Is Coursera Facebook, Amazon, or Pets.com?

Before I get started, let me just say that Phil can vouch for the fact that I had already planned to use “Pets.com” in the title of this post before MIT Technology Review used it in their article on Minerva. As we’ll see, there are reasons to reach for that particular analogy at this particular moment in educational technology.

Anyway, it’s an uncomfortable truth for educational folks that one of the principal innovations of the xMOOC is the store front. It is the ability to find courses in a catalog. If you look at what Coursera is right now from a platform perspective, it is primarily a store front on top of an LMS. The same could be said of edX. And as Phil and I have both written about recently, this is also the primary innovation in Instructure’s Canvas Network. I don’t expect that innovations in MOOC platforms to stay confined to the store front in the long run; for example, Daphne Koller, the co-CEO of Coursera, is also a leading expert in Bayesian machine learning. I think the scale of usage will drive other innovations. But right now, it’s the store front that is the most obvious differentiator between an LMS and a MOOC platform. As we game out which of the various xMOOC entrants will be successful, it’s important to understand how the store front works and the degree to which the growth of one dominant platform could impact the ways that colleges and universities function. I think there are at least three possibilities.

Facebook

The first possibility is that the platform gains value primarily not from the content but from the people in the network. Sure, you could use MySpace, but everybody you know is on Facebook. The software doesn’t matter. The content doesn’t matter either, except insofar as it is user-generated. I don’t think a pure network valuation is going to apply to xMOOCs in their current incarnation because part of their premise is the marquee names of the professors and their home institutions. cMOOCs are another matter (and to the degree that xMOOCs gain more effective mechanisms for peer evaluation as part of their effort to scale, that could begin to change the dynamic there too). For now, xMOOCs “sell” premium content, even if the courses are open (as in bar).12 Then again, we may be missing the real network effects by looking to the students and not the professors. Having chatted with Chuck Severence and attended a couple of xMOOC sessions at EDUCAUSE, I came away from the week with the distinct impression that Coursera instructors in particular have an interesting coopetition dynamic going, where they look into each other’s classes both to help each other and to compete with each other. You see this dynamic in the physical school with faculty from “teaching schools” sometimes (although by no means all the time), but you are more likely to run into the opposite in big research institutions where the Coursera instructors are coming from. Instructors jealously guard what they perceive to be their intellectual property. Given Coursera’s laissez-faire approach to IP, it will be interesting to see how this dynamic plays out.

To the degree that a network effect builds on any third-party MOOC platform, where the store front really becomes a place for instructors to find colleagues who can help them build their courses (and brands, and quite possibly incomes), then traditional academic institutions should be very, very afraid, particularly of a venture-backed for-profit entity like Coursera. No matter what the co-founders may say, if it becomes clear that Coursera can disrupt traditional universities by offering faculty a better deal and students direct degrees, then they will be under enormous pressure to do so. This trend will only be helped as traditional colleges give degree credit for MOOCs on these platforms, sending the signal that the quality of the education is equivalent to the on-campus or more traditional online courses.

Amazon

A second possibility is that the main value of the store front is as…well…a store front. It is a sales channel. In this case, the model might be Amazon. This seems to be how both Coursera in particular is pitching itself, and how Instructure and edX are to different degrees as well. Colleges can expand their footprint through this channel by reaching new students with new offerings. Likewise (to continue in the language of business), there is a “B2B” dimension here, where schools that are struggling to meet the needs of their students with survey courses or specialized courses can give credit for courses offered by other institutions through the store front. The xMOOC store front, in this world, can be viewed as an expansion of marketing for online learning offerings and a mechanism for facilitating cross-registration agreements between colleges. These are both areas that colleges are familiar with.

But there is danger for colleges here to, albeit a different danger. Maybe the right model isn’t Amazon after all. Maybe it’s iTunes. Maybe a dominant store front will allow the company that owns it to extract a very significant toll from the schools or individual faculty members producing the content. Since we don’t have a sense of the economics of MOOCs, we don’t know how onerous this could be. It may be that MOOC money is all green fields anyway and that the cost is worth the benefit. Or not. If you think that your MOOC students do not overlap significantly with your traditional student base, then maybe it’s an acceptable trade-off to have a third party in the middle. But to the degree that you think your traditional students are going to shift to MOOCs, it becomes far more problematic. And the more subtle but serious danger is that the store front erodes the value for the university as “middle man” in the same way that  iTunes has eroded the value of the record label. Sebastian Thrun had to form his own MOOC company in order to go “freelance” as a teacher. But that’s not necessarily the way it’s going to be going forward. Right now, Coursera has more traction than DIY platforms like Udemy precisely because it has the relationships with the universities. But the point is that the value of those relationships will recede if the company achieves a position of dominance.

