The MOOCs are coming!

Hype in education has reached incredibly massive, extraordinary proportions! Nowhere is this more apparent than in the coverage and debate about Massive Open Online Courses (MOOCs).

Why is the HE sector so atwitter about MOOCs?

• HE is a massive and rapidly growing international business sector where demand outstrips supply. Like any market this demand has created lots of activity, amongst existing and new HE players as they try to expand supply
• Expanding the supply of bricks and mortar institutions is very expensive, and that’s even before you start to consider issues like staffing, student accommodation, immigration and visa rules, etc.
• Given we live in the age of information, the solution to scaling HE provision is obviously technology, particularly new structures like freemium and MOOCs!

But as Public Enemy sang in 1988 (just before Al Gore ‘invented the Internet’), Don’t Believe the Hype.

Background

• The first freemium education business wasn’t internet based. It was Stenographic Shorthand by Sir Isaac Pitman and was distributed by the information superhighway of the 19^th century, i.e. post. The course was free anywhere in Britain and Ireland if you paid the 1p postage
• The BBC’s first Director of Education, JC Stobart, said in 1926 that Britain needed a ‘wireless university’ although it then took 42 years for this to emerge as the Open University, a mere 17 years after Australia launched School of the Air
• Mass HE isn’t new, the world’s largest HE institution is Allama Iqbal Open University in Pakistan with 1.8m enrolled students
• The balance of educational power is in the US but is it changing? Harvard, founded in 1636, has 22,000 students and a £12bn endowment. Islamic Azad University, founded in 1982, is the world’s largest private university with 1.5m students on campuses in 5 countries and it already has £16bn of assets
• With enrolments of approx. 170m (if measured as a single body), HE students would be the world’s 7^th largest nation.

So HE is in a state of change and technology will play an important part, but much of what is happening is not new and the hype is obscuring some important stuff.

For example, I think an important underlying factor that will help drive change is the insularity and myopia of many academics, administrators and politicians, who have seen their HE systems as fortresses, securely protected from attack by national and political boundaries, byzantine bureaucracies and perhaps most crucially, by a monopoly on accreditation.

Rapid globalisation and advances in technology, has breeched the ramparts of these national educational fortresses leaving the politicians and academic high-priests inside, confounded about how to respond to the new asymmetric battle.

A good example can be seen in the transnational education (TNE) market. TNE is massive and has expanded from 800,000 students in 1975 to a projected 7m by 2020. There are three main players in this market:

1. USA with 700,000 foreign students who spend approximately £32bn
2. Britain with 330,000 students who spend approximately £15bn
3. Australia with 280,000 who spend approximately £11.5bn.

The US and UK have long dominated world university rankings and so their share of the foreign student market isn’t surprising, but Australia is a minnow in comparison, so how did it climb to number 3? In essence they copied and then bettered the approach used by Britain – they adopted sophisticated marketing techniques (particularly the use of recruitment agents), had easy visa requirements and emphasised they were safe destinations where students would be taught in English. The cost was a commodification of HE qualifications and a race to the bottom in standards at many institutions with too little focus on issues like duty-of-care, educational quality and long-term strategic planning.

In the US things have and continue to be different. While it’s arguable the US is yesterday’s political and economic superpower (soon to be superseded by India, China and the BRIC nations), in four key areas it still leads the world:

1. Consumer choice
2. Business innovation
3. Technology
4. HE.

So in a rapidly evolving international market, these four relative economic advantages are helping the US to maintain their leadership of HE, and MOOCS are just one example of this.

MOOCs

MOOCs basically give anyone with internet access the ability to study an online course for ‘free’. This is a radical change to the business models of existing universities, but also to those of new online players like the University of Phoenix and 2tor.

The basic questions about MOOCs are:

• Who are the MOOCs?
• How do they work?
• Are they financially sustainable?
• Are they a good way to learn
• Do they deliver valuable (employable) skills?

The most high profile MOOCs are:

• Google (surprised?) – currently a bit player with a tiny MOOC, which teaches students how to use Google better.  Likely to become along with Apple, a major MOOC player
• edX (formerly MITx) – partners are MIT, Harvard and the University of California Berkeley. The latest incarnation of MIT’s OpenCourseWare that launched the free open edutech resource movement
• Udacity – Founded by ex-Stanford Professor and Google Vice President, Sebastian Thurn. $5m VC investment from Charles River Ventures. Focus on computer science
• Coursera – a ‘social entrepreneurship company that partners with the top universities in the world to offer courses online for anyone to take, for free’. So far raised $22m from Kleiner Perkins Caufield & Byers, New Enterprise Associates, the University of Pennsylvania (UPenn) and the California Institute of Technology (Caltech).

