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The MOOC stumble: Lessons from Napster

I have been a long time proponent of online education and have been offering webcasts of my classes since 2001 [1]. However, I was a little skeptical about the news stories that appeared a couple of years ago about massive open online courses (MOOCs) being the next “big thing” in education.

If a class were only about delivering content, a MOOC may do the job, but a good class should be (though it often is not) more than that.

mooc-lessons-napster [2]It has to foster hands-on experience, interaction, excitement and “aha'” moments, and MOOCs (including mine) have not paid enough attention to these pieces.

Thus, as the initial buzz about MOOCs has faded, we are discovering the Achilles heels of online classes: high drop out rates and poor retention of knowledge. It is therefore not a surprise to read stories like this one about the failures of and financial troubles faced by MOOC [3]s.

As is often the case, some journalists and analysts are over reacting to these news stories to conclude that online education is a failed venture.

Some of the more reactionary university administrators and faculty are gleeful and are ready to go back to what they have done for decades: take students for granted and cater to the other interest groups that feed at the higher education trough.

That would be a mistake, analogous to music companies reacting to the demise of Napster more than a decade ago [4] by going back to their old modes of business (selling CDs through music stores), only to be swept away by Apple iTunes a few years later. The MOOC model represented the first serious foray of online entities into education and like Napster, it failed because it not only came with flaws but because it’s promoters failed to fully understand the business it was trying to disrupt.It is also worth noting that the failure of MOOCs really rests on your definition of the word “fail.”

My corporate finance [5] MOOC, offered on iTunes U, YouTube and online last spring had more than 50,000 people registered in it. By my count (and it is unofficial), about 10 percent of them have finished the class, as of now, and a significant portion took more than a year, and another 5 percent or 10 percent may get around to completing the class in the next few months.While that represents only 15 percent to 20 percent of the overall total, that works out to 7,500-10,000 people taking the class, a number that I would find impossible to reach in  a physical classroom, even over many years.If that represents failure, I will take it.

One reason for the inability of MOOCs to penetrate the education market is that they started with the faulty premise that the core of what you get for the college tuition that you pay is classroom content.

As my third child went off to college last year, I had a chance to revisit the question of what it is that you get in return for that check you write out to the educational institution of your choice. The first thing to note is that universities operate like cable companies (and other monopolistic entities) and force you to buy a “bundled product”, whether you want the individual pieces or not.

The second is that classes are only a piece, and perhaps not even the most critical piece, of the “education” bundle. As I see it, here are the ingredients of the bundle:

  • Screening: It can be argued that the most value-added day of your education at a selective school (say an Ivy League, Stanford, MIT or Caltech in the US or the equivalents in other countries) is the day that you receive your admissions letter from the school. The rest is purely academic (in the truest sense of the word), since the fact that you were able to make it through the screen becomes the most noticed part of your education.
  • Structuring: For better or worse, universities have been able to define the content of an education for centuries. This includes not only a specification of how long it takes to get a degree (in terms of time and courses) but also the breakdown of courses into required or core classes and the sequencing of electives thereafter.

This post originally appeared on the blog WallStreetOasis.com [6].