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Business Models for Opening up Education: Sustainability of MOOCs, OER and related online education approaches in higher education in Europe

Abstract

This D-TRANSFORM report - Business Models for Opening up Education: Sustainability of MOOCs, OER and related online education approaches in higher education in Europe - is designed to provide guidance for senior managers in higher education institutions, mainly in four Member States of the EU – France, Italy, Spain and UK – when they come to consider whether to deploy MOOCs and related approaches, and how to justify such decisions in terms of business models and strategic relevance.

There is a focus on public sector institutions, but the full range of university provision is considered, including the open universities and innovative private providers of higher education.

In order to give the work the widest possible relevance to Europe, three other European countries are looked at (Hungary, Ireland and and Belgium Francophone Community) and guidelines given so that readers can research information for their own countries in order to create relevant business models.

The report looks in detail at business models for US-based MOOC aggregators such as Udacity and Coursera, but with the focus on lessons that can be adapted for the European scene. This differs in several ways from the US, including on accreditation issues.

It also draws insights from the range of OER, MOOC and online learning developments across Europe.

The report aims to be up to date with MOOC developments until March 2016. Many interesting developments have only fully come to light in the last few months.

Foreword

This report does not aim to provide a historical review with a full set of references. That is a worthwhile exercise, but is not the purpose of this report. Nor is it supposed to be a triumphalist description of the War between Distance Online Learning and MOOCs along the lines of the Battle for Open (Weller, 2014), culminating with a view of "who won". Nor is it an up to date inventory on "who runs MOOCs" across Europe. (That would have been a massive amount of work.)

Rather it is designed to provide guidance for senior managers in higher education institutions, mainly in four Member States of the EU - France, Italy, Spain and UK - when they come to consider whether to deploy MOOCs and related approaches, and how to justify such decisions. Just because of the relative numbers, there will be a focus on public sector institutions, but it should be noted that especially Spain but also UK and Italy have a significant number of private sector institutions.

In order to give the work the widest possible relevance to Europe, a few other European countries are looked at also and guidelines given so that readers can create their own country entries. The report looks in detail at business models for US-based MOOC aggregators such as Udacity and Coursera as well as the European aggregators, but with the focus on lessons that can be adapted for the European scene, which differs in several ways from the US, including on accreditation issues.

The report has tried to be up to date with MOOC developments until the end of March 2016. Many interesting developments have only fully come to light in the first three months of this year.

Guiding metaphor

We have used a guiding metaphor of roads, suggesting that a business model is not a static entity but a journey along a choice of roads towards various possibilities, as Thomas the Rhymer is said to have seen in a famous poem - Thomas Rymer and the Queen of Elfland - bearing his name which is still taught in schools in Scotland.

In the poem the Queen of Elfland explains to Thomas in the Scottish dialect of English of the time:

O see not ye yon narrow road,

So thick beset wi thorns and briers?

That is the path of righteousness,

Tho after it but few enquires.

/

And see not ye that braid braid road,

That lies across yon lillie leven

That is the path of wickedness,

Tho some call it the road to heaven.

/

And see not ye that bonnie road,

Which winds about the fernie brae?

That is the road to fair Elfland,

Where you and I this night maun gae.

It is a useful informal exercise to try to map the business models we discuss here into one or more of the three roads.

But it goes far too far beyond our scope to speculate on which famous woman in the e-learning sector is best suited to the role of Queen of Elfland and which male Rector of a Scottish University might be most susceptible to her influence.

The context in which business models must operate

Below are our conclusions based on specific work for this report but drawing on years of study for EU and agencies on OER, MOOCs and online learning.

OER

1. Most Member States have some activity in OER in HE.
2. Few Member States have an ongoing policy to foster and fund OER in HE.
3. At European level, OER seems to be getting less attention than Open Access and MOOCs.
4. OER material forms on the whole a very small fraction of the amount of content a typical student is required to consume – even in open universities.

MOOCs

1. Many Member States still have little activity in MOOCs, but three have substantial activity.
2. Few Member States have policies/funding to foster MOOCs. Yet MOOC activity is often greater than can be justified by the university mission and viability of MOOC business models.
3. At European level, it is hard to discern the priority that MOOCs have in specific policy terms. There is some EU funding for MOOC implementation, but less than 10 well-known projects.
4. The total number of learning hours delivered by MOOCs in a country is a tiny fraction of overall learning hours and usually a small fraction of the learning hours delivered by DOL.

