"Risky Business: The Difficult to See, Always Moving, Fast and Fuzzy Future of Corporate-Sponsored Massive Online Open Courses"

This is the text and slides from my presentation at the annual Conference for College Composition and Communication meeting in Tampa, Florida in March 2015. Direct any questions, concerns, cheers, boos to Steven D. Krause.

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I’ll be honest: when I learned that the theme for this year’s conference was about “risks and rewards,” the first thing that crossed my mind was all the ways that the words “risk” and “reward” might appear in titles of presentations and panels, and for my own proposal, the first thing I considered was my title. “Risky Business:” Ha-Ha. By the way, I was far from the only one thinking along those lines; my computer’s search of the PDF of the conference program tells me the phrase “risky business” occurs 24 times.

Then, as I started putting together the slides for my talk, I thought “hey, I know: I’ll include a picture from the movie on every slide. 

That will be kitchy and fun!” But after spending a few minutes searching for “Risky Business” images, all I found was pretty much variations of these two pictures. That and, of course, 


In any event, enough with the Tom Cruise connections. This isn’t about that. What I want to talk about today is the risky business of MOOCs.  

How do for-profit MOOC providers (particularly Coursera) stay in business? What are MOOC providers’ long-term goals? How might these business practices ultimately impact pedagogy? 

To continue on with my theme of things that I won’t be talking about, let me get a couple other issues out of the way. First, this talk isn’t about the pros and cons of MOOCs per se. I will circle around this question of course, and I’ll also be talking a bit about the 

latest argument of how MOOCs will “change everything” from Kevin Carey and The End of College, a book that is largely about the business and costs of higher education. Though full disclosure about my own view of the MOOCs good or bad question: while MOOCs have a potential role to play in rethinking distance education and other things we do in teaching, I don’t think MOOCs will be replacing or even seriously competing with higher education as we know it anytime before my own far in the distance and hypothetical grandchildren are thinking about college. And fundamentally, I think Carey is wrong, too.  

I also won’t speculate much about why I think venture capitalists are (or were) taking a chance with MOOC start-ups in the first place, though 

I think a lot of it is about a fear of missing out on the next big social platform. I suppose there’s a chance that a MOOC company like Coursera could become as big as Facebook or Twitter and the Venture Capitalist people who are dumping money into these operations are seeing something I’m not. But my sense is that MOOC investors will be ultimately lucky to break even. Back in 2012 in a Chronicle of Higher Education article on the MOOC business model, Wells-Fargo analyst Trace Urdan was quoted saying something I thought was spot-on then and I still think it’s spot-on now:

"These are two of the most arrogant types of institutions—Silicon Valley companies intersecting with these elite academic programs," he says. "Neither of them considers that anyone else has come to this place before they've arrived. They say, We're here now, so now it's sort of legitimate and for real." (Young, 2012)

I’m also not going to talk about edX and only indirectly about Udacity. edX is also under pressure to pay the bills though it’s a slightly different kind of pressure because they are a non-profit entity that is a partnership between Harvard, MIT, and a few others. 

Udacity’s rise and fall is interesting and fairly easy to sum up. 

In July 2012, Udacity’s founder, computer scientist/former Stanford professor/Google fellow Sebastian Thrun boldly proclaimed the goal of Udacity: “In 50 years, he says, there will be only 10 institutions in the world delivering higher education and Udacity has a shot at being one of them” (Leckart, 2012). 

Two years later and after a botched partnership with San Jose State to offer a math course in a MOOC for credit, Thrun gave an interview with Fast Company where (among other things) he said “We were on the front pages of newspapers and magazines, and at the same time, I was realizing, we don’t educate people as others wished, or as I wished. We have a lousy product.” 

Udacity’s current approach is about offering “nanodegrees,” which are tech training programs in things like web development, data analysis, and iOS app development.  Udacity still offers free courses too, but the nanodegree programs (and their certification) are offered on a subscription basis for $200 a month. Udacity has a number of partners like AT&T and Google. As we’ll see, this is more or less the approach that Coursera seems to be taking too.

I’m focusing on Coursera because they are the biggest player in the for-profit MOOC world, because their shifting business plans have been covered the most extensively, and because Daphne Koller, one of the founders of the company, has given some interesting talks about Coursera that have hinted indirectly and directly at their plans. Here’s one of my favorite clips of Koller at a TED talk she gave in 2012. (Note: I played about the first minute of this TED talk during my presentation).

I actually take Koller at her word here: while I think her perspective is misguided in a number of ways (some of which I talked about in a presentation about MOOCs and colonization I gave this last fall that is also available on my web site), I think she was sincere in her desire to extend educational opportunity. At the same time, Coursera is also trying to make money from this.

