New Waypoints in the MOOC Debate, Part II: Lowering Revenue Expectations

In Part I, I described MOOCs as a symptom of the absence of educational ambition among politicians. Since then, the MOOC situation on the ground has been shifting day by day.  It's been driven by major deal announcements and by the first real studies of neo-MOOC learning patterns. It will likely be driven in the weeks to come by the revelation of the National Security Administrations's Prism program to use companies like Google to gather in secret all communications metadata on pretty much everybody.  I'll address the first of these issues in this post.

In May, Udacity and Coursera described what were at first greeted as landmark partnerships with major universities.  The press take on the Coursera contracts with "ten public institutions" was that

Under the new deals, Coursera is recasting itself as a platform for credit-bearing courses that would be offered to students enrolled at multiple campuses within a public-university system.

 The cognoscenti's view was that Coursera had "jumped the shark":

Yesterday, Coursera did a weird strategy about-face by announcing that, rather than competing with public colleges, it’s going to start competing with Blackboard instead.

. . . Coursera has simply never had a coherent plan to generate revenue.  Oh sure, it had a bunch of ideas about how to do it, which were outlined in this leaked MOU with the University of Michigan, but few seem to have panned out.  The only thing we’ve heard from Coursera is that their idea for charging people for certificates of completion netted $220,000 in Q1 of this year.  Given that Coursera’s annual burn rate seems to be in the neighbourhood of $10M (that’s on top of their partners spending $50K/course to place it on the Coursera platform), this is peanuts. 

In the UK, Martin Weller announced that "You Can Stop Worrying about MOOCs Now." Noting Coursera's intention to explore "MOOC based learning on campus," he asked,

what does that even mean? That's blended learning, or e-learning, and again, not exactly new.  If you take the MOO out of MOOC you're left with just a C, and no-one's that interested in just a C. This follows on the back of Georgia Tech's not free, online Masters MOOC, which looks awfully like a not very well supported elearning course.

Back in the edu-consultancy world, University Ventures described the Udacity-Georgia Tech deal as a case study for Bad Judgment magazine:

The first instance of bad judgment is the University’s announcement that it will be hiring only eight new instructors to teach as many as 10,000 new students and may rely in part on peer grading. The “massive” component of the masters degree stems from its origin: a meeting between the Georgia Tech Dean and Sebastian Thrun at Udacity. As one of the three horsemen of the MOOC movement, Udacity is banking on “massive” despite the fact that the more Udacity tailors its approach to approximate existing online programs (with instructors and interaction, as with its partnership with San Jose State), the more it seems to gain traction. 

The reality is that (1) instruction and interaction are critical to successful student outcomes and (2) the cost of instruction and interaction is not what makes higher education unaffordable.

There have been a group of us, including for example Bob Samuels, that has been making these same two points for quite some time.  Last week, I wrote a couple thousand words about the Udacity-Georgia Tech budget projections that I'm hoping CHE will get around to publishing sometime soon.  Suffice to say that major cost savings cannot be the rationale for the Georgia Tech arrangement. In the ramp-up period, terribly high per-MOOC costs could be justified by mass enrollments, but unfortunately from the VC point of view the masses take these courses for free. These production costs also collide with increasing awareness of large faculty time inputs: Duke's Dan Ariely and Cathy Davidson report 150 hours of their time per hour of "actual MOOC."  Prof. Davidson's phrase in a subsequent post is "insanely labor intensive"  -- in exchange for a $10,000 stipend that she spent entirely on assistants. Many MOOC watchers are now concluding, as she does, that MOOCs do not have a way of making up for massive public funding cuts.

Unfortunately, the idea of exponential cost savings based on zero marginal cost per additional student, as Coursera's Daphne Koller promised, has never been credible. As we exit the marketing phase and start looking at real cost performance, this news will move up the administrative and political food chain.

We need to get back to fixing huge budget shortfalls before we lose another couple of budget years. The spring's new cost discussions have been a help.