One piece of news we never circled back to after the crush of LMS conference season updates was the ending of the Blackboard's membership in the Moodle Partner program. To recap, Moodle Pty., the company that runs Moodle development and owns the Moodle trademark, suddenly announced right around BbWorld that it was ending Blackboard's membership in the Moodle Partner program. Blackboard scrambled to put out a press release saying the decision was mutual. What really happened, and what will happen next?
The decision was mutual but the messaging wasn't
Blackboard's partnership agreement was up for renewal. From what we can tell, both sides recognized that the discussion around terms wasn't going well and were starting to contemplate the contingencies in the event that the negotiations failed. Moodle creator Martin Dougiamas made a unilateral decision to call it and announce the break-up, but I think the handwriting was on the wall already.
The timing was clearly bad for Blackboard from a publicity perspective. Coming at the end of BbWorld, it basically stepped on any announcements they had. That timing could have been deliberate or coincidental; the contract renewal date was set, so the timing was already set to a certain degree. That said, the fact that Moodle did not warn Blackboard or work with them on a joint statement suggests that, at the very least, it was not as amicable a breakup on Moodle's side as their press release and both sides' public comments suggest. Which makes the timing of the announcement look a little more likely to have been planned. To be clear, (a) that's speculation on my part, and (b) I really don't know enough of the details of the negotiations to piece together exactly what was said or done by whom at what point for what reason. These sorts of negotiations are always complex, and the Blackboard/Moodle relationship was particularly fraught for a number of reasons. But partly for that exact reason, you should take the amicable language on both sides with a grain of salt. Just because somebody doesn't want to talk trash in public about their ex doesn't mean that there aren't...feelings.
The tick-tock and emotional valences of the break-up are not ultimately consequential. The real question is what happens next for both organizations. On the Blackboard side, Moodle has been an engine of international growth for them. Over the years, they have acquired major Moodle hosting providers in North America, South America, Europe, and Australia and rolled them into their Moodlerooms business (which was itself an acquisition). While the ending of the relationship doesn't prevent Blackboard from continuing to use the open source Moodle software (or acquire more Moodle service providers), it does raise branding concerns for them in the immediate term and risks of diverging—forking—from that code base in the longer term.
On the Moodle side, Blackboard's acquisitions meant that, increasingly, Moodle Pty was financially dependent on Blackboard. Historically speaking, the primary revenue model for the company has been to collect a percentage of Moodle-related revenues from Moodle hosting and support providers in their Moodle Partners program. As Blackboard acquired the larger and more successful Moodle Partners, they also acquired major sources of Moodle Pty's revenue. At one point, we estimated they accounted for half or more of the company's total revenues (although Moodle Pty has not publicly disclosed enough financial details for us to make this sort of estimation with a high degree of accuracy).
So what happens to Moodle and Blackboard post-breakup?
Short term: Probably not much
The most immediate short-term consequence for Blackboard is that they have had to change their product name. While they can continue to use the Moodle source code under the terms of its open source GPL license, Moodle Pty owns the trademark to the Moodle name. So Blackboard has had to change its product name to Blackboard Open LMS. They are able to say things like "Blackboard Open LMS is based on Moodle," but they can't actually call their product Moodle. That's a tricky messaging problem for them in a couple of ways. First, a big part of the company's sales strategy is to convert self-hosted Moodle customers to Blackboard's SaaS product, arguing that such a move provides customers with an easy migration and all the benefits of Moodle plus the stability of SaaS and the value-added features that Blackboard bundles with the product. With the product name change, the company has taken pains to emphasize that they remain committed to "an easy on-ramp and an easy off-ramp" for Moodle schools through continuing compatibility.
The second question is the degree to which Blackboard's customers have specific brand loyalty to open source, Moodle, or Martin Dougiamas' leadership. Blackboard reports some customer push-back in Southern Europe and little customer concern about the transition elsewhere. We have not yet seen evidence of large-scale concern from Blackboard's MoodleRooms customers about the transition, although such concerns would be not necessarily be visible to us this quickly if they exist. Blackboard's Moodle-derived business—I think I can still call it that—is not likely to contract in the short term as a result of the break-up and may or may not experience a slow-down in growth. We don't see any indicators of a slow-down at this time, but we'll keep an eye on it. (We're getting better at detecting switches from self-hosted Moodle to Blackboard Open LMS, so our ability to track Blackboard's growth on this platform will continue to improve.)
On Moodle's side, Moodle Pty. received $6 million AUD in investment money in the recent past. We don't know how much revenue they company lost with the ending of the Blackboard partnership, but the company has cash to burn if it needs to do so. This leads to at least two significant consequences. First, Moodle Pty's ability to pay developers to work on the platform is unlikely to be disrupted in the medium term. Second, unless the company changes its disclosure policy, it will be a while before we know how much the loss of Blackboard's partnership revenue impacted Moodle Pty and how well they have been able to compensate with new sources of revenue. If the company performs well, we may never know. If they are burning cash to cover for the loss of revenue, we won't see evidence of that until the cash runs out. Which could be a couple of years, even if things are not going particularly well.
Any visible impacts are likely two or three years out
For Blackboard, there are a few longer term risks. First, the rebranding and Moodle relationship may complicate their story enough that it creates more of an opening for competitors when self-hosted Moodle schools decide to move to external hosting. Second, there may be a quiet dissatisfaction with the rift among current customers that won't be visible until contracts come up for renewal. It's hard to gauge the size of these risks because there wouldn't be many visible signs of them this early. A lot will depend on the strength of Moodle's brand versus Blackboard's marketing and customer service execution. The longer term threat is that it becomes harder for Blackboard to retain Moodle compatibility as their code bases drift apart. That risk has more like more a four- or five-year time horizon, and a lot can happen in that time to change the potential impact of that risk. For Blackboard, the breakup may not have a major impact on their business. We'll see.
For Moodle, everything rides on their ability to grow alternative sources of revenue. The company has been touting newer offerings such as MoodleCloud, MoodleNet, LearnMoodle, and MoodleServices. Since we don't have any external evidence that these are material sources of revenue for the company, and since the company itself has not shared numbers that we can independently evaluate, it's very hard to tell what their chances are. Moodle has a huge installed base, which gives the project a lot of momentum. But the company that drives most of the core platform development has a business model that has not aged well and is in the process of diversifying into business models that are as yet unproven. I remember enough physics to know that momentum and acceleration are not the same thing. I think the risks are probably greater for Moodle Pty. than they are for Blackboard. But both sides of the equation bear watching.
This story feels like it's significant. But at this point, there's little hard evidence to show whether it will be, and if so, how. We'll just have to wait and see.