column | Edtech Business

​Why an iTunes Model for Online Learning Is Bad for Educators

By Amy Ahearn (Columnist)     Apr 3, 2018

​Why an iTunes Model for Online Learning Is Bad for Educators

In 2017, Stephen DeRue, dean of University of Michigan’s Ross School of Business, wrote a Forbes column arguing that, in order to make higher education more affordable, we needed to move towards an “iTunes model for education.”

“In the future,” he wrote, “I envision three tiers of education that look a lot like the music industry of today. First, akin to music streaming on Pandora or Spotify, the basic knowledge is widely accessible for consumption, either free or heavily subsidized…The next step is separating marketable academic credentials from the whole degree, just as iTunes enabled us to buy individual songs rather than the whole album…The third tier is an enhanced residential experience.”

DeRue was prescient, but his suggestions have problematic implications for educators—who are the equivalent of musicians in the iTunes analogy. Many online learning platforms, such as LinkedIn Learning and MasterClass, are indeed pivoting towards business models that look a lot like subscription-based streaming services Pandora, Spotify or Netflix. Customers can now pay a monthly fee to get access to a library of content.

However, just as the iTunes business model is deeply disadvantageous to artists, online learning platforms are now granting online instructors smaller and smaller shares of the revenue as they steer business models in the streaming direction. Data journalist David McCandless calculated it would take over one million plays on Spotify for a solo artist to earn the U.S. monthly minimum wage. We could be pushing online teachers in a similar direction.

At Skillshare, instructors earn between 5 to 10 cents per minute-watched. Lynda.com similarly compensates instructors for distinct video views. Ed2Go offers a royalty rate of only 30 percent. This means that the educators who spend time designing the curriculum and building the course earn pennies on the dollar compared to the profits now earned by the Silicon Valley platforms where the courses are hosted.

This compensation structure may seem common (or to some even fair) in other industries such as entertainment. But in education, learning experiences are often designed to be challenging and not always intended to be easily consumable. Unlike watching a movie on Netflix, a good learning experience will produce some degree of friction and difficulty as students grapple with new concepts.

So when students struggle and sometimes give up in an online course, should the course producer take the financial hit, or should the platform also be responsible for designing interventions to help them persist or better filtration mechanisms to help students find the right course in the first place? At best, it feels like the costs of these challenges should be shared, but we are seeing that educators are increasingly paying the price.

It’s hard not to feel that the work of teaching is again being undervalued, much as it has been for centuries. Even as we reinvent the platforms and modalities for learning, the teachers at the center of the model are losing out.

Climbing Out of the “Free” Abyss

How did we get here? The online learning industry has driven itself into a corner that is tricky to get out of, and much of that stems from initially offering the majority of digital content for free. As MOOCs surged in popularity from 2012 to 2015, universities, nonprofits, schools and companies all jumped into the game of developing online courses, and giving them away—often at the promise of no cost—to the world.

It was exhilarating to see high-quality learning materials make their way to students across the globe. But this was only possible because their production was highly subsidized by universities, investors or philanthropists who were testing out MOOCs as new forms of brand building or educational research.

Today, few higher-ed institutions are able to sustain the ongoing costs associated with producing and running MOOCs. The center of gravity has moved towards paid certificate programs and microcredentials that can generate ongoing revenue for institutions. But the market has been primed to expect that high-quality online courses can be accessed for free. When we gave away all of these great online teaching and learning materials, we also undercut the value of the instructional design work that was taking place behind the scenes.

Now, the price points for online learning products are widely varying. I recently conducted an analysis of 4-week facilitated online courses and found that prices ranged from $199 to $3,500. And the market is still in a state of dramatic flux. Online learning platforms have experimented many times to figure out what price points and purchasing models will bring in sustainable revenues necessary for them to grow and achieve an IPO. But these experiments increasingly seem to be landing on models where the majority of profits accrue to the platform companies, not to the content creators.

The Upsides and Ongoing Questions about Platform Models

Still, platform business models undeniably have huge upsides for instructors. They let people all over the world step into the role of “teacher” for the first time, bringing their niche skills and experiences to an audience of learners. They allow educators to focus on course design instead of having to create and maintain their own digital infrastructure.

A platform can also aggregate demand, allowing students who arrive looking for one type of course to organically stumble upon a related offering. These platforms also invest in advertising that drives new customers to courses.

It’s only fair that the platforms should be compensated for the engineering, design, marketing, and community building that goes into sustaining these companies. Yet, just like in the music industry, the scales have tipped but not in favor of designers, instructors and other content creators.

To contextualize this trend, it’s important to note that teaching has historically been a female-dominated industry, with correspondingly low salaries and low status. And according to a 2016 report funded by the Gates Foundation, 67 percent of instructional designers are female. In this #MeToo moment as we consider how women across industries are treated and compensated, it’s worth looking at how the female-dominated professions of instructional design and curriculum development are being valued relative to the male-dominated professions of engineering and business leadership at many of these platforms.

As online platforms commodify instruction into downloadable, viewable modules, we’re at a critical moment when we need to consider how much we are willing to compensate people for the work that goes into well-designed learning experiences and curriculum. Online learning is still a wild west industry. So as the norms and business models are set, we need to keep raising questions around whose work gets valued and why.

