Coursera debates future of monetization

NYT’s Thomas Friedman, Coursera founder Daphne Koller to speak at conference

· April 5, 2013, 12:27 am

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In October 2012, open courseware provider Coursera announced that it had entered into an agreement to license several of Penn’s online classes to Antioch University.

Under the deal, Antioch — which has five campuses nationwide — agreed to pay Coursera a fee to incorporate the courses into its curriculum. Coursera would, in turn, share some of those profits with Penn.

At the time, the move was seen by some as the first step on the road toward generating a revenue stream for the company and its partner schools.

Nearly a year after Penn first announced its partnership with Coursera, the question of monetization has become increasingly relevant as institutions continue to debate the future of online education.

This weekend, the monetization issue — how Coursera will make money, and how that money will be divided among schools and faculty members — will be at the center of a two day-long discussion, when hundreds of professors and administrators are set to come to Penn’s campus for the first-ever Coursera Partners’ Conference.

As part of the conference, Penn President Amy Gutmann will moderate the annual Silfen University Forum on Friday. This year’s David and Lyn Silfen University Forum — which will feature New York Times columnist Thomas Friedman and Coursera co-founder Daphne Koller — will focus exclusively on online learning.

“I think the excitement surrounding this conference, and around Coursera in general, shows that the profits will come, even if they may not have come yet,” said Law School professor Edward Rock, who serves as Penn’s director of open course initiatives. “When you have a product like these courses that represents an increase in quality and a reduction in cost, it’s bound to make money.”

Finding the right fit

From generating revenue through advertising to charging a fee to connect potential employers with high-performing students, the proposed business models for Coursera have varied widely.

While Coursera co-founder Andrew Ng is the first to admit that not even Coursera knows exactly what its financial future holds, he has expressed optimism that monetization will be a natural result of the company’s wildly popular product.

“Ultimately the goal of Coursera is to serve students, not to make money, but it’s clear to us that there’s a way we can achieve both,” Ng said.

Over the next two years, Ng added, the largest source of revenue for Coursera will be the “Signature Track” — an option through which students can earn a certificate of completion for select classes by paying a small fee. The price for taking a Coursera course under the Signature Track can range from anywhere between $30 to $100.

Penn professors active with Coursera also see the Antioch licensing example — referred to colloquially as the “course in a box” model — as another possible monetization strategy for massive open online courses.

Senior economics lecturer Rebecca Stein, whose Coursera course on microeconomics will be starting Monday, said she sees MOOCs ultimately evolving into a new “model textbook.”

Rock agreed, citing mathematics and engineering professor Robert Ghrist’s Coursera course on single variable calculus as an example.

“There are a lot of places where the quality of calculus instruction is pretty poor,” Rock said. “That opens up the possibility of a high school or another university, or even Penn, using his calculus course as the spine of a live, in-person class.”

In February, the American Council on Education formally endorsed Ghrist’s course as a class for which institutions should consider awarding credit. The move came as part of ACE’s first-ever round of credit recommendation for Coursera courses.

The growing popularity of courses like Ghrist’s on Coursera raises another question: where do professors fit into the monetization discussion?

Currently, under Coursera’s contracts with participating schools, universities get to keep anywhere between 6 to 15 percent of revenue, as well as 20 percent of gross profits.

At Penn, Rock said, about 60 percent of revenue earned from individual courses goes directly to faculty members.

“If a course turns out to be a bestseller, there will be significant revenues that flow to faculty members,” he added. “It’s something that professors think about and care about, because they’re putting a huge amount of time into developing these courses.”

However, most Penn professors maintain that money was far from their minds when they decided to get involved with Coursera.

“I’ve had the privilege of touching tens of thousands of people through Coursera,” said Wharton professor Christian Terwiesch, who has taught a Coursera course on operations management. “They didn’t pay me a penny, and I didn’t mind one bit.”

Like Terwiesch, English professor Al Filreis, who has taught a Coursera course on modern and contemporary American poetry, said he is more interested in the “pedagogical side” of MOOCs than the monetary one.

“Now that MOOCs are here, teachers have increasingly become guides and organizers of materials, rather than the source of them,” he said. “That changing role of the teacher in the face of MOOCs is what I think we should be talking about — not monetization.”

‘Something to work with’

In a memorable scene from the 2010 film “The Social Network,” the characters of Mark Zuckerberg and Eduardo Saverin — two of Facebook’s co-founders — are seen debating whether they should open the nascent website up to advertisers.

“Facebook is cool — that’s what it’s got going for it,” interjects Sean Parker, the co-founder of Napster, who is played by Justin Timberlake. “You don’t want to run it with ads, because ads aren’t cool.”

Many have applied a similar “cool” label to Coursera.

“This is a startup that has an incredible level of visibility and brand awareness and is spending cash at a ridiculously low rate,” Terwiesch said. “They have all the time in the world to move forward, and I don’t see any reason to rush toward monetization.”

Ghrist noted the similar development trajectories of startups like Coursera and Facebook.

“If you look at similar ventures, the same questions came up there. How’s Google going to get money from searches, how’s Facebook going to get money from hitting a like button?” he said. “Once you have an interested customer base, then you have something to work with.”

Although Ng does not expect to come up with a long-term answer to the monetization question overnight, he is hopeful that this weekend’s conference will continue to move the discussion forward.

“One of the things I’m hoping the conference will do is help many of our partners meet and begin to develop relationships with each other,” Ng said. “That’s going to serve us very well, especially when it comes to answering some of these big questions.”

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