DOL (Distance Online Learning)

1. Only a minority of Member States have substantial broadly-based activity in DOL – these include UK, France, Spain and Sweden. A few others have an effective open university or other specialised DOL provider or small group of DOL-active campus HEIs.
2. Apart from France, no Member State has a clear policy to foster DOL. Indeed in some Member States, HE policy is a clear inhibitor to DOL.
3. At European level, there have been several reports on open, distance and lifelong learning but little sign of the reports influencing Member State or institutional behaviours.
4. Even in countries where DOL is active the total number of learning hours delivered by DOL in a country is a small fraction of that from face-to-face.

Fees

1. The structure of fees, grants and loans is very different between Member States and sometimes (as in UK) within Member States. Fees also vary between Bachelor and Master courses, EU and international students, full-time and distance students, and public versus private institutions. This means that business models need to be grounded in a Member State context, and linked to the type of institution, provision and student being considered.

Other issues

1. Several of our conclusions are tentative. There is an ongoing lack of systematic, funded, and organised research covering the scale of OER, MOOC and DOL activity in Europe.
2. Systems to deliver MOOCs are increasingly similar to those used to deliver VLEs, so much so that the same analytic tools can be used to compare them.
3. Despite promising research and much hyperbole, there are no established techniques to substantially reduce teaching costs via use of ICT for typical university students.

Business models

DOL

1. In a few Member States, there is a viable business model for DOL.
2. The model can be made to work even better when the State allows student loans.
3. Some restrictions on student numbers in theory are not so onerous in reality.
4. There are few developments to flex the business model, beyond monthly payment schemes.
5. Venture capitalists are most interested in this model but it is not as easy in Europe as the US.
6. In a number of countries where higher education is free (for full-time students) it is possible to charge fees to part-time distance learning students, but fees are too low to allow viability.

MOOCs

1. The two main MOOC business models are freemium, where everything that really makes the course valuable to learners is paid for by them; and loss-leader, where the institution recovers its costs through increased income on other activities fostered by the MOOCs.
2. Over the years since MOOCs started, the freemium model has been under great pressure.
3. The loss-leader model is most fully developed within the UK.
4. There is a niche loss-leader route, impact, in the UK at least.
5. There is a third business model – civic role – of interest to these institutions expected to have a social mission to the community or the world, and well-funded.
6. A fourth model – hovering – suggests focus on MOOCs while awaiting the return of better market conditions or increased government support of DOL.
7. Research into online learning may be another business model in a few institutions.
8. Zero courses (courses with zero ECTS points, e.g. for teaching generic skills) may be justified.
9. MOOC aggregators have an additional model, third party – selling student data.
10. The business models for MOOCs become considerably more feasible if institutions extend “HE” to include elements of vocational and professional training.
11. The business models for MOOCs become more feasible if a provider offers a certificate which has an ECTS transfer value but which is not itself for an accredited institution/course.

OER

1. In Europe, there is as yet no viable business model for OER in HE relevant to most EU countries' HE systems as currently constructed.

Methodological conclusions

European institutions interested in substantial innovation in this area and wishing to learn from the US should:

1. Take great care in drawing overall conclusions for European practice from experience in the US; and take especial care with experience from California and in particular Silicon Valley.
2. Focus on current developments in the US, not on the long and winding road to the current approach to MOOCs.
3. Accept that there are US practices worthy of attention in Europe: close integration of the vocational education sector (ISCED 4) with the HE sector (ISCED 5-8); the importance given to vocational skills (such as programming); and systematised easy credit transfer.
4. Bear in mind the greater financial resources and strategic flexibility of many US institutions.
5. Check funding sources for any development before making assumptions on sustainability.
6. Accept that business models work better in the US because fees are higher and there are no admission quotas on student numbers.
7. Understand that population and immigration dynamics are completely different from Europe and there are massive skill shortages especially in some US states.
8. Accept that employment laws are very different and employment is much less secure.
9. Remember that overheating of some US sectors (such as IT) are different drivers from EU.
10. Realise that US institutions are not interested in fee-charging online provision beyond US except to specialised communities. Europe still has a window of opportunity.