Online Education Business Models (or lack thereof)

By Deane Barker on January 11, 2013

Students Rush to Web Classes, but Profits May Be Much Later: Online courses are springing up like crazy. Sadly, business models are lagging behind.

All of this could well add up to the future of higher education — if anyone can figure out how to make money.

Coursera has grown at warp speed to emerge as the current leader of the pack, striving to support its business by creating revenue streams through licensing, certification fees and recruitment data provided to employers, among other efforts. But there is no guarantee that it will keep its position in the exploding education technology marketplace.

A market disruptor? Maybe. But here’s the sobering part.

Right now, the most promising source of revenue for Coursera is the payment of licensing fees from other educational institutions that want to use the Coursera classes, either as a ready-made “course in a box” or as video lectures students can watch before going to class to work with a faculty member

[…] Many educators predict that the bulk of MOOC revenues will come from licensing remedial courses and “gateway” introductory courses in subjects like economics or statistics, two categories of classes that enroll hundreds of thousands of students a year

So…someone has to be paying for it in the end.  The goal of free education may be inspiring, but if there’s not a student willing to pay tuition for it at some point down the line, then it’s tough to find the revenue to continue it.