What The e-Traffic Will Bear: Making Online Ed Pay the Freight


January 15, 2013 by John Douglas Belshaw


Lately I’ve been doing a good deal of reading and research around online learning. What interests me most about the emergence of MOOCs (Massive Open Online Courses), Coursera, hybrids and mixed modes, and all the other electronic flowers in the educational garden is this: what’s the business model?

Most BC and Alberta institutions do not seem to charge a differential (that is, higher) fee rate for online courses. And MOOCs are famously free.  Online is not a money-maker, not even when there’s a fee. But when there’s no fee, how do universities propose to cover their costs?  

There seem to be five principal answers to this question. 

First, they don’t and they can’t and some Californian universities are in deep because they’ve spent a ton of money on this and no one seems to be able to justify it in an era of declining revenues, increasing indebtedness, and rising rates of crankiness in the sector in the USA. Having said that, each of the three big operators – Coursera, edX, and Udacity – have all raised money up front, so they have something of a cushion. 

From the beginning of the Open Ed movement there was a focus on outcomes. Coursera proposes to charge $30-$80 per course certificate, a kind of completion tax.  That’s not a lot but the scale involved is huge, so even if only a fifth of enrolled students complete and look for a certificate, there’s a possibility that considerable amounts of money will change hands.  Drawback: MOOCs will have to get bigger and bigger as this is a quantity-based equation.  Massification is the verb du jour.

Second option: some are hoping that Prior Learning Assessment or some similar instrument will be the point of payment.  Prior Learning Assessment Review (PLAR) is, essentially, after-the-fact evaluation of what you’ve learned and it can be billable.  Under this model, students do some free Online Ed, then pass their records along to the PLARing agency, convert the brass into gold and then carry on in a more conventional program. In British Columbia, it is the Open Learning Division of Thompson Rivers University that conducts the most systematic PLARs – as it should, given its foundational commitment to ‘Open-ness’. The TRU-OL process will assign a credit value to a wide variety of non-credit educational (and other) experiences.  But there’s a real difference between being able to say, “I took workplace safety training on three occasions, there were people from HR present who can attest to the fact, and I have a ‘participant’ document as well,” and “I logged on to edX, ploughed through the material, didn’t write anything, no exam….”  Who can verify that any learning took place?  This won’t be a problem in every case but it will in some. 

Third, there’s ‘finders fees,’ the model most often associated with Udacity. Employers who are looking for the best students to hire will pay the online educator for the blue-ribbon list.  In other words, in this model, the boss pays tuition to the educator retroactively.  This is too much of an honour system to last any longer than it takes for a smart student to figure out a work-around. And, whatever its merits for application-designing techies in Silicon Valley, it certainly won’t get traction among potential employers of copy-editing English Lit grads. 

Fourth, there’s the peripherals or what I like to call ‘stealth economics.’ Whenever you buy electronics it comes bundled up cozy in StyrofoamTM.  Forget about the market in silicon chips – think of the mark-up on a block of StyrofoamTM!  That’s where the real profit is being made.  There and in the sale of electricity. It’s like the auto industry: the big money is in gasoline and parts.  Education commentator Steve Kolowich has suggested that MOOC providers would reward great students with opportunities to attend – for a fee – TedX-style lectures/events/conferences. For a fee.  Perhaps access to libraries (online or otherwise), fees for institutional apps, will be another source of revenue. 


Fifth and finally, there’s the possibility that the business model is simply that of a loss leader. UBC has joined the elite Coursera community, what the president of Ohio State has called, approvingly, the “College of Cardinals.” Reading the post-secondary tea leaves recently, the UBC’s Associate Provost responsible for academic innovation, Hugh Brock, said “the moment students worldwide decide that an online degree from a top university like UBC has more prestige than a degree at their local university, we are in a different world, and weaker universities will disappear.” 

This Kruschevian pronouncement might be more closely examined one day under the lens of anti-trust legislation but, for now, it offers some insight into how MOOCs might succeed. If competition between post-secondaries (of which we have many) is significantly streamlined, then those institutions with the strongest brand and the longest reach will – in an Online Ed world – be in a position to pull further into the lead.


One thought on “What The e-Traffic Will Bear: Making Online Ed Pay the Freight

  1. Jim Pl says:

    Hi John. This piece is thoughtful and informative. Thanks. -jP

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