Open Ed - Week 8: Economic Models of Open Education

QUESTIONS: How can you build a sustainable business around giving away educational materials? How can you build a sustainable business model around giving away credentialed degrees? Should governments fund open education?

Sustainable business model - start with a customer need: As I learned early on in my business courses, successful business models are based on fulfilling customer needs. I found the same to be true in my early instructional design courses. You need to figure out the "needs" in the A = Analysis. Rarely do you see successful examples of effective businesses or instruction that aren't driven by customer needs. This begs the question - who are the customers. As David Wiley notes, a common perception is that customers are educators building courses, but most use is from learners themselves.

However, I fear that some existing OER efforts are driven by some other motivations than learner need. As we read early on and I discussed in Week 2, some of those "other" reasons include:

  • altruism,
  • public relations,
  • publicity,
  • collaboration on shared interest projects, and
  • survival (don't miss the OER train).


While likely valid drivers, these are supply side only drivers. While it is hard to criticize altruism, altruism for the sake of altruism does not guarantee need by the recipient. Further, availability does not guarantee need by the recipient. Some OER models are comparable to all you can eat food buffets. The supply is plentiful, but there is only so much one can consume, only certain things that you want to consume, and much of the time you would prefer to order what you actually want a la carte. Do we really know if learners want to consume large quantities of content (an entire course)? Is it possible that the learner really only wants certain items when s/he wants them? If so, are learners more likely to want the "special order" items such as specific research reports vs. the plentiful belly buster items that make you full, but a little queasy (like 90 minutes of audio captured from a lecture hall)? 

I don't have any research or learner analysis to support my sustainable business model assumptions. However, I have crafted the matrix below to help me illustrate my interpretation of the various types of OER projects and to describe sustainable business models to support them. The matrix is based on two factors 1) the degree of supply side effort, 2) the degree of learner involvement. Supply side effort includes the time and effort to supply the OER, while learner side involvement addresses the degree to which a learner will spend time and energy interacting with the OER. Hang with me, because I think I may have something here ...

  • Upper Left: The upper left hand corner is a lonely place. It includes projects where there is a lot of supply side effort, but very little learner involvement. These are full blown OER course offerings and course ware repositories that learners may find, but never fully engage in. If they do, they never commit to "completing" them as intended by the supplier.
  • Upper Right: The upper right hand corner is a better place, but I'm not sure many OER projects live here. I consider this to be where "credentialed" OER courses would reside. There is a high degree of supplier involvement and learners are motivated to be there.
  • Bottom Left: The bottom left is a decent enough place, too. I consider this to be "quick hit" central. Millions of small bits of information are quickly searched and digested. While there isn't a lot of learner involvement, there is also not a lot of supplier involvement required. I envision a flurry of seek and find activity going on here.
  • Bottom Right: The bottom right is a very cool place. Learners rock here. Suppliers are here to foster activities, but not direct them. Therefore, learner engagement is high, but supplier effort is far less than a full blown class. This is a places where bits of content flow in like water and learners can't get enough. I think this is where open education learning networks reside ... or would reside if they existed. Unfortunately, outside of a few informal learning examples, I don't think we have seen many of examples of this state of bliss ... or at least I haven't.

Sustainable business model - base it off of customer need: So, what does all this mean to the question at hand? All of this helps us to guess (without the benefit of true learner analysis of needs) where we should focus our time. As depicted by the colors (red - don't go there; yellow - proceed with caution; green - hit it, baby):

  • The Red (Dead) Zone: I consider the upper left quadrant to be a red (don't go there) flag. Unfortunately, a lot of OER projects may live here. David Wiley notes that the numbers of available courses are well into the thousands. I wonder how many see much learner engagement and at what level? I struggle to see the point of building a business model that would support projects that fall the upper left quadrant. Again, these projects involve significant supplier effort to replicate and duplicate courses with no assurance that learner will ever engage. Should we really concern ourselves with sustaining this model unless we know we are supporting learners.
  • Credentials Make It All Worthwhile: The upper right hand corner has some potential, but deserves a yellow caution flag. You need to proceed with caution because it is going to be costly. To get learners motivated to interact with a full blown course, they are likely going to be seeking more than just content. They will likely need interaction and credentials for their efforts. My bet is that they would rather have help and get credit for doing it. Therefore, the competition to OER's at this level of supplier and learner involvement is "for free" paid alternatives.
  • Loosely Joined Bits: Setting up a business model for this sector seems like a no-brainer and it can be accomplished on a shoe string budget. Offer up your OER content online in low touch bits. With the advances in search, this means making your liberally licensed bits of content easily "searchable" by major search engines and directories. A distinguishing feature of this model is the low touch nature of the transaction - customers download their orders and away they go.
  • Learner Driven Bliss: Targeting this sector also seems like a no-brainer, but few seem to be treading into these waters. Learners are driven to participate based on something else beyond supply side tutor support and credentials. Instead, I suspect it is for not only connections to quality content, but also connections to other learners. I think the UK Open Lab Space is the best example I have seen of this model. They are offering up a) quality resources as they already exist in their regular (for fee) courses, b) tools for learning connections, but c) no personal touch from "tutors" (as they do within their regular for fee courses). I am really interested to follow their efforts, as I'm not sure anyone has really figured out how to set up and facilitate such a blissful place.

