Right Business Model Can Make MOOCs Sustainable

174551865Less than one year after Penn announced its commitment to online learning, more than a half-million students signed on for one or more massive open online courses—MOOCs for short. The courses are massive indeed. Those half-million students outnumber all living Penn alumni by a ratio of 1.7-to-1. Penn President Amy Gutmann, HOM’04, endorsed the MOOC concept as the new way to learn. Commenting in a TV interview in the spring, she told Charlie Rose, “We’re off and running. It’s not a question of if it will work but what will work.”

Seated on her right, New York Times columnist Tom Friedman teamed right up, saying, “MOOCs are an idea whose time has come. Online classes can provide the best teachers from the best universities all over the world.”

Penn began offering MOOCs in early 2012 through Coursera, an online platform that provides educational content from Penn and other distinguished universities like Princeton and Stanford. Penn’s first 12 offerings on Coursera spanned an arc that stretched from Fundamentals of Pharmacology to Ancient Greek and Roman Mythology.

“But we must be totally clear, we don’t have a business model,” Gutmann explained to moderator Rose, and fellow panelists Friedman; Joel Klein, former New York City schools chancellor; and Anant Agarwal, a professor at MIT. She made no apologies for that and insisted that the lack of a proper business model would not prevent the attainment of her primary goal: MOOC sustainability.

Klein agreed. “People will figure out a business model,” he said.

Agarwal expressed similar feelings. “It’s more than a business. The opportunity (to expand learning) is most important.”

(Editor’s note: Watch the Charlie Rose roundtable about online education at about the 14th minute of the above video.)

When money is to be made, however, universities reveal the business suits beneath their academic robes. Less than four months after that Charlie Rose interview, New York Times reporter Tamar Lewin authored the front-page story “Master’s Degree Is New Frontier of Study Online.”

Georgia Tech had created an online degree-granting program using a model to monetize MOOCs. The Atlanta-based school plans to kick off 2014 by offering a Master in Computer Science at a cost of $6,600. A student pursuing the same degree on campus would pay $45,000, almost seven times the online tuition, the Times said.

“If it really works, it could begin the process of lowering the cost of education … for millions of Americans,” S. James Gates Jr., the University of Maryland physicist serving on President Obama’s Council of Advisors on Science and Technology, told the Times.

The article also stated that Georgia Tech expects to attract up to 10,000 online students annually. That’s little more than an estimate, but it generates an annual revenue stream of $66 million. Whatever the amount, Georgia Tech says it’ll keep 60 percent for providing professors and content. The remaining 40 percent will go to Udacity, Georgia Tech’s version of Coursera.

“There are millions of students who can’t have a campus-based experience,” Gutmann said. “Students in far off Swaziland, certainly. But also nearby autistic students who aren’t comfortable around fellow students. MOOCs are ideal for them.”

A moneymaking business model like Georgia Tech’s could just be the fastest way to make them sustainable.

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