The MOOC That Once Promised to Change University Education Is Turning Into Job Training

MOOCs still haven't solved the problems of completion rates and revenue.

Last month, Udacity, one of the three big MOOC platforms in the United States, formally entered China under the name "Udacity City."

The two larger education platforms, Coursera and edX, arrived in 2013, one after the other, through partnerships with universities including Peking University, Tsinghua University, and Shanghai Jiao Tong University.

With that, the MOOC (massive open online course) — the new thing a Time magazine cover story called a force that would change the university — had all come to China.

But at Udacity's launch event, changing university education was no longer the selling point. Open Udacity City, the new site built for the Chinese market, and the most prominent thing after "Sign Up" is the paid "Nanodegree." The line meant to get you to register is about work, too: "Take the next step in your career and become a tech expert recognized by the world's leading companies."

The JD.com executive who turned up to lend support talked about how he would give priority to job applicants who had taken a lot of Nanodegree courses — exactly what a business owner says when he shows up to vouch for an ordinary training course.

Udacity's shift is not a one-off. Over the past year, Coursera and edX have also dropped the free credential they used to offer, and paid certificates keep getting more expensive. All three big MOOC platforms now count paid certification as one of their main sources of revenue.

Three Years Ago, MOOCs Were Treated as a Big Deal in Education Reform

Ever since the internet was born, attempts to remake the university with it have never really stopped. Recorded lecture videos posted online as open courses had their run of popularity, too... but all of it stayed lukewarm, until 2011, when Stanford University put its popular computer science courses on the internet.

Stanford picked three computer science courses and let students outside the university register free. The first was "Introduction to Artificial Intelligence," taught by Sebastian Thrun, who ran Google's self-driving car project. Between the pull of the school, the fame of the teacher, and a subject like artificial intelligence, registrations shot straight to 160,000.

That is how the new round of online education later called MOOCs began. Less than a year after that Stanford course ended, Sebastian Thrun founded Udacity. Andrew Ng, another Stanford professor who taught an artificial intelligence course, co-founded Coursera.

Harvard and MIT joined forces in 2012 to build edX, an open-source MOOC platform, and put their own university courses on it exclusively. Unlike the other two, edX is a nonprofit.

The top venture firms were drawn in as well: Google Ventures, Andreessen Horowitz, and KPCB all became investors in these MOOC platforms. Together the three platforms raised $266 million.

The wind blew into China, too.

Most of China's MOOC platforms were founded between 2013 and 2014 — Guokr's MOOC Academy, Kaikeba, Tsinghua University's XuetangX, NetEase's Chinese University MOOC, and others.

Their model differed a little from the American one: they seemed to prefer bringing in content from existing platforms, and bringing it in faster.

Guokr's MOOC Academy, for instance, did not make content with universities at all. It plugged straight into courses from existing MOOC platforms, which amounted to marketing for its partners;

NetEase Cloud Classroom brought in Coursera courses and also produced its own; and XuetangX, founded with investment from Tsinghua University, was built on top of the edX platform.

Time magazine's October 18, 2012 cover story, "College Is Dead. Long Live College!", stands in for what the world expected of MOOCs then.

The article opens with an 11-year-old Pakistani girl sitting an exam, who nearly missed her online test because the government had blocked YouTube.

MOOCs were not only a commercial product. People hoped they would break up the unequal distribution of educational resources, so that anyone who could get online could get the best teaching there was.

That same year, Laura Pappano — author of Inside School Turnarounds and a former columnist at The Boston Globe — voiced the same hope in a New York Times article, "The Year of the MOOC".

"We can see a day when you'll be able to get your college degree from the best online courses and the best professors in the world — a computer science course from Stanford, an entrepreneurship course from Wharton, an ethics and philosophy course from Brandeis, a literature course from Edinburgh — for no more than a small certification fee. This will change the whole process of teaching, learning, and interaction. A whole new world is opening up, and everyone has to learn to take it in."

For a while, the university did look changed. Tsinghua, Peking University, Fudan, Shanghai Jiao Tong, and many other well-known schools began taking part. Beyond teaching courses on MOOC platforms and building platforms of their own, some Chinese universities even started granting course credit to students from other schools.

Founding Dates of China's MOOC Education Platforms

2011.12

Chuanke.com

2012.12

NetEase Cloud Classroom

2013.04

Guokr Academy (later renamed MOOC Academy)

2013.09

Dingni Xuetang

2013.10

XuetangX

2013.10

Mukewang

2014.01

Zhihuishu

2014.04

Haodaxue Zaixian

2014.05

Aixuetang

The Biggest Problems Are Making Money and Completion Rates

But today hardly anyone talks about MOOCs changing education. In the United States, where MOOCs began, the name has cooled off as well:

The dream of earning a degree from the world's best university while sitting in front of a computer is still a long way off, and the problems the MOOC platforms ran into turned out to be far more mundane, each one more so than the last.

The first is money. Free courses can draw a crowd, but they bring in nothing. Good course content takes a long time to shoot, produce, and review, and bandwidth costs money on top of that, so the cost was never small.

According to 2014 figures released by Coursera, only 5% of registered users finish a course.

When the completion rate is that low, cheap certificates never reach enough volume. So the platforms began aiming their certification at fewer users and charging each of them more.

A little over a year into operation, MOOC platforms adjusted by adding paid certification and paid courses and cutting back on free ones.

Coursera and Udacity, which used to hand users a free certificate when they finished a course, both stopped free certification in 2014. What came with it was not only certificate courses running from $29 to $949; some courses also cut the free videos.

