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Is there a business model for MOOCs?

Considering the costs of offering massive open online courses and the return on investment
University Business, December 2013
See which colleges and universities are paving the way in analyzing business models for MOOCs
See which colleges and universities are paving the way in analyzing business models for MOOCs

An increasing number of colleges and universities are offering MOOCs, but few have crunched the numbers to determine whether these online courses can succeed as a business proposition. Where return-on-investment conversations are happening, they generally aren’t leading to comprehensive analysis.

Some institutions, however, are paving the way in their attempts to analyze the potential of MOOCs as a business model.

(Related UBTech presentation: One University's Experience with Coursera.)

Syracuse U: Comprehensive ROI analysis

One school that has run a detailed analysis is Syracuse University, which offered a data science MOOC for the second time this fall, says Jeff Stanton, senior associate dean in the School of Information Studies.

The first iteration of that MOOC cost about $28,500, nearly all of which was labor, Stanton says. “We accounted for everybody’s salary, right down to the last student helper we had involved. We tried to capture time that occurred in the preparation. … I know each person’s role and roughly the amount of time [each was] putting into the MOOC.”

Other costs were minimal because the university already had the textbook and video recording capabilities in house, and the school used the freeware Blackboard product CourseSites to build the MOOC. Primarily, the venture was approached as a learning experience, Stanton says. “We wanted our instructional support staff to be able to understand what was involved and experience for themselves some of the difficulties. That was an important aspect.”

Anyone who successfully completed the MOOC was offered a 20 percent scholarship toward a certificate of advanced study in data science, a 15-credit program that’s state approved as an advanced graduate program.

“We were trying to achieve some synergy there,” Stanton says. “If they completed the MOOC, we felt like they were capable and successful. We had no idea how many people would take us up on it.” The scholarship, worth about $3,750, is given progressively over the individual’s completion of the whole program, he notes.

Ninety people completed the MOOC, of whom eight matriculated into the program this fall. At $1,250 per credit hour, minus the 20 percent discount, Syracuse will reap $15,000 per head—or $120,000 total if all finish the certificate.

“It was definitely worth it,” Stanton says. “I haven’t talked to anyone in the university who was disappointed. People see its potential as a tool for raising awareness.”

In a follow-up survey of students who took the MOOC, more than half the respondents said they’d had no prior contact with Syracuse. “

Hundreds of people potentially interested in graduate study now might consider us as an alternative to other options,” he says. “From that perspective, it’s been very successful. ... It gives students a chance to try before they buy. They can see the level of the curriculum. They can see whether they’re interested in the topic.”

B-School at Temple U: Why students complete

In September, the Fox Business School at Philadelphia-based Temple University launched its first MOOC, a statistics course in its online MBA program. Officials hope prospective students will get a taste of Fox’s online program, which delivers courses in a four-week, compressed format.

For each student who completes the course, Fox is paying about $70 for a Pearson Math Excel product and a complementary product from Instructional Connects that helps with grading assignments, says Darin Kapanjie, managing director of online and digital learning, and academic director for the online MBA and BBA programs.

An assistant professor of statistics, Kapanjie isn’t getting paid anything additional for managing the MOOC.

To help provide clues related to ROI, Temple plans to do follow-up surveys with everyone who enrolls. For those who don’t complete the course, “I want to know why,” Kapanjie says. For the others, he wants to find out if they’re hoping to apply for the MBA program, if they’re MBA graduates looking to sharpen their skills, or if there’s some other purpose. “Hopefully they have a good experience and good, positive things to say about Temple University and the Fox School of Business,” he says.

ROI includes “brand awareness,” he adds. “Your best marketing is word-of-mouth.” Someone taking the MOOC might tell a friend to look at Temple.

Denise Harris, vice provost for student engagement at Hilbert College, talks about ensuring strong ROI through restructing of the student affairs office and focusing on retainment. 

Cuyahoga Community College: Indirect investment returns

Cuyahoga Community College in Ohio offers a MOOC on developmental math, which is still available online but is no longer being monitored. As a two-year school, Cuyahoga looks at ROI a bit differently, says Sasha Thackaberry, district director for eLearning Technology.

The benefits range from the granular, such as students finishing developmental ed more quickly and successfully, to more societal, she says.

“What is the loss to us, as a region, every subsequent year it takes a student to graduate?” she says. “What does it cost us as an institution when students are not successful—if they don’t get into college-level courses, if they’re not able to progress toward a degree. What are we, as a region, missing from that student not getting a better job?”

Cuyahoga received a $50,000 Bill & Melinda Gates Foundation grant that paid most costs of the MOOC’s launch, although there were in-kind costs related to faculty and staff time, Thackaberry says.

“We’re not sold on this model,” she says. “Is it effective? Is it something we can collaborate with our faculty on? What do our students say about it? There are a lot of unknowns.”

Wesleyan U: Content above costs

Even at universities that haven’t gotten detailed in their analyses of MOOCs’ ROI, the topic is on officials’ minds. Wesleyan University in Connecticut has offered six courses as MOOCs. The three running this fall cost an average of $5,000 in stipends to faculty members, wages for teaching assistants, and equipment that would not otherwise have been purchased, says Sheryl Culotta, director of graduate continuing studies.

“Wesleyan has really followed the model of focusing on the quality of the content more than the quality of the production values,” she says. “We’ve invested less than other people might have. I’ve heard people throw out numbers that are significantly higher than what we’ve spent.”

Students taking the courses, through Coursera, have reported to Wesleyan that they appreciate professors sitting in their offices and recording lectures with their own webcam, Culotta says. “They know the personality of the professor more than in some of the slickly produced courses,” she says.

The school has not attempted to measure the hard-dollar ROI aside from a “small amount of revenue” from Coursera.

Culotta says expanding the school’s offerings to people outside of campus furthers its social mission and helps to market the school. So far, 427,000 people have taken Wesleyan’s MOOCs, and approximately two-thirds of them have been from outside the U.S. “We’re looking at it in the bigger picture,” she says. “If we wanted to market Wesleyan University internationally for $25,000, what would we get? Nothing.”

She acknowledges that most international MOOC takers aren’t 16-year-olds looking to enroll in Wesleyan.

“It’s getting the word out and enhancing the reputation of Wesleyan, which is a good thing for us,” she says.

Ed Finkel is an Evanston, Ill.-based freelance writer.