Ten years ago when two Stanford professors started Coursera, many of the big-name colleges the company partnered with offered few online courses. And the courses they put on Coursera were done mainly as goodwill outreach—free offerings to help spread knowledge to those who couldn’t afford a campus experience.
The landscape of higher ed has changed, though, and these days more colleges are looking to start fully online degree programs, out of a mix of rising acceptance of such programs and changing demographics that could mean fewer high-school graduates looking for traditional programs. So some colleges have been pressing for new terms that bring a higher percentage of revenue back to the institutions.
Meanwhile Coursera is eager to offer more degree programs as well. And these days it has grown into a public company flush with funds from its recent IPO.
So today Coursera is announcing what it is calling a “new economic model” in how it splits revenue with the colleges it works with, which for some colleges will mean getting a bigger cut. The new arrangement is tiered so that the more revenue a college generates via Coursera courses, the less the college has to share with Coursera. Specifically, universities get a minimum of 60 percent of the revenue, but could now see as much as 75 percent in the highest tier of activity.
“It’s like a tax code,” says Coursera’s CEO, Jeff Maggioncalda. “It’s a marginal rate that the share that goes to the university gets bigger as the tuition collected across all degrees on Coursera goes up.”
The idea for a change in terms started with requests from some university partners, says Betty Vandenbosch, Coursera’s chief content officer, who effectively said, “come on Coursera.”
“For Coursera it’s good to have many degrees from the same institutions because it’s more efficient for us,” she says. “We recognize that we would be sharing the benefit of ‘bigger and more’ more fairly with this new fee structure.”
One of the first colleges to try the new arrangement is the University of Colorado at Boulder, which already offers two degree programs through Coursera—a master’s in data science and a master’s in electrical engineering.
The benefit, says Robert McDonald, senior vice provost for online and extended education and dean of the University Libraries at the University of Colorado Boulder, is “it’s going to be about reinvesting in our great programs and the colleges and schools involved—it’s more margin to reinvest for the specific departments.”
“We just want to reach the most students we can, especially outside of our region,” he added.
One question now is whether the new terms will convince other Coursera partners who are not currently offering degree programs on the platform to start doing so.
Because, as edtech consultant and blogger Phil Hill argues, Coursera’s latest strategy relies on so-called “network effects” that come when one platform gains a critical mass of users and offerings.
“What Coursera needs is significant and long-term growth of its Degrees business, and these lower revenue-sharing fees provide a strong competitive position,” Hill told EdSurge in an email interview. “A few dozen Degree partners is interesting but not sufficient. Coursera will need to prove that it can both attract new OPM-style degree partners and that it can do so with some hope of making that a profitable business line.”