Coursera

It had emerged as a leader among the competition, already serving 4.2 million students through over
415 courses that it delivered with 83 partners. It had begun experimenting with a few possible
revenue models, but had not yet seen significant income.

Questions/ challenges?

Should they continue experimenting with multiple revenue models, or focus on one?

If the latter, which should they prioritize—charging for the delivery of courses, for premium
services, for access to student data, or developing new strategies not yet considered?

Which was most likely to be successful, given how competitors and traditional players might
respond?

Changes in the Higher Education Industry: -

Increasing Price of Higher Education, Increasing Student Debt

The higher education sector was characterized by many traditional players, which were generally
categorized into public four-year institutions, private non-profit four-year institutions, public two
year institutions, and for-profit institutions.

Challenge for higher education sector: - With declining revenue support for institutions and
subsequent increases in tuition fees, the price of higher education was steadily rising. As student
debt soared, vigorous debates arose on the affordability of an undergraduate degree

Institutions responded to the declining share of state support by seeking funds from other sources,
the primary being tuition.

larger loans and resources to cover the increase in tuition and fees.

With the rising costs of higher education, the value of an undergraduate degree was also being
questioned.

Introduction of MOOC: -

Early 19th century – correspondence courses

1920 - distance learning based on radio or telephone

1970 -1980 - Online education over the Internet began being delivered

1989 - University of Phoenix, dedicated to provide higher education options to working adults,
launched its online program for enrolled students

Definition of MOOC - loosely defined as online courses aimed at large-scale interaction, were seen
as a new milestone not because of their online element, but because of their impressive scale and
open access.
Diff between traditional online courses and moocs:-

Traditional online courses Moocs

academic credit, charged tuition, and MOOCs were typically free, not for credit, and

massive in enrollment, with hundreds of

thousands of students per teacher

2) limited enrollment to a select few

Funding: -

By July 2013, Coursera had raised $65 million in funding. Its Series A round of $22 million came from
mainstream Silicon Valley venture capital firms Kleiner Perkins Caufield & Byers and New Enterprise
Associates, joined by two of Coursera’s partners, California Institute of Technology and University of
Pennsylvania.

Its Series B round of $43 million involved three specialized education technology funds, GSV Capital,
Learn Capital Venture Partners, and Laureate Education, as well as global players—International
Finance Corporation, the World Bank’s investment arm; and Yuri Milner, a Russian entrepreneur.

The company boasted over 4.2 million registered students32 and saw an increase of approximately
1.45 million course enrollments per month

Mission:-

We believe in connecting people to a great education so that anyone around the world can learn
without limits. . . . We envision a future where everyone has access to a world-class education that
has so far been available to a select few. We aim to empower people with education that will
improve their lives, the lives of their families, and the communities they live in.

Technology:-

Technology The platform infrastructure encompassed all technologies that enabled the delivery of
courses through the website, www.coursera.org.

Development of technology centred on delivering quality online courses, such as making systems
support high traffic volume, seamlessly delivering video lectures and quizzes, and automating
assessment grading. Coursera developed innovative technologies to solve these problems.

Courses:-

Courses Through the platform, Coursera delivered 415+ courses on a wide range of topics spanning
mathematics, social sciences, computer science, humanities, the natural sciences, business and
many more.

Courses had defined start and end dates, although some allowed students to join a course after it
had finished running. The founders stressed that these courses were designed to be a supplement to
formal education, rather than an alternative, although they also sought to provide an option for
students who could not afford to pay high tuition.

Core principles included mastery learning to ensure that students had multiple opportunities to
demonstrate their knowledge, interactivity to improve student engagement and long-term
retention, and frequent feedback to enable students to understand their own progress.
Premium services Coursera provided premium services in addition to its course delivery, including
verified certification, accreditation recommendation, and career services.

“Signature Track” was an option for students in select classes who wanted to earn electronic
certificates. The fee for joining varied between $30–100 per course, and Coursera stated that it
would offer financial assistance for students with economic need.

Signature Track verified the identity of the student using a photo identification and a biometric
profile.

Signature Track was available for 70 courses, with more planned to become available over time.

Coursera also marketed Signature Track to companies that sponsored employee training.

Some of the courses featuring Signature Track offered college transfer credit at institutions that
chose to accept validations by the American Council on Education (ACE).

Coursera charged an additional $60–$90 on top of the Signature Track fee for the proctored exam,

Coursera Career Services was launched in December 2012 to provide recruiting services for students.

Company gear Coursera launched an online store to sell company gear, such as T-shirts and mugs.
Profits from this store funded the Coursera Financial Aid program, which helped low-income
students pursue and pay for Signature Track.

“We believe strongly in giving our university partners the ability to experiment with online education
and we encourage them to think outside the box when approaching online course development.

The quality of the content was of crucial importance to the company, as Koller saw “great courses
from the best instructors [as] key to success” in emerging as a leader among the competition.

