The future of online courses?

My own university, the University of Queensland, has around 6 flagship courses that it puts online for free, in a deal that involves universities from around the world who put up the courses that they excel in. It typifies the current reality of online courses: it is free; it is relatively high-quality; and almost no-one uses them because it is not material that is worth something.
Online courses currently are much like bootlegged high-class literature: it enables those who are self-driven to learn something about everything without paying for it, but it does not tap into the money streams of the education market, which, after all, is a market of diplomas and accreditation. Until online courses come with accreditation, there simply is no money in online courses and we are looking at the academic equivalent of owning horses: a gentlemanly way to get rid of your money.

What would a future with accreditation look like? Since students want high-name brands, it would involve many thousands, perhaps millions, of students doing the same exam by a top-brand name at the same time, and receiving a diploma from that top-brand name based on the exam results.

How would this work? Well, since it is important for a top-brand name to maintain confidence in its brand, that top-brand would have to control the examination as it happens all around the world simultaneously. This means it will only send out the exam seconds before the start of the exam, but much more importantly, it will mean that the people doing the exam will be monitored by cameras and brand-accredited examiners all around the world.

In effect, we would thus be looking at a system of world-wide examination rooms in which one can do, say, 1st year biology from Harvard, 2nd year physics from Oxford, and 3rd year economics from a conglomeration of Dutch universities (like the Tinbergen Institute). The material on which the exam is based will then be online and for free, but local universities will have provided tutorials in which students get trained and in which their misconceptions get ironed out so that they understand the material: the ‘low-tier’ universities start to become a franchise of the high-tier universities and they mainly offer feed-back on the learning of their students.

What is in it for the high-tier universities? Lots and lots of money. One might think that Harvard is filthy rich now with reported endowments in the tens of billions of dollars, but think of what Harvard would be worth if 1 in 10 students on the planet took its exams at a designated fee? At current population levels, that would be in the vicinity of 20 million students per year, each worth several thousands of dollars. The market value of teaching 20 millions students per year would then easily run in the hundreds of billions. That’s a lot of money on the table and some high-class university is going to go for it.
What is in it for the low-tier universities? For the first-mover ones, a greater market share. A third-tier university can make a real jump quickly by pre-empting. For the later-movers, it will be a question of survival. Simple market pressures will force many low-tier universities to abandon their own courses and opt for franchise status once the franchise game gets going.

How can local universities and local academics rescue some degree of market power? By offering content that is not generic and that thus involves something unique, such as the biology of the area, the economy of the particular country, or the geology of the local mines. Universities and national academies of scientists will have a strong incentive to exaggerate the importance of that local content, but in the end it will be the market that decides how important it really is. And of course if this market becomes well-established the emerging big brand names can easily add in some national and practical content where needed, just as international car manufacturers can vary the side they put the steering wheel and the colour of the cars they produce.
What should one think the time-frame of all this to be? Well, the technology needed to do it is already there and the networks in which to trial such franchising are pretty much established as well. So all that we seem to waiting for is a top-tier university that grasp the bull by the horns and finds local partners. It needs a Bill Gates, a Steve Jobs, a Richard Branson, or some other such entrepreneur at one of the top places. And once this train is in motion it is easy to see that the market pressures can move things along very quickly.

For those in universities that do not have a top brand-name, it is a matter of either waiting in trepidation or jumping the gun and offer oneself as the meek follower of overseas fashions. In economics in Australia, it has been the norm for years now to meekly follow the big overseas textbooks (whether spruced up a bit with minimal local content or not). The next step is for the overseas suppliers to cut out the middlemen, the local academics, entirely.

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12 Responses to The future of online courses?

  1. Moz in Oz says:

    Why do you think it would be worth thousands of dollars for an Australian student to sit their first year biology exam from Harvard rather than a local university? Even one thousand dollars would seem to be quite a high fee. Especially if those universities don’t standardise on requirements and accept each other’s exams (there would seem to be an advantage to each university in not doing either). For a complete degree “exams sat at 5 different presitge universities, degree granted by local university” would seem unlikely to be much more attractive than just the local degree. Especially in markets where “presitige degree” is a social marker rather than evidence of remarkable competance.

    The other change that would be required for your secnario would be a student loan scheme that allows students to pay any university, anywhere, the money they borrow through HECS. Otherwise the market will be limited to those students who have a few thousand dollars a year to throw at overseas universities. And policing that will be difficult, putting the government in the position of deciding which overseas universities it should accredit.

    Not to mention that if the fees are global rather than matched to local pricing a lot of people won’t be able to afford them, but if they are “exam tourism” will be hard to defeat.

  2. Paul Frijters says:

    “Why do you think it would be worth thousands of dollars for an Australian student to sit their first year biology exam from Harvard rather than a local university?”
    For pretty much the same reason that people are willing to pay a lot more for a Ferrari and a bottle that says ‘Champagne’ rather than ‘sparkling wine’. Social status and other signalling reasons.

    • Moz in Oz says:

      You think “I didn’t go to Harvard, but I did pass one first year course in their MOOC” would be a prestige announcement?

