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Monetizing MOOCs…

Paying for Proof
January 9, 2013 – Inside Higher Ed
By Paul Fain

Coursera will offer a fee-based pathway with identity verification for students who want to earn a more meaningful certificate of completion, the company said today in an announcement that also sheds light on an emerging business model for the largest massive open online course (MOOC) provider.

University partners and Coursera will jointly issue certificates under the fee-based option, affixing their powerful brands to them but not issuing credit for the courses. Fees will range from $30 to $100, with an initial group of 5 courses getting the deluxe treatment. However, company officials said most Coursera offerings would include the fee-based variety by the end of the year.

The for-profit Coursera has enrolled more than 2.2 million students so far in its 213 free online courses, which are taught by professors at 33 prestigious universities. While the company has attracted $22 million in venture capital and a boatload of hype in its first year of existence, this may be its clearest source of revenue. Other money-making experiments include licensing its courses to colleges, with Antioch University being the first to sign up, and possible partnerships with employers that are interested in hiring high-performing students.

A free option will remain in place for all of Coursera’s offerings, and students who can’t afford fees can apply for aid. Company officials said they want to provide high-quality online courses to everyone, including students in the developing world, where Coursera has had early successes.

Under the new verified option, dubbed “Signature Track,” students will need to submit their pictures to Coursera through a webcam, as well as an image from a picture ID that the company deems verifiable. Coursera will also create profiles of students’ unique typing patterns, the company said. Once students have registered a keystroke signature, determined by typing a short phrase, they will use the same phrase to log in when submitting work in a course.

When students earn a verified certificate, they will be able to electronically share their “detailed course performance” through a personal course records page hosted by Coursera, the company said.

Revenue from the fee-based path will be split with partner universities. A Coursera spokeswoman said universities would keep 6-15 percent of revenue from courses taught by their professors, as well as 20 percent of profits.

Money isn’t a major concern for some of Coursera’s partners, at least not now.

“I never thought about the revenue part of it,” said Peter Lange, provost of Duke University, which will be participating in the pilot program for fee-based courses. Duke’s goal for participating is about the global classroom, he said. “All these MOOCs allow our faculty to extend their reach.”

Free or Fee?

While most Coursera partners have deep pockets, the courses come with costs, including a professor’s time and salaries for videographers and other assistants who help run the courses. At the University of Washington, for example, creating a MOOC for Coursera costs about $15,000 to $30,000, said David Szatmary, the university’s vice provost of educational outreach.

Washington has already begun a hybrid model in its collaboration with Coursera, where the standard, free MOOCs are offered simultaneously with more academically rigorous credit-bearing versions, which include a fee. Last year the university offered two of its souped-up Coursera courses, which cost $1,000 for noncredit and $2,000 for credit options. Only a handful of students registered for those versions, but Szatmary said that was partially because the university had little time to promote them.

The numbers of fee-based Coursera applications are up for winter courses, said Szatmary, with 26 students applying to enroll in one course in computational finance. While that group is a tiny portion of the more than 30,000 students who signed up for the university’s Coursera offering in computational finance in the fall, it doesn’t take much to break even. Szatmary said 15-20 students would do it.

A similar calculus could apply to Coursera’s new verified courses, where a relatively small number of full-freight students would cover costs for tens of thousands of their peers enrolled in free versions. For example, 1 percent of students paying $50 in a course with an enrollment of 100,000 would create $50,000 in revenue.
Fee-Based courses from Coursera

UCSF: Nutrition for health promotion and disease prevention
UCSF: Clinical problem solving
Duke University: Introduction to genetics and evolution
Georgia Tech: Computational investing, part I
University of Illinois: Microeconomics principles

MOOCs are technically only “open” if they are free. So for Coursera, the pathway to credit or verifiable credentials will likely not be that of a pure MOOC (perhaps a MOC, or even an OC if few students go the fee-based route?).

Today’s announcement “shows that they’re focused on selling credentials as opposed to selling content,” said Stephen Downes, a senior researcher at the National Research Council of Canada.

But that’s still a good thing, said Downes, who along with George Siemens and other digital pioneers helped come up with the concept for a MOOC. “Each one of these developments is pushing online education forward,” he said.

Coursera is also doing its part to link the concept of openness with online higher education, Downes said, and the next frontier for MOOCs should be “open credentials.”

Credit Remains Elusive

While Coursera’s fee-based choice will not lead directly to college credit, students could use the certificates to try to earn credit through prior learning assessment – the process of measuring college-level learning gained outside of the traditional academic setting. And the company described the verified pathway as a step toward credit and credentials.

Students will have two to three weeks to choose the fee-based option, and will then need to complete the verification process. Ensuring that students are who they say they are can be a problem in online courses that enroll tens of thousands of students, or more. But so far the stakes have been low for preventing academic dishonesty because the MOOCs don’t lead to credit. It’s hard to get too worked up about cheating on a course where the most obvious goal is self-improvement and nobody really knows the students’ identities.

That is changing, however, as Coursera’s co-founders, Daphne Koller and Andrew Ng, have said in recent months that they want Coursera’s courses to lead to credits or alternative credentials, which students could use to advance in their careers. Koller and Ng, both Stanford University computer science professors who are on leave from the university, say low-cost, high-quality MOOCs could help more students earn college credentials.

One path will be through credit recommendations issued by the American Council on Education (ACE). In November the council announced that it would work with Coursera to assess whether completers in a few of the courses should earn credit recommendations from ACE, which are honored by many (but far from all) of the council’s 1,800 member institutions.

“We believe strongly in the value of a college degree and, by offering these high-quality courses to students in a way that opens the potential of college credit, we hope to ease the path for students toward graduation,” Koller said at the time, in a written statement.

But for that to work, Coursera needed to find a way to be confident about student identities. The company has built most of its own verification technology, a spokeswoman said, but would consider using third-party vendors if necessary. ACE’s credit recommendations would eventually require a similar verification process, she said.

For Coursera to earn money on certificates, the company will need to keep its student verification costs down. That can probably only happen if it is fully automated, Downes said, which is Coursera’s plan for now.

“Any time you bring in human intervention your efficiencies of scale are gone,” said Downes.

The company’s verified certificates share similarities with a relatively new option of site-based assessment from Udacity and edX, which round out the big three of MOOC providers. Students can sign up to take assessments based on courses from the two MOOC providers, likely with a fee included ($89 for a Udacity course). The tests are proctored and, in Udacity’s case, administered at Pearson-owned testing centers. Students who pass them get a bulked-up certificate of completion.

The potential for earning credit for free, or relatively cheap, online courses is certainly tantalizing. But don’t bet on Coursera’s university partners making the leap to issue credits for their MOOC offerings.

“Most of our peers probably wouldn’t take a free Coursera course certificate for credit,” said Szatmary. He also said that the University of Washington would not sign certificates for their own free Coursera courses. “We obviously don’t want to compete with ourselves.”

Lange, for his part, said even the verified Coursera certificates are a form of alternative credential, with possible uses including career advancement or personal enrichment.

“I don’t connect this to credit,” he said. “I connect this to a credential that a person will be able to use as he or she chooses.”

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