Experts speculate on possible business models for MOOC providers | Inside Higher Ed

“Massively open online courses, or MOOCs, do not currently lead to any widely recognized credential. Still, with more than 1.5 million people having registered for MOOCs through Coursera, Udacity and edX, the demand for the novel online offerings is undeniable. But while demand appears to be high, none of these three organizations -- two of which are for-profit companies that will be expected to generate money for investors and the other of which is a nonprofit that will be expected to stand on its own feet eventually -- currently has a business plan. They can afford it, for now. The Massachusetts Institute of Technology and Harvard University together have committed $60 million to edX, Coursera has raised $16 million in venture funding, and Udacity is sitting on an undisclosed infusion from Charles River Ventures... So far the only revenue stream that the major new MOOC providers have said they will pursue is charging a fee for a certificate. Coursera, the largest of the big three with over 1 million registrations, says it may charge between $30 and $80 per certificate, depending on the course, to students who pass muster. MIT and Harvard say they will likely charge a ‘modest fee’ for the opportunity to earn an edX certificate. But the extent to which revenue from certificate fees can support a MOOC business remains unclear. So far only a small fraction of the students who have registered for MOOCs actually made it to the final exam -- generally between 10 and 20 percent. That means the providers would be relying on a slim sliver of their users for revenue... The cost of streaming lectures is Coursera’s biggest operational expense, says Koller. ‘The [students] who drop out early do not add substantially to the cost of delivering the course,’ she says. The most expensive students are the ones who stick around long enough to take the final, and those are the ones most likely to pay for a certificate... The extent to which the credentials students earned from MOOCs end up carrying weight, in the work force or in academe, remains an open question. But if they do become valued currency, the volume and proportion of MOOC registrants who have their sights set on a credential might stand to rise... One of the more provocative potential business models for MOOCs is to bypass credentialing altogether. Udacity has suggested that it might double as a headhunter for companies that might like to hire some of its more impressive students... Udacity would offer to match students with companies that have enlisted Udacity as a talent scout... Udacity would take a commission for each successful match, same as a headhunter... Here, again, Udacity would be making money on a relatively small fraction of its user base... But the MOOC providers might also do well to look beyond courses and credentials to other elements of the college ‘package’ that registrants might like purchase à la carte, says Ann Kirschner, dean of the honors college at the City University of New York... The companies could potentially make money providing -- or outsourcing -- library resources, tutoring services, and other accouterments of collegiate academic life, says Kirschner. ‘That ‘envelope of learning’ is going to have to happen somehow in order for this concept to really take off, and in creating that envelope will be opportunities for new businesses,’ she says. If they wanted to stay within their current course-and-assessment wheelhouse, the MOOC hosts could ‘add layers of more robust assessment’ to their courses -- a tier of feedback and human interaction that some students might be willing to pay for, says Paul LeBlanc, the president of Southern New Hampshire University, which has built its own very large national online learning enterprise... There are ways MOOC providers could create a premium product around the demand for networking opportunities, says LeBlanc. Once again, they would be taking aim at their more successful, upwardly mobile users. But this time the premium offering would be not be services, but events. Take edX, the nonprofit MOOC platform from MIT and Harvard. The universities could organize conferences in different cities for students who take a certain number of edX courses and maintain a certain grade point average. MIT and Harvard professors could give talks, employers could send recruiters, and students could participate in workshops and hobnob over drinks. The success of those conferences would depend heavily on universities’ willingness to leverage their names to pump up the prestige -- especially overseas, where most of the current MOOC students are and where the MIT and Harvard brands are in particularly high demand, says LeBlanc... ‘Most of the stuff that will hold up over time, will be that which is attached to the brand,’ says LeBlanc. ‘Everybody would put it on their resume,’ he added. ‘They could make a billion dollars.’”