Coursera is an internet-based company that works with universities to provide free courses on various topics. Many offered courses are taught by well-respected university professors.
Quite a bit of speculation has been going on regarding the business model of Coursera. Here is the wiki summary -
The contract between Coursera and participating universities contains a “brainstorming” list of ways to generate revenue, including certification fees, introducing students to potential employers and recruiters (with student consent), tutoring, sponsorships and tuition fees. As of March 2012, Coursera was not yet generating revenue. That July, certification and the sale of information to potential employers was being explored. Thus far the company has been funded by $16 million in venture capital awarded in April 2012. John Doerr suggested that people will pay for “valuable, premium services”. Any revenue stream will be divided, with schools receiving a small percentage of revenue and 20% of gross profits.
Here is the fully executed agreement document of Coursera with Universities discussing potential monetization strategies. Let us summarize.
1. Coursera will provide certificates for those taking classes with it. We presume the certificates will come for a fee.
2. Coursera will charge fee for testing a person.
3. Coursera will allow employers to assess potential employees by going through electronic data.
4. Coursera will get paid for human tutoring service.
5. Corporate employee training for a higher fee.
6. Website ads.
7. “For certain courses, tuition fee will be charged (after an initial free period)”.
Here are four other links discussing Coursera’s business model.
How much money is being invested?
NY Times tells us that -
In less than a year, Coursera has attracted $22 million in venture capital and has created so much buzz that some universities sound a bit defensive about not leaping onto the bandwagon.
Other approaches to online courses are emerging as well. Universities nationwide are increasing their online offerings, hoping to attract students around the world. New ventures like Udemy help individual professors put their courses online. Harvard and the Massachusetts Institute of Technology have each provided $30 million to create edX. Another Stanford spinoff, Udacity, has attracted more than a million students to its menu of massive open online courses, or MOOCs, along with $15 million in financing.
We are actually not that concerned about Coursera’s business model. Maybe the company will be successful, or maybe the shrewd VCs will successfully dump it on some hapless pension fund.
Our question is why university professors are helping this business to succeed. What is in it for them and how is it legally allowed.
A set of organizations were granted non-profit status in USA, because they provided useful ‘charitable’ services. 501(c)(3) clause covers -
Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.
Given that education is the core mission of Universities, how can they ‘outsource’ it to a private business and still maintain non-profit purpose. Please shine some light on it, because we have no training in law.
If you ignore the above aspect of legality and treat the Universities as tax- free businesses, why are their professors collaborating with the company to make it successful? It seems like Coursera’s business model will decimate traditional ‘business model’ of universities. What do well-respected professors gain by giving their intellectual contributions away to Coursera?
For example, if Coursera charges $100 to give someone a ‘Genomics 302’ certificate from Lander, why will that someone pay $3000 to take genomics course from University of Northern Anchorage? I see the relative advantage of Eric Lander over University of Northern Anchorage up to that point, but if we extend the line of thinking, is not Coursera destroying the business model of University of Elihu as well?
Please note that we are not suggesting that Coursera is doing something unethical or the company should not exist. With ease of electronic communication, it is inevitable that distant learning will provide value to some people. We are wondering what the University professors gain through the exchange.
Edit. We first rejected the following link thinking that it was from the Onion. These days reality is more hilarious than the funny-sites.