MOOCs, Massive Open Online Courses: Startups Seek Elusive Profits

It all started largely as experiments with the goal of enabling students anywhere in the world to attend lectures, as taught by some of the world’s leading authorities at Stanford University and MIT. To participate in these experiments, students did not need to be enrolled in the universities, they were not required to pay any fees or tuition, and they didn’t have to be anywhere near the Stanford or MIT campuses. Instead, courses were free and delivered online.

In the fall of 2011 at Stanford, three courses were made available as early versions of MOOCs (short for massive open online courses). The first was an Introduction to Artificial Intelligence by Sebastian Thrun and Peter Norvig. The professors were astonished to have 160,000 students enroll as news of the course went viral. An online course conducted by Stanford professor Andrew Ng drew 94,000 enrollees. Thrun quickly founded a MOOC startup called Udacity. Andrew Ng launched a competing MOOC called Coursera, in conjunction with Daphne Koller.

For many years, professors at MIT had been posting videos of their lectures from 2,100 courses online for free public viewing, in an experiment of their own known as OpenCourseWare. In March 2012, MIT organized these outstanding courses into a more formal system called MITx (edx.org/school/mitx). Now, MIT’s courses are delivered by edX.org. edX was founded by Harvard and MIT and today is a subsidiary of 2U. edX delivers a massive number of high quality online courses ranging from university-level education to corporate training and technology skills. edX participants also include such noted schools as UC Berkeley, Boston University, the University of Texas and the University of Cambridge.

People who enroll in free online courses tend to be from nations outside the U.S. In many cases, they are in low income locales with limited access to higher education. MOOC startups have popped up worldwide, including Futurelearn in the UK (sponsored by the well-known Open University), as well as MOOCs in Asia, Australia, France, Turkey and Latin America.

Although there are certainly academic and technical challenges in launching a MOOC, the biggest challenges lie in creating a revenue flow, and if desired, obtaining accreditation. Another massive challenge lies in providing exams and certification to students who want to take MOOC courses for college credit or professional continuing education credits.

Many universities were anxious to participate in MOOCs. Their strategy is multi-purposed, including the ability to enable students to engage in a wider variety of courses at little to no operating cost, as well as the potential to give their own professors wider reach through a global online audience.

While initial sign-up rates for free or low-cost courses are extremely high, even in the tens of thousands for some courses, levels of participation and course completion are often low. The fact that casual students have no financial investment in the courses, and may not be participating for class credit, leads to little incentive to perform well as an enrollee. Many observers consider the MOOC model to be a failure, as they are too impersonal and too generalized to provide quality education.

Sebastian Thrun’s Udacity changed strategy from providing university courses, instead focusing successfully on training and certification that is job-related, particularly for those in technical careers. Udacity now offers courses in computer programming and many other technology and business skills. It is tailored to meet the standards of the Open Education Alliance, a consortium of employers and educators aimed at utilizing online courses and other technologies to boost access to, and participation in, job-related training. This approach has the potential to solve many of the challenges faced by MOOCs. That is, 1) Students have a vested interest in completing courses, since the learning is career-related; 2) Certification can be earned; and 3) The MOOC can charge fees for facilitating the training and certification process, frequently funded at least in part by an employer.

A wide range of employers are keen to take advantage of the possibilities of online training as a way to boost employee skills, knowledge and job satisfaction. Wal-Mart, one of the world’s largest employers by headcount and by revenues, sees great potential in this strategy. In a partnership with for-profit American Public University, Wal-Mart employees are able to get highly discounted tuition rates for online training in dozens of degrees and certificate programs. Participants can earn degrees and get a wide range of job-related training that can enhance their career paths.

Today, educators and students are benefitting from a world that has moved into something like a post-MOOC era. While there are still free courses available in some fields, vast numbers of colleges and universities have adopted fee-based online education at large scale, including a great deal of student-teacher digital interaction and student-to-student collaboration. Digital-native students are well suited to studying on their laptops and mobile devices on their own schedules and in locations of their own convenience. Fee-based online courses for college/university students as well as business employees foster convenience for the students while cutting costs for schools and corporate training centers. Both online-only and hybrid online/physical classroom models have evolved to the degree that they provide good quality along with cost-effectiveness, as well as the convenience of remote studies.

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