Sustainable business model - finance and fund those that support customer need: So, again, what does all this mean to the questions at hand? How can you build a sustainable business around giving away educational materials? You can do it by first concentrating only in areas that fill a learner need - not just supply side needs. Avoid projects that have high supplier "touch", but low learner need. At the Open Ed conference, I heard a suggestion to hire students (cheap labor) to sit and "convert" professor lecture content and other face to face course materials into a digital format. Why? Do learners want this? Isn't this the same mistake made when online courses first came into being? Will this support any user's needs? I don't think so. I would put such efforts is in the upper left red (dead) zone. Instead, I would recommend focusing on models to support the other three areas:

  1. Set it free model: Again, the lower left hand corner seems like the easiest and least costly. As content is developed and created for other uses, make freely licensed and easily retrievable copies online. Likely most content is already "online" in some fashion, or could easily be saved to a server, so set up a process to break it out from the walled gardens. Don't password protect it. Don't copyright it. Set it free!
  2. Credential it model: This model supports efforts in the upper right hand corner. I'm struggling to see a difference between this and a traditional online learning program with courses, activities, tutors, grades, and transcripts. I think there is far more demand for this than OER suppliers recognize - or maybe acknowledge. However, this model has MAJOR supply side challenges. I doubt that many of the major players will offer such a model at their home institutions given the prevalent perceptions of online learning withing these organizations. Online learning is still perceived as inferior (OK for some, but only as an alternative) to face to face learning. For the first day or so at the Open Ed conference, I asked a few of the major players if they were using their own content to foster online learning programs, but I stopped when all I got back was, "Our institution doesn't offer our education online." In other words, you can have our content, just not our "education". However, they may be more agreeable if it is separate and not equal credentialing - "continuing education" credits and the like. To offer this full blown type of service, I'm not sure it can be done without passing tutor and administrative costs on to the learner. However, if the content is good and credentials mean something, I think learners are willing to pay - maybe as membership fees or as part of a conversion set up, as outlined by Stephen Downes. Yet, if the ultimate goal is to find ways to offer open education without cost to the learner, then I think this is a great place for foundations and government money to go - to shift endowment and donation money currently supporting the red (dead) zone into these projects.
  3. Blissful connections model: Supporting the bottom right corner can be done relatively cheaply - certainly at far less cost than either the upper left or upper right quadrants. Pulling existing content out of walled gardens, adding a content management system, and tossing in a few asynchronous and synchronous communication tools and you are off to the races. All of this can be done with open source software and $100 / year hosting package. However, I also feel this is a great place for foundation and government money to go. Money to support active learner engagement ... Go figure?!


Excellent post! You made a

Excellent post!
You made a very interesting analysis and your matrix is nice but I'm not entirely convinced that the "customers" are only the "final" learners, even if I guess your remarks would not really change if we included educators as "customers", too...
Furthermore, it's not very clear to me what you mean for "supply effort". For example, OU LabSpace does not seem to me exactly a low-effort project... However, it's true that this project has some peculiar features that make it more "friendly" for final users, maybe the use of a well-known LMS like Moodle with the communication tools like forums, or the plain, easy to understand language used, or ...the good instructional design applied. But these are not usually "cheap" features... :-)


Yes ... all good points! I am making a distinction between high and low "effort" based largely on two things 1) digitizing (and possibility re-designing) full scale face to face course content and 2) tutor support. I distinguish this degree of supplier "effort" from the effort associated with making existing content (basically, "as is" content) more freely available online and under a more open license - for example, the course syllabus, teacher notes, journal reports, student papers, and so on. Also, while there is effort associated with this and in setting up an online community space for learners, there is no need for other "high touch" efforts such as tutor support, course design, administrative support for credentialing, etc.

I feel this latter type of learning community (say centered around research topics, communities of practice) using a LabSpace type format as an example would be a great place to see foundation money flow (again, as apposed to supporting full scale course "conversion"). An institution's value to learners is far more than the digital content it releases. The institution also serves a valuable learner need by bringing people together to network and learn - not just teachers, but also peer learners. Whether or not one agrees or disagrees that this is a more "low touch" effort for the supplier, what an amazing way for an institution to support more open learning!

... and true ... teachers (and others) are users, too. However, do we know that they really looking for full scale courses? And if they are ... most licenses have non-commercial restrictions, so we have a pretty small subset of teachers who could use this course content - just those who would be reusing it for non-commercial purposes. Again, it seems like a fairly small subset. However, isn't it possible that these teachers would derive similar benefit from specific pieces of content, such as the syllabus, ideas for learner practice, etc. If so, aren't there many other more "low touch" ways to support this than digitizing entire courses?

Thank you for your comments! It is great to have my initial reflections on these topics tested!

Jennifer Maddrell