Can Free MOOCs Be Profitable?

This is the first part of an ongoing series on the profitability of MOOCs. Click below for the other entries.

Part 1: Can Free MOOCs Be Profitable?
Part 2: Can Premium MOOCs Find an Audience?
Part 3: Proven Profitability: The Freemium Vertical Integration MOOC Model
Part 4: Can We Convince People to Pay for MOOC Certificates?
Part 5: Are MOOCs Effective Advertisements?

____________

It’s becoming a well known fact that MOOCs are popular but not profitable. Universities are willing to suck up the costs as a means of advertising. Charging would deter enrollment and cancel out that effect. But at some point, somebody might start wanting to make money off of the. So can MOOCs be profitable without charging a dime?

Probably not.

The only free solution is to do what network television has done for decades: run advertisements to pay the bills. The goal of this post is to convince you that this won’t work very easily.

Most of what I am about to tell you comes from first hand experience with my YouTube channel, game theory MOOC, and international relations MOOC. Consequently, I am going to make a strong assumption throughout that we will be running the hypothetical course through YouTube.

However, I also believe this is the correct thing to do–YouTube’s reach is much, much further than anything else out there. As evidence, I offer myself–a PhD candidate who has received no institutional support (in the form of class releases, publicity, or technical assistance) who has nevertheless amassed more than two million views. YouTube takes a cut of advertising revenues, but they also host the videos and find advertisers for you. One potential downside is that they limit the number of advertisements a viewer has to sit through, but I figure that no MOOC student is willing to sit through 10 minutes of commercials for every 30 minutes of lectures they watch (like TV networks do).

Okay, so our course is on YouTube. Every time an ad runs, we make a fraction of a penny–roughly 3/10ths of a penny to be more precise. Thus, we rake in $3 for every thousand viewers.

Why so low? I don’t have a good answer beyond “because that’s what the market is willing to pay.” One big issue is Adblock Plus, which allows its users to ignore the ads. YouTube’s analytics page therefore differentiates between “monetizable” and “non-monetizable” views. If Adblock Plus didn’t exist, we’d be a lot happier, perhaps increasing our revenues up to $5 per thousand. Alas, we are stuck at $3.

On the bright side, we gain another view each type someone watches one of our lectures. As such, if we have a 50 lecture class–not unreasonable since online lectures should average ten minutes–we will receive 50 views per student who finishes the course (Bear in mind that few students who “take” an MOOC actually complete it.) In turn, every thousand students yields $150.

How much does it take for a class to become profitable? Constructing an MOOC has different challenges than teaching a traditional course, but they might ultimately take the same amount of time. I hear horror stories that adjuncts work for $3000 per course, so let’s use this nightmare as a baseline. If one thousand students yields $150, we need 20,000 students to make our MOOC profitable. Browsing through Coursera enrollment rates, breaking the 20,000 barrier seems possible…until you realize that only about 10% of those people are actually completing the classes.

Now, to be fair, people who do not complete a course contribute a large number of views. (My newest incarnation of Game Theory 101 has about 14,000 views for a prisoner’s dilemma lecture but only 1400 for the final lecture.) And one Coursera class, Introduction to Artificial Intelligence, had 20,000 people complete the course. Nevertheless, you can see that reaching 20,000 students (or one million total views) is far from easy. And, again, this is only to reach a very minimum level of profitability.

Thus, free courses probably won’t ever be profitable. Nevertheless, universities remain happy to funnel money into them as a means of advertisement. A decent MOOC may very well be worth $10,000 or more in publicity. Granting course releases for faculty and hiring additional visitors to compensate more than makes up for the cost.

But making money and keeping classes? Nope.

One response to “Can Free MOOCs Be Profitable?

  1. Pingback: Can Premium MOOCs Find an Audience? | William Spaniel

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s