How do MOOCs work?

The model so far is that each MOOC allows anyone to register for courses. Most have no fees for the course or any tests and few currently offer any form of modular accreditation beyond saying a student has successfully completed the course. Registration numbers can be huge but completion rates are low (6-30%) depending on how you measure them.

Course content tends to be modular video, questions and tests. The video is cut into small chunks with regular questions to check the student understands the concept followed by small tests/assignments. Every course analyses student performance, but so far few, if any, provide individually adaptive software to personalise the student’s learning experience. At completion the student gets a statement of completion and eventually these will become some form of transferable/recognised HE credit.

There is a direct link between recruiting students, getting them through a course and building viable income streams. Right now completion rates are low and business models are reminiscent of the first dot com bubble. The basic difference is, unlike many companies during the first boom, MOOCs are showing they can adapt very quickly and have the ‘fail early, fail fast and fail frequently’ tech model at the heart of their businesses.

Right now everything is in a state of flux as companies, partnerships, business and educational models evolve.

Are MOOCs financially sustainable?

Probably, but this depends on the providers, their partners, investors and business models. For edX’s participants their involvement is probably driven by a desire to maintain their leadership role in the HE market. Their investment (so far) is modest and edX is built on the back of investment in traditional HE, i.e. professors, infrastructure and IP.

For Udacity and Coursera and their investors, it’s staking a big land claim in what they are betting will be an online HE education gold rush. Their revenue models include paying small amounts for enrolment, testing, accreditation, recruitment and anything else they can dream up. Coursera’s difference is that they don’t bear the cost of developing courses and IP, that’s the responsibility of their 16 partners (see below). Coursera also has another difference, the revenue sharing model with their partners. From what has been leaked to the media so far, 6-15% of revenue and 20% of gross profits after costs and previously paid revenue are deducted. This looks rather like an amalgam of a publishers advance and royalty claw back model with the murky accounting practices normally found in film financing (where a big profit is almost inevitably transformed into a large tax loss for investors).

The bottom line is, Coursera will take the lion’s share of any revenue no matter how you do the numbers.

Are MOOCs a good way to learn?

Completion rates are very low and if edX was a K12 school in England, then OFSTED (the regulator) would place it in ‘special measures’ and parachute in a new management team to turn it around.

155,500 students signed up last May for edX’s Circuits and Electronics, but only 7,157 or 4.6% passed. Actually the completion rate is much better as many students dropped out without even starting the course. There are two main causes:

• the slacktavism factor, where people find it very easy to sign up to something online (Kony 2012), but most don’t follow through their clicks with any real action or commitment
• the lack of basic educational qualifications for the specific course. Anant Agarwal, edX’s President pointed out Circuits and Electronics was only a prototype and said that the high drop out rate was because the course ‘requires a background in physics, a background in calculus, a background in differential equations.

More importantly Agarwal highlighted two key educational benefits of MOOCS:

• ‘It’s (Circuits and Electronics) as many students who might take the course in 40 years at MIT’!
• ‘Over time, edX will have courses on each of those three (mathematic) prerequisites, and we can point students to those courses if they don’t have the background.’

Can MOOCs deliver valuable (employable) skills?

It’s too early to tell how these ‘modular ‘qualifications’ will be received by other HE institutions or employers. I suspect there will be lots of institutional resistance to allowing HE credit for students who have taken MOOCS, but in the end it will happen.

On the employment front I am more optimistic. If you want to work for a big corporate MOOCs aren’t going to help you much. Luckily for students who are considering MOOCs, the majority will end up in the SME sector which is the engine of employment and economic growth in most countries. Here what counts is enthusiasm, adaptability and broad skills –anything from HTML, to Ruby, Java and CSS

If MOOCs can deliver these then they will soon (on a case-by-case basis) become highly valued by SME employers.

Summary

MOOCs are here to stay and those who have the most to lose are those poorly performing HE institutions thought their ivy covered ramparts and credentialing monopoly would keep the edutech barbarians outside their gates. They were wrong!