A Skeptical View About Online Courses (from a commercial viewpoint)

The Digital Skeptic: Online Education Fails Economics

Jonathan Blum, 12/18/12, LA Daily News

NEW YORK (TheStreet) — …In this nutty digital age, the red-hot online thing is …old-school, throwback university classes with a Web-age twist: They’re free.”The course is working out better than I dreamed,” Michael J. Cima told me in an email. Cima, the David H. Koch Professor of Engineering at MIT, teaches a free, online version of one of his chemistry courses at the school… Cima is not the only super geek rocking the quad with free online higher ed. 

…So where’s the investor bummer? That’s sadly far too easy. Just spend one minute studying how the money actually flows into Coursera and it’s way clear this business will graduate to become the next Netflix… , Facebook… or Twitter.  That is, yet another digital brand struggling to make its next dime. 

…First, Coursera tries to do business not only in a new digital way, but in a terribly complex one. Go to Page 3 and there is not one business Coursera is in, but three. There’s the “Coursera Monetization Model,” the “University Monetization Model” and the “Registered Students Model.” Besides having the “your guess is as good as mine” vibe as to what businesses these actually are, there are what appear to be tricky revenue splits all over this campus. That means anybody close to this outfit should tool up for painful audits, complex disclosures and the bad blood that pollute the music and movie business. 

…”Wow. That contract looks terrible for instructors,” Cima wrote to me when I emailed him the Michigan memo. Cima was concerned about a release he would have to sign and losing control of his courses. Coursera’s Daphne Koller responded via email that Cima had nothing to fear. The release was merely for marketing photos. She was firm that professors and schools control their material and no deals are exclusive.

…Which graduates us to the 800-pound gorilla sitting in the classroom. Just like in the music or movie industry — where Napster, Spotify, Last.fm, Netflix and dozens of other content sites fight a no-win battle selling the same stuff — Coursera faces essentially limitless competitors from existing and as yet to-be-born outfits offering the same content. Koller told me over the phone that the multifaceted business model sounded far more complex than it really is. And the level of competition her firm faces does not concern her. 

…Like many other Web classmates, Coursera is really in the “business” of offering valuable content — this time, its $6,000 classes — for nothing. To these tired eyes, all this company will do is prove, yet again, that this model is as broken on campus as it is in the real world.

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