Pets.com

Of course, the third possibility is that this idea of the educational store front as a stand-alone for-profit company is a passing fad. Back in the days of the first internet bubble, there was an assumption that all brick-and-mortar institutions would be disrupted by digital ones. But it turned out that pet stores, banks, and the like were perfectly capable of opening their own store fronts. Schools could do the same, either on their own, through consortia like edX, or through relationships with vendors whose business models are more aligned with their own (like LMS companies who get all their money from selling to institutions). Each of these possibilities has its own risks, but as a first approximation, it comes down to picking the right balance between the risk that the school will fail because it will execute poorly and the risk that the school will lose control over its destiny by handing it over to third parties that execute more effectively. I don’t think there is any one-size-fits-all answer, and I also don’t think we know how the market dynamics are going to play out. But one thing we do know is that, on the internet, scale really matters. The bigger the lead any one entrant gets on the others, the less viable alternative choices become. Let me put it this way: Would you rather be competing against Facebook or Amazon?

Some Final Thoughts

I have deliberately used commercial language here and have focused on financial sustainability for the institutions because I think it is an important dimension to the MOOC phenomenon that is either being ignored or exhorted in breathless paeans to “disruption.” This is serious stuff, and it merits some level-headed analysis. But at the same time, what is “good” for the current incarnation of traditional academic institutions is not necessarily what is best for students or even the long-term health of academic communities. This post isn’t about what should happen. It’s about what could happen.

Second, I have focused here on the implications of one facet of the MOOC as a platform, but there is a whole other world of MOOC as a genre of content and experience. We talk about xMOOCs as if they are largely monolithic, but the variation among them is still pretty substantial. Coursera is mostly a platform play at the moment. Udacity, being much more content-centric in its positioning, is more of a direct competitor with schools and textbook offerings. It’s not a black-and-white distinction, but the content dimension merits its own analysis. I hope to get to that in future posts.

 

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  1. Free as in beer, open as in bar. It works, right? And in the spirit of open as in bar, I am claiming the phrase as a trademark. You may not use it. That said, you may read it here in this post as many times as you like, free of charge. Because I’m all about “open.” []
  2. If open as in bar is the analog to free as in beer, then what is the analog to free as in speech? My first thought was open as in marriage, but that doesn’t seem quite right. []

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About Michael Feldstein

Michael Feldstein is co-Publisher of e-Literate, co-Producer of e-Literate TV, and Partner in MindWires Consulting. For more information, see his profile page.
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5 Responses to Is Coursera Facebook, Amazon, or Pets.com?

  1. Clay says:

    People keep saying this, so I’m probably just missing it, but I’m having a hard time seeing Coursera as a ‘platform play,’ as you put it. The contracts they sign with universities is all about the course package, who has rights and responsibilities for same, etc. The future revenue model hinted at is analytics for recruiting. And the platform is, well, uninspiring. Is this not the kind of business (and structuring of incentives) that would more likely lead to them wanting to outsource (or partner with) someone who can worry about the platform, so that they can focus on their core competencies?

  2. I’m sure that Amazon’s contracts with the small businesses that sell through it are about the product being sold. Likewise, I’m sure that Facebook’s contracts with its advertisers are about click-throughs, etc., (think analytics and revenues) rather than how “friending” works or whether the timeline is a good idea. In both cases, the platform enables the “sale.” In particular, I’ve seen several different write-ups that note the dramatic difference between the incoherent mess that is the Facebook interface for average users versus the finely tuned UX for Facebook advertisers. Coursera is a platform play, but it’s not a learning platform play. It’s a distribution platform play. The degree to which it becomes a learning platform play depends on how much increasing educational impact yields an increase in adoption/sales.

  3. Dear Michael:
    Here I am again .
    You are a rare intellegent man in the world regrading online and MOOCs.
    I expect you to explain people that
    edx has nothing to do with Coursera .
    In fact MOOC has nothing to do with both . Somebody tried to imitate to cMOOCs of Stephen Downes .
    EDX is non commercial, not for profit with a 12 years of long range planning since 2001.
    They have the same vision I have and I had since 2001 .
    Try to reach scale . Then cost is nill, transfer price is also a small fee .
    MIT was reluctant to go to online , since the name of online had a very bad reputations due to for profit companies + even some money hunger state universities .
    MIT has declared in December 2011 MITx . Later Harvard joined them .

    Coursera in April 2012 made all things mixed up .
    Coursera is just a INTERMEDIARY
    Like a marketing company. They are good at it though .
    So please do not mix up EDX with Coursera .

    They nothing to be massive either . Since people love to go after free things therefore there are many registration at the beginning then 90% drop outs.

    Yes Coursera may lead to Facebook and Amazon. people who are seeking free things go there .
    Let us be with edx forever for serious learners .

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