There is a significant shift occurring in online learning—one that puts students and pedagogy into the driver’s seat, and colleges and universities seeking new ways to increase enrollment and revenue.

One barrier for colleges to capture this revenue has been the business model of the companies whose business it is to help them create and deploy online programs—they take approximately 50 percent of the program’s revenue as payment for their services (they typically handle marketing, recruiting, enrollment management, curriculum development, course design, support and technology hosting). These online program management providers (OPMs) have the benefit of reducing up-front investment, but the cost is prohibitive for many, effectively slowing down the movement to online learning.

However, a new fee-for-service unbundled model has emerged to fill this void.

As online degrees become more ubiquitous (Eduventures estimates that there are approximately 24 million students enrolled in higher education, 2.85 million of which are enrolled exclusively in online programs; enrollments in online graduate programs are expected to surpass 30 percent of all graduate students), simply offering online programs is no longer a differentiator.

And, while colleges and universities are looking for opportunities to offer more unique and engaging learning experiences, the baseline requirements remain the same—increased enrollment, revenue, student retention, and student satisfaction.

The Pedagogy-Focused, Unbundled Fee-for-Service Model

The new unbundled, fee-for-service model for online program development is emerging, and it focuses on pedagogy as the driver for technology decisions rather than the other way around.

In this model, colleges and universities take more control over the curriculum, student experience, marketing strategy and revenue model. Unlike the traditional, bundled, revenue-sharing approach in which the OPMs take 40 to 60 percent or more of online tuition, schools make the initial investment for services and then retain all of the tuition revenue.

(Next page: Why pedagogy is becoming online king)


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