The "Nanodegree certificate" Udacity brought to China last month is not cheap either: 980 yuan a month.

Chinese MOOC platforms make money in much the same ways: certification fees, paid courses, and, for XuetangX, professional certification fees as well. Guokr's MOOC Academy takes a cut for sending traffic to other online course platforms, and wants to build a community of learners of its own at the same time — but its numbers aren't large, so ad money isn't easy to come by either.

"There are problems built into the way MOOC products are designed to interact with students. Effective communication is hard, and there's no mechanism that pushes you to motivate students or keep track of their progress," Zhang Lijun, an investment manager at Sinovation Ventures, told QDaily. That, she said, is why completion rates for today's MOOC products fall so far short.

If users can't finish a course even by watching videos and doing homework, then counting on their certification fees for revenue isn't much of a bet.

Gu Minman, managing director at ZhenFund, thinks the reasons people accept paid education are themselves what produce low completion rates. She told QDaily:

"Education goes against human nature. People need a bigger reason before they'll put up with the suffering of being educated. They put up with it because they want a better job or a place at a better school, not because education itself is fun. So a system like the MOOC is by nature an experiment. I don't think online education is the same thing as the MOOC."

Is Vocational Education Another Way Out?

Of all the schools and startups that said they were building MOOCs, the most successful commercially is still Lynda, which does nothing but vocational training.

Unlike the three big MOOC platforms that rose in 2012, the "teachers" on Lynda are people from various industries who know one skill well. They make video lessons on practical skills like photography and programming and sell them on Lynda, where users pay at least $25 a month.

Charging from the first day helped Lynda reach $100 million in revenue in 2012, and it was finally bought in 2015 for $1.5 billion.

From the paid courses that came later to the paid certificates of the past two years, the three big overseas MOOC platforms have moved closer and closer to Lynda's direction: pay for the content.

In China, the newest wave of MOOC products has copied the Lynda model too, turning online education straight into IT skills training and charging for courses from the start.

51CTO Academy and Geek College both began as IT knowledge-sharing communities before shifting to paid IT education, with engineers from companies making paid courses and selling them on the platforms for a share of the take. Courses on the former run from free to a few hundred yuan; the latter sells a training course at 260 yuan a year.

Starting last year, the two also built training classes priced in the thousands. 51CTO Academy, for one, ran classes at 3,000 to 5,000 yuan last year, four months long; besides the instructor, several teaching assistants answer questions in a QQ group — up to 15 of them, reportedly around the clock.

51CTO says 70% to 80% of its teaching staff today come from the community's old forum moderators, users with about five years of IT experience. At Geek College, what mainly sets the several-thousand-yuan courses apart is that teachers mark students' assignments; those teachers are senior employees at Chinese tech companies.

By public figures, NetEase Cloud Classroom, which also sells paid vocational training, now has 7 million users. Its main courses are still tied to job skills, priced from a few hundred yuan to over a thousand — one, "Python in Practice: Build a Web Crawler in Four Weeks," costs 499 yuan.

The upshot, after several years of operating, is that the MOOC looks more like the "distance learning" of a decade and more ago. Back then you bought a DVD of a teacher lecturing, with a textbook to go with it; now the DVD is an online video and the textbook is online reading material.

The MOOC came to this because the underlying problem in education was never solved.

Vocational education offers a direct shot at a job, and that is the main reason a student will pay tuition and finish the course.

Plenty of courses on MOOC platforms are popular, but they can't persuade students to finish them or to pay.

Traditional universities partly solved this by bundling everything together. Once that content is taken apart and moved online, it can no longer come with the same diploma, and the problem shows up again.

Which Makes MOOCs' Competitors the Offline Vocational Training Schools

The online education companies think their biggest selling points are price and their ties to tech companies.

"This price works out to about a quarter of the average offline price," said Liu Yun, a PR representative at Geek College, whose premium courses now sell for 5,000 yuan.

By comparison, the "tech full-time class" run by Tarena, a Chinese vocational education company, starts at 13,800 yuan a term.

Qiu Wenping of 51CTO Academy argues: "The academy is aimed at working people, with one or two years of experience. That's a group Tarena and Beida Jade Bird don't offer courses for."

Perhaps sensing that pressure, the traditional education and training schools have started building MOOC-like content platforms themselves. Tarena, one of the five largest offline training chains in the country, announced last March that it had launched TMOOC, a vertical employment-training platform, bringing over its existing video library and using its 118 physical centers to answer students' questions.

IT education and training is a product of the current business climate. It isn't only internet startups that need programmers; traditional banks, manufacturers, even the auto industry are all trending toward an internet makeover, which means demand for programmers too.

According to remarks early this year by Guo Sheng, CEO of Zhaopin, the number of programmers is growing by roughly 20% while employer demand is growing by 70% — supply can't meet demand.

According to data in Analysys International's 2015 Research Report on China's Internet Vocational Education Market, vocational education — the largest slice of the internet education market — grew fast, at a compound rate of 42.5% between 2010 and 2014. Within vocational education, the largest slice is general IT education.

The reality is that developers are not a matter of numbers. The better companies still won't take developers turned out by crash courses, offline classes and online courses alike.

They will still pay several times as much for someone who spent four years or more at a top university and interned on a big team at Baidu, Tencent, or Alibaba — and those companies, in turn, prefer interns from elite schools. From the entrance exam to the internship, it is all one long process of sorting people.

The platforms that once tried to change university education still haven't got around competing with the traditional university.

Cover image from: PEXELS