Money Models for MOOCs

in Noteworthy
September 30th, 2013

BU Professors consider business models for MOOCs.

Despite the massive media ink spilled over massive open online courses, the ink spilled by MOOCs themselves remains red. MOOCs lose money. Most are free. Universities and venture capitalists subsidize them while searching for the class of the future. This cannot continue but their future, we believe, is bright.

After years of trying to replicate old business models online, companies, or their competitors, built platforms that offer free service and information as bait to attract users and their activity. These platforms monetize eyeballs, comments, referrals, and relationships based on two key ideas:

  • Charge for complements, including analytics and value-adding activities performed by users.2 Red Hat Linux offers Linux software for free and charges for consulting and technical support. Tumblr offers blogging and social networking for free and charges for analytics. From a MOOC’s perspective, teaching a man to fish allows us to sell him a boat. We can also sell the fish he caught while learning.
  • Charge a different group with interdependent demand. TripAdvisor offers free advice to travelers and charges airlines and hotels. LinkedIn offers many free services to job seekers and charges recruiters. Teaching a man to fish, we can charge fleet captains who hire him.

The first idea defines what one pays for, which can be content or complement; the second idea specifies who pays. We used these ideas to create a matrix of possible business models, shown in the accompanying table, and identified a number of plausible money models for MOOCs.

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