Kevin Carey interviewed Koller for his just released book-- from the context of the interview, I’m guessing that interview happened in 2012-- and he asked her then about how Coursera planned to make money. Besides assuming that they’d make money based on the Silicon model of get users first and worry about profits later, Koller’s answer (as paraphrased here by Carey) is basically about scale:

“If only 2 percent of all the people in the world are willing and able to pay $74 for a service, that’s $10 billion a year, which is a lot of revenue for a company that can fit all of its employees into one part of one floor of a commercial office building in Palo Alto. Her point was that the world is really big and there are lots of people in it who need education, so you don’t need to charge them a lot of money to get to some-large-number-ex and everyone gets rich” (155). 

The first thing I read that was about Coursera’s business plans was in the July 2012 CHE piece “Inside the Coursera Contract: How an Upstart Company Might Profit From Free Courses.”  I blogged about extensively when it came out, but just to summarize quickly here:
  • Selling certificates of completion
  • Employee and university recruiting/screening
  • Training-- both for the corporate world and what this article described as  “non-university academic institutions (e.g. community colleges),” which I take to mean selling “course in a box” setups.
  • Advertising
  • Tuition
The other thing that I think is worth emphasizing here is that when Coursera and Udacity emerged in 2012, their ultimate vision seemed to be about bypassing higher education and credentialing completely and the audience/customers they had in mind were traditional college students. In other words, they saw those certificates of completion as potentially valuable as a college degree. They were looking for that 18 year old kid who comes to EMU or U of Michigan or wherever to instead sign up for a series of Coursera MOOCs.

Long-story short, Coursera et al’s vision of educating the world’s youth and earning billions of dollars got off to a promising start in 2012. Audrey Watters has a great summary of this early history at her blog HackEDU. As many of you might recall, 2012 was dubbed the “Year of the MOOC” and the mainstream and education media were awash in articles about how MOOCs were going to replace higher ed as we know it. Among other highlights of those early days three years ago: Coursera was expanding like crazy and adding dozens of university partners who develop the content and share in the quote unquote profits, and they introduced “SignatureTrack,” which is a for a fee certification program. There was legislation in California that would have required state colleges and universities to accept credit from certain MOOCs. Things were great.

But by mid 2013 (probably earlier), the enthusiasm dropped sharply as a result of pushback in the mainstream media, failures to get MOOCs to “count” in places like California, and the well publicised failure of Udacity’s experiment at San Jose State. But to me, there are three ongoing problems with MOOCs that impact their bottom line. 

First off, the dropout rates for MOOCs hover at around 90%. Besides the fact that a lot of people give up on the MOOCs that they enroll in, at least as many people sign up for a MOOC and never have anything to do with it. In that sense, MOOC enrollments are a lot like interest in Twitter and Second Life and such things: lots of people get their free accounts, visit the service for about 15 minutes, and then never return.

Second, MOOCs have a fundamental audience problem in that somewhere around 80% of student participants already have a college degree and are gainfully employed, and a significant percentage of the folks of that group actually have advanced degrees as well. A lot of the people who actually stick with MOOCs are looking for what I’d describe as free “edutainment” about an interesting topic.  

And third, what students really want (and are willing to pay for) aren’t free-floating courses. Rather, they want a degree program from a recognizable institution. An interesting example of how this played out in mid-2013: Colorado State’s Global Campus was the first college in the U.S. who agreed to grant credit to students who passed an intro to computer science MOOC. There was a $89 required proctored exam associated with the course, which is a whole lot less than three credits. No students enrolled, I think because even though the course was really cheap, it wasn’t really worth anything.

Koller was interviewed at the beginning of this year by Don Huseman at the University of Pennsylvania’s Wharton School of Business, and it’s one I’d highly recommend for anyone who wants to dive more into the risky business of MOOCs and who also wants to see Koller try to “spin” Coursera’s plans. For example, she says that the goal of Coursera was never going to “put universities out of business” and she says now that Coursera’s target audience was now working adults, particularly ones who are looking for some kind of “just in time” certification. In fact, she boasts about how Coursera is “currently the second biggest credential supplier on LinkedIn, right after Microsoft.” I presume what she’s talking about there are the kind of credentials you can get as a certified Microsoft software or networking specialist. Here’s a clip from that interview where she begins specifically addressing the business model question.

Like I said before, I am not a business expert, but it doesn’t seem to me like selling certificates your customers might list on their LinkedIn profiles doesn’t strike me as a multi-billion dollar business. Second, these verified certificate programs Koller is talking about here are very similar to the nanodegrees Udacity is offering, and these programs are pretty focused in the world of Information Technology. In that sense then, it seems like Coursera (and Udacity for that matter) is more interested in competing with companies like Lynda.com which has been delivering high quality training in software and programming and the like for years. This seems like a long ways away from those lofty TED talk days where Coursera was going to teach the world.

