The changing business model for MOOCs

Yesterday I wrote a post about MOOCs and the changing role of teachers. Part of that post was a consideration of where MOOCs sat on the hype cycle. Then, soon after hitting the 'post' button, I read this Times Higher Education article, about Coursera changing its business model:

Coursera last week announced the release of dozens of new courses and course sequences, which it calls Specializations, in subjects ranging from career brand management to creative writing. But many of the new MOOCs came with a new barrier to enrollment. To sign up for Michigan State University’s How to Start Your Own Business, for example, budding entrepreneurs have to pay $79 up front for the first of five courses in the Specialization or prepay $474 for the entire program.

So, what was previously free is now becoming not so. Note that Udacity (another MOOC provider) moved to a pay model a few years ago as well. Of course, having a pay model will likely reduce the number of enrolments by students who fail to complete each course (but not entirely - many university students fail to complete courses despite much higher fees), but it also reduces the 'open' aspect of massive open online course (does that make them MOCs instead?). As might be expected, Coursera has been criticised for making MOOCs less accessible, particularly to those on low-incomes (including those in developing countries).

However, this change clearly demonstrates that the free online model wasn't sustainable. As noted in the article:

The education writer Audrey Watters called the shift “significant,” but also “inevitable.” In an email, she pointed out that Coursera has needed to develop a business model that satisfies its investors -- “although I’m not fully convinced that this move will be it,” she added.

Which suggests to me that MOOCs are approaching that 'trough of disillusionment' section of the hype cycle. The technology is failing on its initial promise, and producers are trying to find the right business model to fit. Up to now, MOOC providers have been essentially assuming that education was mostly about content provision (which MOOCs are great at). However, a substantial part of education is about signalling and credentials (I've written about signalling in education previously here), which relies on separating high-quality from low-quality students - since MOOCs are open-access (and free) and identity verification for assessments is difficult (but not impossible), MOOCs are less good at demonstrating a student's quality to employers. If employers don't recognise a MOOC certificate as signalling a high-quality employee, then it's hard to argue that it holds as much value to a student as a university qualification. In order to be a financially sustainable business though, this is a problem that MOOC providers are going to have to solve.

Read more:

• MOOCs and the changing role of teachers in higher education