In 2012, the New York Times proclaimed the “Year of the MOOC.” Massive open online classes were all the rage, and they remain popular four years later. However, as Training Industry CEO Doug Harward wrote in 2013, their business model needed to change to be sustainable.
Recent venture capital deals suggest that some changes have indeed made the model more successful. Earlier this month, Naspers’ Venture division invested $60 million in Udemy to expand its global reach, one year after Udemy’s $65 million Series D funding round in June of last year. Since that round, the company’s international business has grown, with over 50 million enrollments from more than 190 countries and new partnerships with companies in Brazil (Estácio), South Korea (Bloter), the Middle East (Bayt.com) and Singapore (STJobs).
“We’ve reached a critical juncture in our global economy where everyone needs to embrace lifelong learning and take initiative for upskilling themselves,” said Dennis Yang, CEO, Udemy, in a statement.
Naspers, an international internet and entertainment company with operations in 130 countries, will provide the local expertise needed to help Udemy continue to expand around the world.
Meanwhile, Skillshare’s $12 million Series B funding round last month will be used to “double headcount, expand internationally and continue to add courses and features,” according to TechCrunch. Writing on Medium, founder and CEO Michael Karnjanaprakorn reports that those subscribers are located in more than 180 countries, 40 percent outside of the U.S. Like Yang, Karnjanaprakorn calls for “a new education paradigm. With technological advances in the world moving at an accelerating rate, the volume of skills needed today can never be captured within a centralized education system. This skills gap will continue to increase throughout the world without innovative companies and platforms changing the status quo.”
According to Online Course Report’s 2016 State of the MOOC report, there are over 400,000 MOOCs, a number that is increasing quickly. However, only 5 percent of all students actually complete the courses in which they enroll. While there are a variety of factors that can affect this number, the large, free nature of MOOCs and the low completion rates have made many in the industry wonder if they are “massively” overhyped. After all, if participants have no skin in the game, why would they be motivated to complete a course? And if companies are providing courses for free, how would they stay in business?
A TrainingIndustry.com blog suggested a few methods of monetizing MOOCs to ensure the companies that offer them can “build and maintain engaging and effective content.” These methods include keeping content free but placing a cost on certification, keeping some content free while charging for premium content, and keeping content free but charging for mock assessments and knowledge checks.
How are Udemy and Skillshare doing it?
Udemy’s instructors can choose to make their courses free or to charge for enrollment (in which case they must apply to be a premium instructor). Premium course prices range from $20 to $50. If instructors promote their courses themselves, they retain 100 percent of the course revenue. Udemy also has several scenarios in which the instructors share revenue with the company, based on marketing costs or affiliate sales.
Udemy for Business is a platform for organizations to access Udemy’s curated content or host their own content. The online, subscription-based platform enables employees to learn on demand and on-the-go, which the company says will save organizations time, money and resources. Udemy for Business boasts such clients as T-Mobile, General Mills and Century 21.
Skillshare considers itself “the Spotify to the industry’s iTunes.” It offers 559 free classes, and for premium members, who pay $6 to $10 per month, it provides 4,888 premium classes as well as the ability to download videos to watch offline. Skillshare applies 50 percent of each membership fee toward paying its teachers. Organizations can opt to pay for team membership ($96 per student per year), which includes reporting as well as a dedicated account manager.
Udemy and Skillshare demonstrate a shift from the old MOOC, which was a delivery platform, to a new MOOC, which is more of a marketplace for content providers. With a combined $72 million invested in these two companies in the last couple of months alone, perhaps this new transactional form of MOOC is more appealing to investors. I’ll be looking forward to seeing the results of these partnerships in the coming years.