      I can almost beleive that for some of the filler degrees for the 1%, but by definition if you’re selling to the 1% you’re not mass market. And to the extent that you succeed in the mass market, you’re not selling presige to the 1%. There’s a reason Porsche created the “people’s car” brand rather than putting his own label on the beetle.

  3. conrad says:

    I imagine the problem for the high level universities is that if you offer anything to anyone, you wreck your brand, especially when part of that brand includes some aspects of social networking rather than just a degree.

    Another problem is that just offering material isn’t enough — the problem is assessment and interaction, and once these are put in, the cost isn’t too different to now, even for subjects that don’t require labs and things like that. Indeed, if online courses are run well, they probably cost more to run than face-to-face ones. The problem now is that everyone wants to make money from them, and online courses often end up as poor equivalents of the non-online ones (as you note — basically good for self-motivated for people that could have learned the stuff anyway, which isn’t necessarily the market universities are targeting anyway). In addition, if, for example, MIT sold its course material (which for many courses, isn’t very thrilling if you look through all their free notes), they would then lose credibility as poorer providers did a poor job selling it.

  4. derrida derider says:

    conrad’s point about costly interaction is fair enough, but I think you need to distinguish the interaction needed for learning (eg labs) and the interaction needed for accreditation; the latter still has value on its own. I personally would pay something for a certificate proving I learnt stuff from that Stanford course on game theory I did a while back, even (especially, in fact) if the learning was self-motivated.

    I think this could be done surprisingly cheaply if it’s organised well. There’s gotta be a business opportunity here for a multinational firm offering fee-based standardised and credible exam organisation (including invigilation). Exam marking would be by the institutions, but (as at present for MOOCs) automated.

    Only students sitting the exam would pay the fee, and the institution gets a cut. While these would be only a small minority of those “thousands, even millions” enrolled in the course, given the numbers that still would generate a modest revenue flow from each course to cover the course’s modest cost. If some uni wants to turn it into a major profit centre they’ll need to offer one or more definitive courses in specialised topics that people worldwide will recognise as the one to beat on that topic (that is, get relatively price-inelastic people sitting its exams).

    Such a firm would get scale economies by running sessions where students from many courses and institutions sit exams together, even subcontracting local schools or colleges as possible and needed outside major cities. If it was big and efficient enough institutions would soon start outsourcing exam sessions to it for their face-to-face students too. In any case the exam fees would be way, way less than a thousand dollars.

    Anyone for a Kickstarter project?

    • conrad says:

      To some extent, the IT industry already runs along these lines (e.g., Cisco and Microsoft certification), although I’m under the impression that they’re not generally running on the cheap side of things.

    • paul frijters says:

      Hi DD,

      we seem to think of this in similar ways. I dont think thousands per course is going to occur, but thousands per year does sound reasonable to me. If you end up with perfect competition then indeed profits would be driven down, but I think you will get strong market concentration in many countries and of course one can easily price-differentiate by country, so I do think there is a lot of money in this. If a third-rate university in Australia would start to offer an Ivy-league exam degree in business then I suspect that it would get a lot of interest of students who would otherwise go to GO8s. By doing away with lectures and focus just on the tutorials, the subservient university would be able to make large cost-savings (effectively, it only needs to buy in quite targeted and narrow knowledge, and can do away with large lecture halls).

      I agree with Conrad that the business model I am proposing is already around in other industries. I can’t really see what is going to stop this happening in university land.

  5. Matt B says:

    In the Australian context – unless the income contingent loan system is prepared to pick up the tab – it is hard to see overseas qualifications getting too much traction. They may play a niche role for those with a high level of education to get access to specific skills and knowledge or rock star academics (which is already the case) but I can’t see them getting significant market share for the mass/universal undergraduate market. The Tudge working group looked into extending online education and Robb is keen for Australia to service millions of international students – we may see more students take on online options but the combination of up front cost barriers, protectionism of local provision and the importance of face to face social networking will in my view make local (australian major city) providers the dominant form of higher education provision for some time yet. If one looks at melb uni’s latest strategic plan discussion paper they see the opportunity in online professional program’s rather than mass undrgraduate education and will continue to offer an on campus experience centric undergraduate offering

    • Paul Frijters says:

      why would the HECS system prevent this? The savings made on academics and lecture halls would probably be more than enough to pay for this and local universities simply count it as a legitimate ‘service provision’ expense. No change in funding model needed at all.
      I agree the GO8s will hold out as long as they can for the reasons you note (local monopoly power) but can think of plenty scenarios in which third-tier universities in Australia go for it. For one, its an easy way to offer lots more degrees. Secondly, it is probably cheaper for them and solves the problem of reputation for them. Once they start offering top-brands, it is hard to see the GO8 holding out for long.

  6. Anna says:

    Online courses offer fllexible learning.
    I am thinking of doing a certificate III course in health.

  7. Tracy Fullmer7 says:

    Hi Anna,

    You can check this site for certification and course

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