To many people taking a class at one of the world’s most established and highly regarded higher education institutions was nothing but a dream up until recently, Coursera has changed that. Established in 2012 with a mission statement “envisioning a world where anyone, anywhere can transform their life by accessing the world’s best learning experience[i]”, Coursera set on a challenging path.
Beginning with high profile collaborations, starting with the founders’ Alma Mater, Stanford University, Coursera quickly positioned itself as a front runner in the MOOC (Massive Open Online Courses) space, fending charges by additional startups (Udacity, etc.) and efforts by established schools (Harvard and MIT’s edX). With great coverage, massivefunding (>$145MM[ii]) and a fast growing platform (students, courses offered, and courses providers) all seemed great, but what lagged to appear is a viable business model.
After struggling for a while, Coursera’s current business model leans on three channels of monetization[iii]:
- Course Certification – previously called “Signature Track”, this is Coursera’s first successful revenue generation tool, introduced in 2013. While most courses on Coursera are free of charge, this allows you to confirm your identity and receive a confirmed certificate that you completed course credit. After several iterations of different pricing, Coursera currently offers these certifications for a flat fee of $49 per course.
- Specializations – With an understanding that most courses provide limited value as a stand-alone product, Coursera went on to provide packages, called Specializations, providing a set list of classes and including a capstone project. Specializations are generally priced at $300-$600.
- Course Purchases – While classes are still free to ‘audit’, Coursera now provides the option to participate in classes that include require hand in assignments that are being graded and for which feedback is provided. Such courses are purchased for anywhere between $39-$119.
In addition, most recently (mid-2016) Coursera started offering Degrees in collaboration with the University of Illinois at Urbana-Champaign[iv]. Currently the degrees available are an MBA and a Masterof Computer Science in Data Science. The price point is considerably higher than that of courses and specializations but still lower than other physical attendance parallel degrees (~$20K).
With all these monetization channels in place and 18M+ learners[v], Coursera is set to take on its greatest challenges: Course Completion – while growing numbers of learners start courses on a regular basis, Coursera has learned that on demand classes considerably limits the percentage of completions, coming to well under 4% in mid-2015. This learning led to a change in class structure, pushing for fixed class schedules as well as group learning and projects. With greater collaboration baked into the plan, Coursera has seen a 4x increase in completion rates[vi]; Awareness – with a mission stating allowing higher education learning to anyone, anywhere, as of March 2016 awareness of Coursera was as low as 8%, even in the US[vii]; and Life Transformation – while the stated message is providing access to people who do not have access to higher education, currently 76% of Coursera learners are college graduates; Multi-Homing – historically, barriers to transfer between different platforms are extremely low, but with the formation of specializations as well as longer programs, Coursera is pushing for greater loyalty and more value created by staying for the program for longer.
Though challenges are plentiful, and competition is fierce, the Coursera team is consistently innovating to provide better solutions for their customers and partners’ pain points. With Coursera’s real conviction and belief in their mission, I believe their prime is still ahead.
[i] Coursera Partner Conference Presentation 2016 (https://www.flickr.com/photos/wfvanvalkenburg/25667471790/in/album-72157666181282926/)
[ii] Source: CB Insight
[iii] Online Learning Insights (https://onlinelearninginsights.wordpress.com/tag/coursera-business-model/)
[iv] Coursera Website (https://www.coursera.org/courses?languages=en&query=degree)
[v] Coursera Partner Conference Presentation 2016 (https://www.flickr.com/photos/wfvanvalkenburg/25847236862/in/album-72157666181282926/)
[vi] Coursera Partner Conference Presentation 2016 (https://www.flickr.com/photos/wfvanvalkenburg/25968028875/in/album-72157666181282926/)
[vii] Coursera Partner Conference Presentation 2016 (https://www.flickr.com/photos/wfvanvalkenburg/25847222862/in/album-72157666181282926/)