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.
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.