In early October, Clarissa Shen, vice president and international executive of online educator Udacity, spoke with the Economic Times about her company’s outlook and their massive online open courses (MOOCs). “They are dead,” she said bluntly, referring to the product that started Udacity in the first place.
Meanwhile, the latest report by the Khan Academy, a non-profit MOOC provider, shows that they pulled in donations exceeding $24 m in 2015. edX, the second largest MOOC provider in the world, managed $ 22 m.
Shen didn’t get it quite right. MOOCs aren’t dead; Udacity just hasn’t been able to sufficiently monetize them.
When MOOCs Roamed Free …
After Sebastian Thrun, a founder of Udacity, first transitioned his Stanford University course on AI into a MOOC in 2011, many considered the model to be a true silver bullet. Enrollment numbers stretched into six figures and included people from all walks of life.
Several competitors started their own online courses. The New York Times declared 2012 the year of the MOOC.
But soon after, some troubling data began to congeal. People from around the world were enrolling in droves, but few were completing the courses. Often less than 10% of enrollees would see it through to the end.
Many for-profit MOOC providers changed gears. They adopted new business models that inevitably included an expanded sales team.
But at the same time, the non-profit MOOC providers doubled down. By filing as 501(c) non-profit entities, partnering with universities around the world, and making up the rest in donations, MOOC providers without a mandate to drive profits found themselves in a nice place.
While the competition pivoted, they swallowed up the leftovers and educated any stranger that passed through their site’s portal.
And it turned out well for upper management. Khan Academy executives took home just over 10% of total revenue in 2015. Chief officers at edX pocketed 8.5%.
Profits aside, there are other reasons why Shen didn’t get the MOOC death pronouncement quite right. For one, Udacity still offers MOOCs, many of them for free. So does Coursera, Alison, FutureLearn, Design2Learn, and several others.
But in a broader sense, the product of Udacity’s pivot—the Nanodegree—isn’t that different from a MOOC in the first place.
While the definition of “MOOC” can be found in its name, pinning down an exact meaning can be fairly difficult. Here’s what most would agree on: they’re massive and can scale to infinite degrees in theory. They’re open and available for anyone willing to take them. There is no application process, no vetting based on background or ability, no turning anyone down. And they take place online.
For their Nanodegrees, Udacity puts students through an application process and charges a monthly fee. As a result, classes are smaller. They also partner with companies with the intent to prepare a student for a specific job instead of teaching a more general curriculum.
Udacity’s courses could be described as medium-sized restricted online courses, but MROC doesn’t exactly roll off the tongue.
The Future of MOOCs
MOOCs didn’t turn out to be silver bullets (and neither have for-profit spin offs), but there’s also good reason to welcome new analogues.
Coursera, one of the first MOOC providers to switch to a more aggressive, for-profit model, found that, by charging for their courses, completion rates jumped from 10% to 60%. Udacity’s premium courses include a hiring guarantee. If students don’t land a job after six months of completing a course, the company will refund their tuition.
So if MOOCs aren’t dead, why would Udacity want the public to think so?
For one, the company is known for its bravado. Sebastian Thrun once shared a prediction with the Economist that, in 50 years, there will only be ten universities on earth. Company rhetoric tends to fall under the standard presentation-at-a-tech-conference category. Udacity’s mission is “to democratize education.”
But here’s the bottom line: the company is selling a product that isn’t all that different from its competitors, including the non-profit hold-outs. They need to distinguish themselves and ensure potential clients that this is the MOOC Nanodegree they’re looking for.
Yes, MOOCs are wonderful. They have changed the world and opened up countless avenues to education, lifelong learning, and career advancement. They are not dead, and they won’t be anytime soon.
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