MOOCs challenge higher education’s business models

Elite universities with global brands – and those with at least national prominence – will be least affected by the sudden onset of massive open online courses or MOOCs, because they will always have markets for people willing to pay for the elite model of education, says a new report by the Observatory on Borderless Higher Education.

Prepared by William Lawton and Alex Katsomitros, the report, MOOCs and Disruptive Innovation: The challenge to HE business models, says it is also clear that many in the elite group of universities have calculated they have little to lose by joining the MOOC club now to extend their reach.

Later they may increase their intake to degree courses and help meet their widening-participation obligations.

“Universities could therefore use MOOCs as a way of determining whether disadvantaged groups or those with poorer school results might in fact thrive on their degree courses,” Lawton and Katsomitros write.

“Rahul Choudaha recently asked whether MOOCs could 'lead to the decline of branch campuses' and concluded that new branch campuses would at least face competition from MOOCs. It is of course early days but it might be better to think of MOOCs and international branch campuses as independent internationalisation strategy options,” write the report authors.

MOOC impact may be pedagogical

They say that the most far-reaching impact of MOOCs may be pedagogical rather than in relation to internationalisation strategies and recruitment.

Because MOOCs offer a “scaled consortium model for teaching delivery” there is reason to believe such collaboration could be adapted for fee-paying students taking regular undergraduate degrees.

“Some American universities have for years substituted video and linked PowerPoint presentations for lectures in introductory computer science courses so class time is spent on interaction and problem-solving.

“This ‘flipping the classroom’ or ‘reverse teaching’, as it is called, could conceivably be applied to universities across whole sectors. If introductory lectures were provided online en masse to a consortium of subscribing institutions, it would free resources to focus on hands-on seminar and laboratory teaching and learning.”

Then again, the report says it could just mean employing fewer lecturers – although that is likely to be resisted by the education unions. In any case, universities would still need academic expertise; but the question is what kind and whether they would need as much.

“Some will argue that mass online delivery is not about learning – and they are correct insofar as it is no substitute for the intrigue and stimulation of face-to-face tutorial discussions with the smartest students and world-class teacher-researchers.

“But MOOCs tap into a thirst for knowledge. Add to that what governments and universities say about the need for widening participation in higher education, the challenge will be how they manage to harness what is now available in a way that retains the purpose, value and relevance of higher education,” argue Lawton and Katsomitros.

The major innovations with MOOCs

The 4,000-word report describes the beginning of the MOOC movement, noting that the University of Manitoba is credited with having offered the first MOOC in 2008 – a course that was credit-bearing for 24 students at the university and non-credit bearing for 2,200 who registered for free online.

But it says the real disruption came from Stanford last year when a free online course on artificial intelligence by Peter Norvig and Sebastian Thrun attracted more than 160,000 students, from every country except North Korea – with 23,000 completing the course.

Lawton and Katsomitros then give an overview of three MOOC companies that have developed in the past year – Coursera, edX and Udacity – and explore the challenges they pose to traditional models of delivery in higher education.

They say the major innovations with MOOCs are not the elements of access to academic staff, peer interaction, wiki-style forums and automated assessment – because these are all part of the online offerings of traditional universities over the past few years.

No, “the disruptive innovations are shifting costs from students to institutions, shifting costs from students to future employers, matching students to jobs via a database or individually, and combining these with supervised, in-person exams at locations around the world”.

They point out that the scale of MOOCs also means if one in 10 students completes a course that has 50,000 students enrolled, a US$100 completion certificate fee brings in US$500,000.

“The modus operandi of the traditional higher education sector is taking a lot of money from a controlled number of students. With MOOCs it is charging hundreds of thousands of students a minimum fee. Koller of Coursera calls it a 'real democratisation' of higher education.”

But are the low completion rates of MOOCs important? As the authors say, completion rates are certainly poor compared to the case of traditional universities although “that may not be relevant in this new world [with] thousands more people expressing interest in higher education and thousands more learning and completing courses than otherwise would”.

They argue that as institutions learn to integrate credits from MOOCs into degree programmes, starting numbers and completion rates will both rise.

Lawton and Katsomitros say that individuals adapt to new technologies easily and seem to welcome the added stress they generate, whereas institutions need to work out responses to retain a competitive edge – or even relevance.

“All industries have to cope with the disruption of the unfolding digital revolution, and education is no exception,” they conclude.