Wednesday, April 18, 2012

Free Education, For Profit

Following closely on the heels of Udacity, the company founded by Sebastian Thrun, Coursera, another new startup by two other Stanford Professors is offering free college courses online. The aforelinked article notes:

 "Mountain View, Calif.-based Coursera is backed with $16 million in funding led by John Doerr at Kleiner Perkins and Scott Sandell at NEA. It has no immediate plans to charge for courses or to make money in other ways." 

Making college classes accessible to a large audience is great, and I do support this in principle to a large extent, but I have to say it bothers me that Coursera, like Udacity, is a for-profit private company. 

I fear that sooner or later the investors will demand their pound of flesh. 

Think about Facebook and Google. They are both free, but ultimately they both make their revenue from advertising. Increasingly they've been driven towards trying to extract more information about their users and exploiting this information for targeted advertising. Similarly, Coursera, for instance, will be able to accumulate quite a lot of information about participants in its courses - their interests, their skills, their strengths and weaknesses in the context of learning and problem solving. Will these be for sale too?


Andreas Terzis said...

The short answer? Yes!

Abi said...

From this WSJ story on Udacity:

"Making money isn't currently a priority for Udacity, a 20-person company that raised $5 million from venture-capital firm Charles River Ventures in December. Mr. Thrun and fellow co-founder and Stanford Ph.D. David Stavens, Udacity's 29-year-old chief executive, believe recruiters and corporations world-wide eventually will pay for access to recruit from its pool of talent."

From Wired:

"Stavens is thinking about potential business models. Though Thrun cringes at the notion of charging students, people might eventually pay for add-ons—say, TA services, study aids, or offline materials. He also considers other revenue streams. Near the end of the term, he emails his top 1,000 students, the ones with perfect or near-perfect scores on homework and tests. The subject: Job Placement Program. Thrun solicits résumés and promises to get the best ones into the right hands at tech companies, including Google. A recruiter who places a hire typically earns 10 to 30 percent of an engineer’s first-year salary, which might be $100,000. Stavens figures he could charge much less. After all, KnowLabs discovers talent in the course of doing business."

These ideas don't look particularly icky -- but a lot will depend on how they are implemented, especially when shareholders start asking for profits as well as a growth in profits.

Bhaskar Krishnamachari said...

Hi Abi, Thanks for the pointer to the wired article. Let's see if these more benign-sounding ideas pan out, but I still think some skepticism is justified at this point.

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