" learning outcomes but charge a premium for those follow-on courses that target higher cognitive skills like "Applying, Analyzing, Synthesizing, Evaluating and Creating". The cost of premium courses would have a link to improving career and income prospects for the learners so they would have a clear cost/benefit understanding of the return on the investment in their learning making the payment choice more acceptable.
Value-add - Where you separate the knowledge from worked examples and activities so you can give away all the knowledge for free but learners wanting a greater understanding of how the knowledge could be applied and to ensure that learning had taken place would need to download a paid for eBook that contained worked examples, activities and answers to the activities. The free course could mention the eBook as milestones to complete in the learning process.
Corporate Social Responsibility (CSR) sponsorship - Corporations donate money to the MOOC that helps learners attain a higher education as it equally helps the corporation to demonstrate their CSR. Corporations could set eligibility criteria for their donation that secured some increased value for the brand. i.e. only sponsoring learners from a geographic location, ethnic group, social status or industry work preference. To get the best 'bangs for bucks' with this model, course costs per learner would need to be priced low (less than $100). With the expected volumes in online learning this price can deliver a profitable model for the MOOC as well as allow the corporate brand to speak of the more emotive 'number of students educated' statistic, rather than the less impressive and objective 'money spent' one.