What incentives do universities have for offering free courses through Coursera, Udacity,...

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Donna Murdoch

Reputation. At this point, if a top tier Professor hasn't "staked their claim" on what they consider their topic of expertise, they are giving that topic to someone else. Imagine if you considered yourself one of the foremost experts in the country in your field. It is a land grab of credibility and expertise, and right now a very real reason that they are not diluting their brand, but actually solidifying it both for the Professor personally and in terms of the Institution. There will be others after, but the one who is first is going to be THAT person, plain and simple. Also, things are moving at light speed, and there is a perfect storm of reasons why this generation may be the last to experience Higher Education as we know it.

Remember, although today University of Washington announced that some Coursera courses will be enhanced to provide partial content for some of their "for credit" courses given in smaller classes, they are not created to be credit courses. These schools are not giving away credits, they are giving away a sample. 75% of the MOOC audience is International - and there we have another reason for "giving away" content on MOOCs. It is a fantastic international recruiting tool for the Universities.

I am purposefully leaving out the social good aspect of it all because I do believe that's a given underneath it all. But other quantitative reasons for having them include data! Big data. Lots of great data about the students that they give in order to register. And, at least in Stanford's Artificial Intelligence Course last summer, the top 1000 students (they began with 170,000, ended with I believe 25,000) received letters from Sebastian Thrun asking to pass around resumes to his friends at Google, etc. Is there a better way to vet potential employees?

My list can go on and on, and I don't think Coursera is something that will replace online education students will pay for to get credit. That's an entirely different topic (do they need degrees, etc.) I just wanted to answer the question at hand.

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Peter Baskerville

I really don't think that universities have sat down and figured out an answer to the incentive question themselves, so it's a bit hard to speculate on their behalf. I will however have a go at speculating an answer as to why it is happening.

Being part of a higher education institution myself, I have discovered two very distinct and equally powerful drivers - the passionate teachers who care about sharing their knowledge and helping individuals in the learning process and the administrators who care about the reputation and sustainability of their institutions.

I believe that the push to place free courses from the universities into the MOOC space is being 100% driven by the passionate teachers with the administrators going along with it simply because it's possibly the only sensible response to the unstoppable learning tsunami quantified by Sebastian Thrun and Peter Norvig with their free AI course. It's hard to believe the institutions are excited about voluntarily giving away for free what they have sold for tens of thousands of dollars for decades. The incumbent is rarely the promoter of such fundamental change so you have to wonder why they are doing this.

I think that the institutional administrators have little option but to support these passionate teachers hoping that a commercial model eventually emerges from the MOOCs that protects the institute's reputation without cannibalizing their on-campus enrollment and existing revenue streams. They hope that their on-campus experience, that helps individuals transition from 18-22 year-olds, will be of sufficient value to maintain the current numbers at the current price. They also see that if they don't support these passionate teachers within the institution then there are a growing number of venture capitalists who would be happy to underwrite the teacher's course development off campus and online.For example, if 160,000 AI students from Sebastian Thrun and Peter Norvig's course could be persuaded to pay just $20 to download the accompanying course worksheets/activities, you can see the commercial win for the teacher and the venture capitalist but possibly at the expense of the institution.

In response, these passionate teachers who are pushing content into the MOOC space, argue that they are sharing information and helping learners who are not currently part of the existing market for university products - like the 22-102 year olds, international students and the smart retired.

Still, anyone who has studied Schumpeter and Christensen will note the elements of "Creative Destruction"and "Disruptive Innovation" being unwittingly introduced by these passionate teachers. These theories explain that a paradigm shift to a new platform that destroys the old, begins with a groundswell of acceptance of a lesser quality but vastly cheaper product by the masses of people who are not currently served by the existing offer. With 4.2 billion working aged people on the planet currently denied access to higher education due to cost and geographic constraints, its easy to see how these free and easily accessible MOOCs will grow exponentially in acceptance in the years ahead.

These theories go on to explain that eventually the sheer weight of numbers in the new innovation attracts the best resources (teachers, industry experts, content) until even the privileged 5% of people on the planet who currently seek a college education via the existing university models, switch to the new model and in doing so destroy the revenue streams of the old. It's easy to see how the new super cheap price points of the new paradigm could support a teacher working virtually, but it's harder to see how institutions with their massive physical footprint and overheads could maintain their economic sustainability.

The following article supports my view that neither Coursera nor the universities have figured out the motorization strategy yet but it's clear that there is an intention to do so at some point, possibly in an innovative way that has not yet been discovered. (Think Adsense at Google) http://chronicle.com/article/How... The 8 possible motorization strategies documented in the Coursera agreement include: certification, secure assessment, employee recruitment, employee screening, human tutoring/manual grading, corporate enterprise model, sponsorship, tuition fees. See the agreement here https://www.documentcloud.org/do...

In summary, I don't believe that the university administrators are pursuing a well thought out business case in regard to free education. I'm sure they also see the cannibalizing threat of participating in the new innovation but they also see the commercial threat of their key resource (passionate teachers), supported by venture capitalists, leaving the institution and developing their own commercial learning models at a fraction of the price of the existing university models. Caught between a rock and a hard place, institutions are choosing to protect their short term cash flow option (by keep their passionate teachers in-house for now) in the hope that something will emerge in the new paradigm that will enhance the university's reputation and ensure its survival. I personally think institutions are operating on false hope and agree with Donna Murdoch's view that "this generation may be the last to experience Higher Education as we know it."

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Daniel Lemire

Those who think that this is all about altruism and sharing knowledge should probably read the fine prints. This is free in the sense that Quora, Facebook and Google are free. We are not talking of free as in Wikipedia or Linux.

These are business investments. Coursera has received $22 million in VC funding so far (from what I could tell). Udacity has also received VC funding though I could not determine how much. Colleges participating in Coursera probably have some kind of deal whereas they get equity or the equivalent in the venture.

There is a real possibility that they could turn into highly lucrative businesses. It is impossible to tell at this point, but these $22 million could turn into $2 billion or more. This would still be only a very tiny chunk of the overall higher education market, but even so, it would multiply the value of the initial investments severalfold.

And, well, if it does not pan out, this project still makes the colleges look forward-thinking (marketing!).

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