How Coursera would make money, view regulation

During the flap between the state Office of Higher Education (OHE) and Coursera, the website offering Massive Open Online Courses, I had a quick talk with Coursera's cofounder, Andrew Ng.

You may remember that Coursera offers these free, noncredit Massive Open Online Courses -- known as "MOOCs." The company's prestigious partner colleges and universities (such as Stanford, Emory and the University of Virginia) produce the college courses, which Coursera then streams them.

The crux of the exchange between the OHE and Coursera is that Minnesota law requires all schools offering online education -- be they free or paid, for credit or no credit -- to register with the state.

(Although the issue is really between universities and the OHE, Coursera apparently got caught up in it in the bureaucracy.)

The registration requirement is meant to protect consumers from fly-by-night operations, but after OHE Director Larry Pogemiller stepped into the fray, he said the law is simply outdated.

So why don't universities just register? Well, a number already do. But the registration requires a decent amount of paperwork and fees, and it's questionable whether a college would find putting out free courses worth all that hassle and cost.

Ng told me he understood the state's desire to protect consumers. But he said compliance would be difficult -- especially if such a law were enforced in states across the country:

"For all 33 universities to go through the registration and approval process ... . Imagine all 33 universities having to do this in every one of the 50 states in the United States. (It) would have been a huge burden. And even going to our 33 partner universities and telling them that they need to -- all 33 of them -- need to approach the state of Minnesota for approval would have been a significant burden on our partners."

But will MOOCs really stay free? The OHE's head of registration, George Roedler, said they probably won't. And that's where his consumer-protection concerns kicked in.

Ng agreed that a big-money business could be on the horizon:

"Right now, Coursera is by far the largest MOOC platform,. ... There are for our five others that are much smaller. And I do believe that online education will grow into a significant business. We need to help our partner universities cover their costs. So we will be bringing in revenue at some point, and revenue-sharing back with our partner universities. This has to turn into a serious business."

(OHE chief Larry Pogemiller told me earlier he thinks legislators should be able to draw the line between regulating paid, for-credit MOOC courses and the free, noncredit variety.)

So how would Coursera turn this into a moneymaking business? And why doesn't Coursera charge now?

Ng told me:

"We want to keep the content free. I've often been asked, 'Why not charge $5 for a course? You know, the cost of a latte? Anyone can afford that.'

And the answer is: I want to make sure we're serving the neediest people of our society. So the poor kid in India -- not only does he not have $5, he probably doesn't even have a credit card. And to throw up the wall that prevents the neediest in our society from accessing this content, I think, would be a tragedy.

But we do need to bring in revenue, because our partners are incurring costs. We're incurring costs. So we're building out things like job placement services, where if a student takes our course and does well, and if they give us permission to do so, then we may facilitate introductions to employers and charge the employer for that. So hopefully students find jobs and charging the employer for the introduction.

Several of our university partners might also charge for a branded certificate. So the course content would be free. But if you get a certificate with a University of Pennsylvania brand on it, that seems like it might be worth something as well.

So the way it works is: We have many companies coming to us today and telling us that they want to hire our strongest students. Because if someone comes online and does well in a Cal Tech course, does well in a Stanford course, this is a very strong sign that this is a highly talented individual, and companies would love to talk to this person -- to interview them and maybe offer them a job.

So obviously we'd only do this for the students that give us permission to do so. We're very mindful of student privacy. But if a student tells us that they're looking for a job, and gives us permission, we might introduce the student to these potential employers, and help the student find a job.

And this is something that companies are frankly very willing to pay for. We're piloting this out with a number of companies already. All the indications are that finding employees -- skilled employees -- is challenging, and companies are very willing to pay us for this service.

That's why, Ng said, keeping Minnesota students from officially taking Coursera courses would be a double blow to them. Not only could they not get the education, but they wouldn't have access to the company's job-matching service.

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