“You never give me your money.”

25 03 2014

When is a business not a business? When it’s in the edtech business! How do I know? This quote from the new Coursera CEO, former Yale President Richard Levin talking to the Chronicle is typical of a whole genre of similar sentiments:

The company has disbursed some payments to its university partners from revenue generated by its Signature Track program, which offers “verified” certificates to MOOC students in exchange for fees. But so far, the returns for Coursera’s partners have been largely intangible.

Mr. Levin said he was not too worried about that. “Intangible returns are, in fact, the kinds of returns that we, at universities, are in the business to provide,” he told The Chronicle.

[Emphasis added]

Yet if you read all the business-oriented coverage of Levin’s hiring, you’d see them discuss very little else besides the possibility of Coursera’s tangible returns. Here’s Anya Kamenetz (of all people) hassling them because students never give them their money:

The money problem is a big one. Coursera’s growth so far has been funded by investment. They have been experimenting with different ways to attract revenue. Advertising, the most obvious choice, would likely be off-putting to students and university partners. At the end of 2012, Coursera announced a recruitment service, where employers would pay for access to users. But this didn’t get much traction.

A little over a year ago, they introduced a ”Signature Track,” which provides learners verification of their identity and course completion for a fee. Nine months later they announced $1 million in revenue from Signature Track. But that compares to $85 million in investment that the company has already taken on, from venture capitalists who expect large returns. It also translates into a 4/10 of one percent adoption rate, with just 25,000 of 7 million users opting to pay. Successful “freemium” companies, which offer some services for free and others for pay, typically have 2 to 4 percent paying users–five to ten times more than Coursera is reporting. In order to be sustainable, Coursera needs a lot more paying customers.

But wait!!! I thought Coursera’s mission was to bring education to the people who couldn’t afford it? Remember all those geniuses in lesser-developed countries? That argument is for TED talks and the New York Times. Can you imagine if Coursera’s VCs complained that the company never gave them its money and Richard Levin told them that they should be satisfied with “intangible returns?” Since the Chronicle told us that he’s being compensated with an ownership stake in the company, I think that scenario is by definition impossible.

Then there’s the question of paying students in developed countries. Here’s Ray Schroeder in the WSJ talking about other potential revenue streams:

“Coursera has huge potential,” Mr. Schroeder said. “The roadblock has always been accreditation.”

He estimates that with accreditation the company could charge in the neighborhood of $300 for a course and still undercut the cost of most other accredited courses by several hundred or even several thousand dollars.

I hate to point out the obvious, but charge $300 a course and Coursera’s initial sign up numbers are going to plummet. Their MOOCs would also cease to be actual MOOCs. Take out the massive and take out the open and you’re left with online courses, or OCs. If they’re automated, they won’t be particularly good online courses either.

While I’ve been picking on the stupidity of the phrase “intangible returns,” I should also note how stupid it is to suggest that universities are simply in the business of providing them too. It’s the determination of the modern university administrator to run their institutions like businesses that have already made so many online courses unrelentingly awful. In other words, Levin isn’t just fibbing on behalf of his new company. He’s fibbing on behalf of his new company’s clients too.

When all is said and done then, ed tech businesses are in fact businesses. It’s just that edtech businesses are less honest about it than those in other industries.

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11 responses

25 03 2014
Pat Lockley

logic for me is that Coursera ends up as Amazon – you have a shop there and sell through it, and it takes a cut. It has just about enough users to support it

25 03 2014
Jason Fossella

but who would have the shops?

profs? if they’re already employed at a U, I’m pretty sure their employer would have some choice things to say about moonlighting for a competitor.

Universities? why, when they can already sell under their own brand?

unemployed PhDs? this is a maybe, but who would want to take a course from a PhD who wasn’t good enough to get a job at all, not even at Central State Junior Community College?

25 03 2014
Mark R. Cheathem

I agree with your larger points about the Amazon model, but just because a Ph.D. is unemployed doesn’t mean they aren’t “good enough to get a job.” Lots of factors determine academic employment.

26 03 2014
Jason Fossella

maybe. but we’re not describing the nuances of academic employment. we’re trying to describe a situation under which Coursera could make money. would you pay for a course offered by an unemployed PhD? who probably isn’t publishing, since he has no access to resources, who isn’t being supervised in the classroom, and whose course isn’t accredited? a PhD teaching outside a university isn’t a professor, he’s a ronin.

26 03 2014
Pat Lockley

it’d be interesting to see a study of who are the named staff on coursera pages. I’ve done one MOOC with a PHD as an instructor.

A lot of my degree (software engineering) was taught by people without PHDs (maybe half) and it was from a top 5 UK uni.

25 03 2014
patlockley (@patlockley)

Lots of profs write books for other University Presses – which is almost moonlighting, but I’d also imagine a MOOC alongside a book launch would work

Why would unis sell using another brand? Well you don’t buy coke from a coke shop. Amazon shops have brands, just not as prominently, and for a smaller uni, having access to a MOOC platform’s user base to market too makes sense. The state unis don’t really have a brand if you’re talking new markets for them and a MOOC is a lot cheaper than an overseas campus.

I’d imagine Unis would pay an amount to use Coursera as an external LMS platform on a course by course basis.

I think the other revenue models will never happen, not till accreditation

And whether there is enough time / funding left, I doubt it, but then google will buy it anyways

25 03 2014
dkernohan

…but Amazon makes money!

25 03 2014
30 03 2014
Eli Rabett

The key is the accreditation. What you can look for is Coursera and the rest forming their own accrediting agency.

31 03 2014
Successful parasites never kill their hosts. | More or Less Bunk

[…] Daphne Koller said this to Marketplace last week after hiring ex-Yale President Richard Levin as CEO. My immediate response was, “Who ever said Coursera wanted to put universities out of […]

1 07 2014
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[…] of the vast majority of faculty. For all of their rhetoric about democratizing education and saving the world, venture capitalists are interested in making money and/or exercising power, the cost to faculty be […]

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