One other pivot not discussed as much in this interview: Coursera has started to move away from offering courses in a timeframe analogous to a brick and mortar college--  that is, courses you begin, proceed through, and end on a specific schedule-- and more toward on-demand courses, which is also like Lynda.com and similar services. In an interview with the Australian Financial Review, Koller seems to be imagining a scenario where these courses are marketed to institutions: “It’s going to be huge for a lot of smaller colleges which have a limited curriculum. It’s going to be huge for a lot of large institutions which don’t have adequate teaching staff” (Dodd). 

So here we are, at the end of the MOOC business, neatly summed up in two charts. You have here the often quoted Gartner hype cycle and how for MOOCs 2012 was the “peak of inflated expectations” and 2013 was the “trough of disillusionment” and now we are somewhere between that trough and the plateau of productivity (“Hype Cycle”). You have this graph on the right from a recent Inside Higher Ed article that shows the shifting thoughts of higher ed administrators about the prospect of MOOCs (Craig). All finished, nothing left to see here, move along.

But then, like the gimmicky horror movie ending, along comes yet another wave in the disrupt everything genre in higher education in the form of Carey’s The End of College. At first glance (and since it just came out, I haven’t had a chance to study it thoroughly yet), it is kind of a bizarre flashback to the year of the MOOC in 2012, though instead of speaking too specifically about MOOCs, Carey tells us he’s calling for “The University of Everywhere.”  Here are a few choice phrases on how describes that magical place in the opening pages:

“At the University of Everywhere, educational resources that have been scarce and expensive for centuries will be abundant and free. Anything that can be digitized… will be available to anyone in the world with an Internet connection. The idea of ‘admission’ to college will become an anachronism, because the University of Everywhere will be open to everyone… [and it] won’t, in fact, be a single place or institution at all. … The University of Everywhere will span the earth…. [It] will solve the basic problem that has bedeviled universities since they were first invented…. how to provide a personalized… education to large numbers of people at a reasonable price. The intense tutorial education that has historically been the province of kings and princes will be available to anyone in the world” (5).

Needless to say, I think Carey is wrong in lots of different ways. I think he’s right that higher education spends too much money on football and fancy campuses, and there is no doubt that higher education costs too much money. But his assumption about the research/teaching balance being out of whack and the inability of professors to teach is at best an exaggeration. Carey talks about runaway costs, but as far as I can tell, he says little about how expenses have been driven up by rising administrator salaries and increased bureaucratic demands on everyone from outside stakeholders (assessment!). Further, he seems to think that the content that would be delivered electronically in the University of Everywhere is free as in “free beer,” that that work just magically happens. 

But the reason why Carey’s argument matters is the same reason why the MOOC business got traction a few years ago: Carey is playing off the popular (and largely uninformed) view of college, that it's far too expensive because professors don't do anything to teach and they are getting paid too much to do something that appears to most people outside of academia to not actually be a job. Write a book about how higher ed needs to be reformed by improving government funding, eliminating administrative bloat,  and by streamlining extracurriculars gets zero discussion and it sells 200 copies. Write a book about how higher ed ought be run like Google and it gets covered by the New York Times and Fresh Air and lots of other places and it sells thousands. So even though the future of Carey’s “University of Everywhere” seems like an even more “risky business,” it’s similar to MOOCs in that we need to engage in the conversation.

Works Cited:
Carey, Kevin. The End of College: Creating the Future of Learning and the University of Everywhere. New York: Riverhead Books, 2015. Print.

Chafkin, Max. “Udavity’s Sebastian Thrun, Godfather of Free Online Education, Changes Course.” Fast Company. 14 November 2013. Web. 20 December 2013. <http://www.fastcompany.com/3021473/ udacity-sebastian-thrun-uphill-climb>

Craig, Ryan. “How Can Universities Use MOOCs to Recruit Students? (essay)” Inside Higher Ed.  N.p., n.d. Web. 12 Mar. 2015.

Dodd, Tim. “Coursera Sets Sights on Universities.” Financial Review. N.p., n.d. Web. 12 Mar. 2015.
Hussman, Don. “The Hype Is Dead, but MOOCs Are Marching On.” Knowledge@Wharton. N.p., n.d. Web. 9 Mar. 2015.

“Hype Cycle.” Wikipedia, the free encyclopedia 28 Jan. 2015. Wikipedia. Web. 12 Mar. 2015.

Leckart, Steven. “The Stanford Education Experiment Could Change Higher Learning Forever.” Wired Magazine. 20 March 2012. Web. 20 December 2013. <http://www.wired.com/wired- science/2012/03/ff_aiclass/all/>

Watters, Audrey. “Top Ed-Tech Trends of 2013: MOOCs and Anti-MOOCs.” Hackeducation.com. 29 November 2013. Web. 11 Mar. 2015.

Young, Jeffrey R. “Inside the Coursera Contract: How an Upstart Company Might Profit From Free Courses.” The Chronicle of Higher Education 19 July 2012. The Chronicle of Higher Education. Web. 11 Mar. 2015.