ERIC Number: EJ992924
Record Type: Journal
Publication Date: 2012-Jul-19
Reference Count: N/A
Inside the Coursera Contract: How an Upstart Company Might Profit from Free Courses
Young, Jeffrey R.
Chronicle of Higher Education, Jul 2012
Coursera has been operating for only a few months, but the company has already persuaded some of the world's best-known universities to offer free courses through its online platform. Colleges that usually move at a glacial pace are rushing into deals with the upstart company. But what exactly have they signed up for? And if the courses are free, how will the company--and the universities involved--make money to sustain them? Some clues can be found in the contract the institutions signed. "The Chronicle" obtained the agreement between Coursera and the University of Michigan at Ann Arbor, the first public university to make such a deal, under a Freedom of Information Act request, and Coursera officials say that the arrangement is similar to those with the other partners. The contract reveals that even Coursera is not yet sure how it will bring in revenue. A section at the end of the agreement, titled "Possible Company Monetization Strategies," lists eight potential business models, including having companies sponsor courses. That means students taking a free course from Stanford University may eventually be barraged by banner ads or promotional messages. But the universities have the opportunity to veto any revenue-generating idea on a course-by-course basis, so very little is set in stone. Coursera is following an approach popular among Silicon Valley start-ups: Build fast and worry about money later. Venture capitalists--and even two universities--have invested more than $22-million in the effort already. Coursera's leaders say they are actively pursuing only two of the moneymaking ideas on the list: (1) charging students who pass the courses a small fee for a certificate; and (2) serving as a matchmaker between students looking for jobs and companies seeking qualified employees. Even those two ideas are works in progress, though. None of the partner colleges have decided how much they will charge for certificates. And the company is still studying how best to work with employers, and how much to charge. When and if money does come in, the universities will get 6 to 15 percent of the revenue, depending on how long they offer the course (and thus how long Coursera has to profit from it). The institutions will also get 20 percent of the gross profits, after accounting for costs and previous revenue paid. That means the company gets the vast majority of the cash flow.
Descriptors: Income, School Business Relationship, Higher Education, Student Costs, Corporate Support, Online Courses, College Students, Colleges, Electronic Learning, Educational Finance
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education; Postsecondary Education
Authoring Institution: N/A
Identifiers - Location: Michigan
Identifiers - Laws, Policies, & Programs: Freedom of Information Act