Editor’s note: The Gates Foundation has provided EdSurge with financial support.

column | Edtech Business

​Why an iTunes Model for Online Learning Is Bad for Educators

By Amy Ahearn (Columnist)     Apr 3, 2018

​Why an iTunes Model for Online Learning Is Bad for Educators

In 2017, Stephen DeRue, dean of University of Michigan’s Ross School of Business, wrote a Forbes column arguing that, in order to make higher education more affordable, we needed to move towards an “iTunes model for education.”

“In the future,” he wrote, “I envision three tiers of education that look a lot like the music industry of today. First, akin to music streaming on Pandora or Spotify, the basic knowledge is widely accessible for consumption, either free or heavily subsidized…The next step is separating marketable academic credentials from the whole degree, just as iTunes enabled us to buy individual songs rather than the whole album…The third tier is an enhanced residential experience.”

DeRue was prescient, but his suggestions have problematic implications for educators—who are the equivalent of musicians in the iTunes analogy. Many online learning platforms, such as LinkedIn Learning and MasterClass, are indeed pivoting towards business models that look a lot like subscription-based streaming services Pandora, Spotify or Netflix. Customers can now pay a monthly fee to get access to a library of content.

However, just as the iTunes business model is deeply disadvantageous to artists, online learning platforms are now granting online instructors smaller and smaller shares of the revenue as they steer business models in the streaming direction. Data journalist David McCandless calculated it would take over one million plays on Spotify for a solo artist to earn the U.S. monthly minimum wage. We could be pushing online teachers in a similar direction.

At Skillshare, instructors earn between 5 to 10 cents per minute-watched. Lynda.com similarly compensates instructors for distinct video views. Ed2Go offers a royalty rate of only 30 percent. This means that the educators who spend time designing the curriculum and building the course earn pennies on the dollar compared to the profits now earned by the Silicon Valley platforms where the courses are hosted.

This compensation structure may seem common (or to some even fair) in other industries such as entertainment. But in education, learning experiences are often designed to be challenging and not always intended to be easily consumable. Unlike watching a movie on Netflix, a good learning experience will produce some degree of friction and difficulty as students grapple with new concepts.

So when students struggle and sometimes give up in an online course, should the course producer take the financial hit, or should the platform also be responsible for designing interventions to help them persist or better filtration mechanisms to help students find the right course in the first place? At best, it feels like the costs of these challenges should be shared, but we are seeing that educators are increasingly paying the price.

It’s hard not to feel that the work of teaching is again being undervalued, much as it has been for centuries. Even as we reinvent the platforms and modalities for learning, the teachers at the center of the model are losing out.

Climbing Out of the “Free” Abyss

How did we get here? The online learning industry has driven itself into a corner that is tricky to get out of, and much of that stems from initially offering the majority of digital content for free. As MOOCs surged in popularity from 2012 to 2015, universities, nonprofits, schools and companies all jumped into the game of developing online courses, and giving them away—often at the promise of no cost—to the world.

It was exhilarating to see high-quality learning materials make their way to students across the globe. But this was only possible because their production was highly subsidized by universities, investors or philanthropists who were testing out MOOCs as new forms of brand building or educational research.

Today, few higher-ed institutions are able to sustain the ongoing costs associated with producing and running MOOCs. The center of gravity has moved towards paid certificate programs and microcredentials that can generate ongoing revenue for institutions. But the market has been primed to expect that high-quality online courses can be accessed for free. When we gave away all of these great online teaching and learning materials, we also undercut the value of the instructional design work that was taking place behind the scenes.

Now, the price points for online learning products are widely varying. I recently conducted an analysis of 4-week facilitated online courses and found that prices ranged from $199 to $3,500. And the market is still in a state of dramatic flux. Online learning platforms have experimented many times to figure out what price points and purchasing models will bring in sustainable revenues necessary for them to grow and achieve an IPO. But these experiments increasingly seem to be landing on models where the majority of profits accrue to the platform companies, not to the content creators.

The Upsides and Ongoing Questions about Platform Models

Still, platform business models undeniably have huge upsides for instructors. They let people all over the world step into the role of “teacher” for the first time, bringing their niche skills and experiences to an audience of learners. They allow educators to focus on course design instead of having to create and maintain their own digital infrastructure.

A platform can also aggregate demand, allowing students who arrive looking for one type of course to organically stumble upon a related offering. These platforms also invest in advertising that drives new customers to courses.

It’s only fair that the platforms should be compensated for the engineering, design, marketing, and community building that goes into sustaining these companies. Yet, just like in the music industry, the scales have tipped but not in favor of designers, instructors and other content creators.

To contextualize this trend, it’s important to note that teaching has historically been a female-dominated industry, with correspondingly low salaries and low status. And according to a 2016 report funded by the Gates Foundation, 67 percent of instructional designers are female. In this #MeToo moment as we consider how women across industries are treated and compensated, it’s worth looking at how the female-dominated professions of instructional design and curriculum development are being valued relative to the male-dominated professions of engineering and business leadership at many of these platforms.

As online platforms commodify instruction into downloadable, viewable modules, we’re at a critical moment when we need to consider how much we are willing to compensate people for the work that goes into well-designed learning experiences and curriculum. Online learning is still a wild west industry. So as the norms and business models are set, we need to keep raising questions around whose work gets valued and why.

Editor’s note: The Gates Foundation has provided EdSurge with financial support.

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