Avid Investor cum "Economist" Jim Rogers warned that the traditional model of universities might not be sustainable thanks to the bureaucracy and the seniority model they employ. They are barely running as profitable businesses but faculties that merit scholars and academicians, not realists and investors. But how about the Online University business model? Nothing about it was mentioned in the book, Street Smarts. However should we be applying his rule of investment correctly, I'm assuming we could spot the gem or dirt through a few questions highlighted below:
1. Is Online University sustainable as an educational initiative?
Yes it reaches millions of users over months with the huge initial investments.
Yes it offers flexible pacing option for students all over the world which could prove attractive to the students or adults.
Yes it comes mobile and is available all time everywhere globally as long as there's internet access, except North Korea.
The doubts however are on these. Can students and adults really learn real professional skills via the net? How about the social and interactive side of online education? If recruiters cannot correctly assess applicants' abilities via phone or Skype interviews, can educators effectively assess students' abilities and learning via the net? How efficient would the process be for geographically dispersed individuals here?
TED Talk works but with sponsorships and it's mainly spreading of ideas rather than transferring skills. Not to mention it is non-profitable.
2. Is and will Online University be profitable business?
Yes if the conversion rate from free users to paid online education services are high enough. Coursera started with 1-2% conversion rate at its inception but it's growing. It charges for its verifiable certificates upon completion which are still vying for credentials but it services millions of users for free. Social entrepreneurial model definitely but as a profitable business it is too early to tell. However on the upside, it offers a feeder system for traditional university enrollments.
Udacity charges an average of USD150/month plus coaching plus personalized mentoring plus all free-of-charge materials online. Its user base range from 24 to 34 years of age, mostly IT professionals keen to upskill on Big Data, Mobile, Web Development & Programming.
Coursera raised USD85million over 2 rounds of fund raising by Sept 2013 since its inception in 2012 Spring but to date, its return is barely 10% of its investments, yet. The Singaporean government has spent some modest amounts to organize data science courses for both the government and non government staff through Coursera.
3. What is Tertiary Education or Professional Cert in essence?
A paper certification extremely focused at getting you a job at a company you want?
A learning experience that entails social aspect and physical involvements?
An ideal aspiration to empower everybody to live the American Dream, or the Chinese, the Indian or the Malaysian Dream? Sebastian Thrun, CEO of Udacity believes in democratizing education so education is optimized for everybody and woven into their daily fabric. He dreams of a day where online educational is like toothbrush to us as our trusted partner in life. On the other hand, Richard C Levin, CEO of Coursera sees Online Education platform as an avenue for notable partner universities to magnify their global impact.
AT&T and some top tier Silicon Valley employers such as Google & Facebook are collaborating with Udacity to absorb their Big Data graduates.
Coursera has 110 notable partner universities around the world including names like Yale University, Stanford, John Hopkins, Princeston, University of London, Tokyo University, Peking University, Nanyang University, National University of Singapore, Nanyang Technological University, etc.
4. What are the challenges or barriers of Online Education?
Sebastian, "the trust that comes and our ability to deliver the users' and partners' expectations. How do we create fun like online lessons similar to that of games to get students and learners addicted because online education is more than watching a Youtube video, it demands for your diligence and dedication."
The high dropout rate, 1-4% finishing rate thanks to the flexibility and the inflexibility of arranging resources for coaching and mentoring. The ease of signing up these online courses also encouraged the mismatch of students' capabilities to the wide selection of courses.
As for the anticipated Disruptive Innovation, no Superstar Syndrome or displacement of tier-2 and tier-3 universities happened yet. Superstar professors seem to be happy under their institutions still and not venturing out to go into business on themselves.
The Revenue-Split model, incentivising the contributors is still not an easy split-the-top-line-revenue option but one complicated model that considers many aspects.
5. What is the future of Online University business model?
More direct projects with industries, 1-on-1 mentoring with students, vocational courses, corporate courses, interactive lessons with video quizzes or peer grading every 6-8 minutes of lecture, connections, discussion groups, higher price points to speak to professors real time, etc.
In short, it is a social entrepreneurship business model to date. Will it turn into a profitable business soon? That's for you to figure and ride on.
Other relevant studies and links:
1. Democratizing Education by Richard C Levin, CEO of Corsera with BFM Radio on 14th Nov 2014.
2. Can Udacity Democratise Education by Sebastian Thrun, CEO of Udacity with BFM Radio on 19th Dec 2014.
3.Corsera Official Website
4. Udacity Official Website
5. Adec Official Website
6. Coursera CEO Richard Levin: Democratizing Learning Takes Time
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