Costs for producing this content varied across courses and partner organizations.

It reported an expense of $30,000 per course,73 while Edward Rock, senior adviser to the president
and provost and director of Open Course Initiatives at the University of Pennsylvania, said that each
course took about $50,000 to create.

Once the course launched, professors spent an average of 8–10 hours per week.

In exchange, the company shared from 6% to 15% of gross revenues earned from the courses that a
partner university provided.

In addition to partnerships with elite institutions, Coursera collaborated with other partners to
provide its course content. A group of companies, non-profits, and universities translated select
courses into the most popular languages on Coursera, which included Russian, Portuguese, Turkish,
Japanese, Ukrainian, Kazakh, and Arabic.78 Coursera also embarked on a pilot program with major
publishers—Macmillan Higher Education, Oxford University Press, SAGE, and Wiley—to gain access
to their digital textbooks for free while a student was enrolled in a course, via Chegg’s e-Reader.

Marketing

Coursera maintained a company blog through which it announced new developments, celebrated
milestones, and communicated its perspectives on education and technology. Otherwise, the
company spent no money on marketing and relied on word-of-mouth to organically grow its
customer and partner base.
Coursera’s platform was openly accessible by anyone, anywhere, via the company’s website.

Coursera specified that users were only allowed to view or download material for their own use.

However, among the students who submitted the first assignment, 30% completed the class.84
Students who registered for the Signature Track demonstrated a much higher completion rate, with
almost 70% of the students successfully finishing their course.85 These rates compared well against
other MOOCs, as the average reported MOOC completion rate was estimated to be 6.8%.

Students who took courses on the platform and wanted to help out were asked to assist with
subtitles, spread the word about the company, build the course wiki, and serve as a community
tutor or teaching assistant on the forums.

Revenue models

Having raised $65 million from venture funds that generally hoped for a 10-times return on
investment and having partnered with 83 institutions that also expected to see some revenue,
profits were an important next step.

Charging for content delivery.

Charging for premium services

Charging for access to student data/traffic.

Competitors: -

Coursera faced two main competitors, although many MOOC platforms were launching globally. One
was Udacity, a company founded by another Stanford professor. The other was edX, a joint venture
by Harvard University and the Massachusetts Institute of Technology (MIT). The three companies
differed significantly in their approaches to product, partnerships, and revenue models.

Udacity: -
Launched in 2012.

CEO- Sebastian Thrun

As of June 2013, Udacity had raised $21.1 million in venture funding from Charles River Ventures.
Steve Blank, and Andreessen Horowitz.103 Udacity offered 28 classes on a range of science,
mathematics, engineering, and business topics. Unlike Coursera and edX, Udacity courses were
available on demand with suggested completion times, rather than set run times.

Udacity began to partner with institutions to provide university-credit courses for larger numbers of
students at more affordable prices. As Thrun explained, “In California, we have 470,000 students
waitlisted to get into community colleges.

The first of these partnerships developed classes that were provided freely online, but could be
taken for credit from San Jose State University for $150. These credits were accepted in the
California State University system and, for one of the courses, also in the University of California
system.114 For the initial program, Udacity contracted to pay faculty members $15,000 per
course115 and, beyond the pilot, to share 51% of profits from the courses with the university.116 In
May 2013, Udacity announced a collaboration with the Georgia Institute of Technology and AT&T to
offer the first online Master of Science degree in computer science earned through a MOOC format,
for a low fee of $7,000.

Mission:- “active doing” over “passive listening” and specified that Udacity was “bridging the gap
between real-world skills, relevant education, and employment.”

Udacity leveraged Google App Engine—which provided a suite of scalable services— and built only a
few of the functionalities outside App Engine.

courses had been translated into over 63 languages.

Revenue Model:-

providing accredited courses with degree-granting institutions for a fee, and working with
companies in technology sectors to train existing and future employees.

EDX:-

EdX was founded in April 2012 as a joint initiative between Harvard University and MIT, with $60
million in pledges from the two schools.

As of May 2013, edX had provided 59 courses to over 900,000 students.143 Courses spanned diverse
subject areas and provided either an honor-code-based or proctored exam certificate upon
completion.

Partnerships:-

consortium included 27 global partners.

EdX also partnered with the International Monetary Fund to help it expand the reach of its training
courses to policy makers and finance officials around the globe.

Products:-

Technology – open source

Revenue Models:-

“university self-service model,” allowed for a participating university to use edX’s platform as a free
learning management system for its own courses.

The university would be required to pay edX the first $50,000 generated by the course and $10,000
for each recurring course, after which the university and edX would split 50% of all revenues.

The university would be required to pay edX the first $50,000 generated by the course and $10,000
for each recurring course, after which the university and edX would split 50% of all revenues.

indirect sources of revenue, including, “for example, book sales on the site, proctoring services, and
any sitewide employee-recruiting services.”