What are their business models?
A Universities UK report (2013) provides a summary of the business models of Coursera, edX, FutureLearn and Udacity and points out some of the differences between three USA-based MOOC players and an EU-based one.
Revenue generation for investors or to sustain operations is a key motivation for the USA-based MOOC proponents. Backend services, such as design, consultancy, analytics and recruitment, are also seen as business opportunities. Exams, certificates and credentials, as well as course licensing, are also considered revenue opportunities.
The activities of FutureLearn, from the UK, are currently viewed as contributing to the service obligations of public institutions. The recruitment of international students through MOOCs is also thought to be a motive—it is a potential revenue stream, but the magnitude of this revenue stream is as yet unclear. To date, The Open University (UK) has seen an eight per cent return on its provision of free media (not all of which are MOOCs), through subsequent course registrations (Uvalić-Trumbić & Daniel, 2014). The following table provides a snapshot of the business models for four MOOC platforms, based on the Universities UK analysis (2013, pp. 8–9).
|
MOOC PROVIDER |
BUSINESS MODEL |
| Coursera (USA) | Private, for-profit start-up funded by investment from venture capital firms, with an initial estimated investment of USD 22 million. Equity investment from some university partners. Depending on the lifetime of the course, between six and 15 per cent of revenue generated by Coursera is to be shared with the university, plus 20 per cent of gross profits from all courses provided by the university. Partner institutions can use the course management system for internal courses for no charge. |
| edX (USA) | Not-for-profit enterprise owned and funded by MIT and Harvard, committing to USD 60 million investment. Contribution of technology platform by Berkeley. Additional philanthropic support, including funding from the Bill & Melinda Gates Foundation. Option of equity investment by partner institutions. Two types of arrangements: (i) cash payment of USD 250,000 for edX to put courses onto platform, with no less than 70 per cent of gross revenue; (ii) a self-service model, with shared revenue of up to 50 per cent after edX receives the first USD 50,000. Online course platform made available as open source. |
| FutureLearn (UK) | Third-party, for-profit enterprise owned and funded by The Open University. No up-front costs to institutions. Contribution in kind by partner institutions to develop courses. Revenue from exams, certificates and corporate courses is shared with partners. |
| Udacity (USA) | For-profit enterprise supported by venture capital firms. Estimated outside funding of USD 21 million. |
Business models for MOOCs vary from extensions of existing university practice to for-profit models conducted through enterprises in the private–public partnership mode. However, for universities and other public educational institutions, the lesson from MOOCs may require a complete rethink, as noted by Daniel (2012, p. 1):
The competition inherent in the gadarene rush to offer MOOCs will create a sea change by obliging participating institutions to revisit their missions and focus on teaching quality and students as never before. It could also create a welcome deflationary trend in the costs of higher education.
In Brazil, it appears that MOOCs have become an enterprise model operated by Kroton, a large educational technology company that offers online courses through its Unopar online university (Gaskell, 2014). Kroton has these key features:
- For-profit enterprise model spanning the country of Brazil
- Online courses delivered by teachers with “huge reputations”
- Weekly get-togethers at hundreds of local learning centres, where students watch a broadcast and engage in discussions
- Buying power of the parent corporation lowers materials costs for learners
- Curriculum promotes employability
