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While Massive Open Online Courses (MOOCs) offer a complete course experience free of charge by definition, there are monetary cost and benefit associated with it. Several stakeholders are associated with the creation and the distribution of MOOCs as well as research and further services beyond the course itself. The diversity of MOOCs and their players makes it thus difficult to analyse a universal business model for MOOCs. Also, the growing influence of MOOCs attracts new stakeholders in the market, bringing in new services, sponsorships, customers, cross-financing models etc.
Although some providers are slowly changing this policy, many Massive Open Online Courses (MOOCs) are still offered completely for free online. The participants do not have to pay anything for a full course experience: all the resources and most of the course services (e.g. feedback, tests, quizzes, exam and some limited tutoring) are offered free of charge. But who is paying for the efforts in developing MOOCs and for all the operational costs?
Are MOOC Sustainable?
To answer that question we need to look at possible business models describing the conceptual structure that supports the viability of a business (i.e. how an organisation fulfils its purpose including all business processes and policies). Business models can apply to any type of organisation including one at the governmental level (see for example chapter 8 of UNESCO-CO, 2016). For a long time, one of the main challenges in the area of MOOCs was to develop sustainable business models and to some extend it still is.
However, creating and analysing a general or ‘universal’ business model for MOOCs is difficult, if not impossible. This is mainly due to the fact that several stakeholders are involved in the creation and the distribution of a course, as well as research and further services beyond the MOOC itself. The content of a course might come from a university, a company, a non-profit organisation or other parties. When it comes to the distribution, there are platforms that use content from external partners and generate revenue from issuing certification or additional services. Other platforms are either part of a higher education institution that provides the content or are funded by a third party. Thus, the conceptual differences of these various content providers, platforms and other stakeholders make it difficult to establish a universal MOOC-model. Therefore, we will first define our understanding of the roles of these stakeholders.
| Role | Description | Actor |
| Content provider | Provides the course content (slides, videos, quizzes, exams, reading material). This can be one party, or it can be split up between several parties. E.g. one party could produce the slides while another party records the videos, or one party produces week 1, while the other party produces week 2, etc. | Universities, enterprises, Commercial content agencies, NGOs, governmental institutions, associations |
| Platform provider | Hosts and operates the MMS. Provides the possibility to conduct courses either as a self-service product or with full support. | Commercial companies, universities, platform developers, non-profit organisations, enterprises, governmental institutions |
| Platform provider | Hosts and operates the MMS. Provides the possibility to conduct courses either as a self-service product or with full support. | Commercial companies, universities, platform developers, non-profit organisations, enterprises, governmental institutions |
| Certification provider | Some MOOCs offer more than the mostly rather informal MOOC certification. Examples are e.g. ECTS credits or professional certification. | Universities, enterprises, commercial companies, governmental institutions, associations |
Table 8:Possible roles of stakeholders in MOOCs
Often different roles are taken by the same actors. Depending on the current role, the actor might have different interests. We will now give a few examples to make these distinctions more tangible.
Business Model Concepts
The ‘business model’ concept is a theoretical model being used in science and the business-context. Especially, the use of word ‘business’ appears to be confusing: although the concept was developed in the context of for-profit businesses, it is now applied to any type of organisation, including for-profit, non-profit,governmental or any other type of organisation. In addition, there are many versions of business models. Al-Debei (2008) identified four primary dimensions: (1) Value Proposition, (2) Value Network, (3) Value Architecture, and (4) Value Finance while Yoram (2014) comprised the following three components: (1) Customer Value Proposition; (2) Infrastructure (both resources and processes) and (3) Financial Aspects.
However, the economic models cannot be applied to open content and free resources like Open Educational Resources (OERs) and some parts of MOOCs (Stancey, 2015). Stancey argues that the classic economy is based on scarcity while OERs and MOOCs are based on abundance at no cost. Thus, completely different approaches might be needed.
With the aim to either develop a new one or document existing business models, many frameworks and templates are used. The most popular one used nowadays is the Business Model Canvas (Fielt, 2013). The Business Model Canvas was initially proposed by Osterwalder (2010) based on his earlier work on Business Model Ontology (Osterwalder, 2004). Since then, new canvases for specific niche markets have appeared, such as the Lean Canvas (https://leanstack.com/leancanvas) and Open Business Model Canvas (https://medium.com/made-with-creative-commons/what-is-an-open-business-model-and-how-can-you-generate-revenue-5854d2659b15). In addition, the latter includes ‘Social Good’ and ‘CC licence’ (https://docs.google.com/drawings/d/1QOIDa2qak7wZSSOa4Wv6qVMO77IwkKHN7CYyq0wHivs/edit) while the Lean Canvas is especially in the interests of the start-ups (https://canvanizer.com/how-to-use/business-model-canvas-vs-lean-canvas).
The components of the canvas are:
- Value Propositions: A promise of value to be delivered and acknowledged and a belief of the customer that value will be delivered and experienced. A value proposition can apply to an entire organisation, parts thereof, customer accounts, or products or services.
- Customer Segments: What group(s) of customers is/are a company targeting with its product or service by applying filters such as age, gender, interests and spending habits.
- Channels: What channels does a company use to acquire, retain and continuously develop its customers.
- Customer Relationships: How does a company plan to build relationships with the customers it is serving.
- Revenue Streams: How is a company pulling all of the above elements together to create multiple revenue streams and generate continuous cash flow.
- Key Activities: The most important activities in executing a company’s value proposition.
- Key Resources: The resources that are necessary to create value for the customers. These resources could be human, financial, physical and intellectual.
- Key Partnerships: What strategic and cooperative partnerships does a company form to increase the scalability and efficiency of its business.
- Costs: What are the costs associated with each of the above elements and which components can be leveraged to reduce cost.
Unbundling
Universities typically offer a bundle package including a range of services such as teaching, assessment, accreditation and student facilities to all learners, whether they require them or not. MOOCs are opening up a discussion around the unbundling of such services. Unbundling means that parts of the process of education are not provided by one, but several providers, or that some parts are outsourced to specialised institutions and providers. Regular examples are support of the study choice process, study advice and tutoring, content creation and development, examination training, assessment and proctoring, learning platforms, learning analytics services, etc.
As such, different educational services are split amongst different funding schemes and even different customer segments. Some (educational) services are outsourced to third parties for concerns such as cost efficiency or organisational priorities. As such, different educational services are unbundled. Freemium business models depend on the money that is generated from additional services to be paid for next to the basic product – service offered for free.
MOOCs are seen as an accelerator of these unbundling processes by outsourcing the marketing efforts, ICT/delivery platform, exams, learning analytics services, etc. Consequently, the business model of MOOCs (and education more generally) will change as well.
Despite the fact that Massive Open Online Courses (MOOCs) are offering a complete course free of charge by definition, there are monetary costs and benefits associated with it. Several stakeholders are associated with the creation and the distribution of MOOCs as well as research and further services beyond the course itself. The diversity of MOOCs and players behind it makes it thus difficult to apply a universal business model to MOOCs. Currently, a successful and financially sustainable business model of MOOC has yet to be developed. Since MOOCs are free of charge, services around MOOCs and additional values (e.g. certification) are offered in order to create revenue. The whole cost-revenue cycle is even more complex since most content providers cross-finance their costs and many MOOC platforms receive external funding for their activities. The rapid growth in the MOOC market leads to the influx of new stakeholders, bringing in new services, sponsorships, customers, cross-financing models etc. in the whole world of MOOCs.