A New MOOC Business Plan

Coursera, the company that provides many massive open online courses (MOOCs) to colleges, is apparently changing its business strategy.

The way it used to work was that Coursera would offer students free, online versions of courses taught by professors at elite colleges. The students wouldn’t get academic credit from these institutions but they would potentially get the advantage of the high-quality courses. The company wasn’t really sure how to make money off of the free courses, however, and merely proposed potential revenue strategies, like corporate sponsorship or payment for certifications. Observers assumed that eventually the company would find a plan.

Apparently it has. According to an article by Steve Kolowich in the Chronicle of Higher :

The company, which has made its name by working outside higher education’s tuition-based credentialing system, announced partnerships with 10 public institutions that would extend well beyond providing support for new MOOCs.

Under the new deals, Coursera is recasting itself as a platform for credit-bearing courses that would be offered to students enrolled at multiple campuses within a public-university system.

Basically it’s moving away from the “you can take computer programing from a Stanford professor” model to the “freshmen biology at this school will only be offered online” model. It’s also moving away from free.

The company’s new partners are the State University of New York system, the Tennessee Board of Regents and the University of Tennessee systems, the University of Colorado system, the University of Houston system, the University of Kentucky, the University of Nebraska system, the University of New Mexico system, the University System of Georgia, and West Virginia University.

The way the money works, Kolowich explains, is that,

In a typical case, the company would charge the university a flat fee of $3,000 for “course development.” After that, Coursera would charge a per-student fee that would decrease as more students registered for the course. The first 500 students would cost the university $25 per student; the next 500 would cost $15 per student; the university would pay the company $8 for each student beyond that.

Payments to Coursera for use of “adopted” courses—those developed elsewhere—would be similarly tiered. Under the contract, if the university charged each student in a course the same tuition rate, it would get to keep a greater share of tuition revenue as it enrolled more students in the course.

This makes a great deal of sense from a business perspective. It doesn’t make much sense at all from an education delivery perspective. Academics have been complaining for years about college’s efforts to increase class size in order to gain more tuition dollars (without incurring greater expense) but this is something altogether new.

If the college isn’t going to actually teach a course, why is it even offering it? Is the University of Tennessee going to keep charging students $11,194 a year and then make a profit but not really teaching freshmen courses to students?

When did we decide to fully privatize the American public university system again?

As the article points out, the way these will actually be administered remains to be determined. It’s too early to know yet what strategies colleges will adopt when they soon begin offering online courses though the company.

As one commenter wrote on the Chronicle article, however:

Here it is. The beginning of the end for public universities. Taxpayer money will now begin to be syphoned away from traditional, brick & mortar state/city/community colleges (you know, the ONLY options for socio-econimic advancement for poor, working and middle-class students) with living, breathing faculty & face to face classes and into private sector online “education” until the states completely do away with public institutions altogether. (Exactly what’s been done to the prison system.) Welcome to digital feudalism.

This apocalyptic scenario won’t necessarily occur in as dramatic a fashion as the above writer describes, but it doesn’t really sound all that farfetched, does it?

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer