Konkol et al. (2021) recently wrote about OER business models and sustainability. They frame this in terms of what they call the paradox ‘“that generating revenue out of OER is not intended, but ignoring income can make OER unsustainable”. This does capture the basic tension inherent in the idea of reducing the cost of educational materials to marginal/minimal levels while remaining a sustainable operation – though I’m not sure whether I’d term this a paradox in the strictest sense as it’s essentially about striking a balance between competing tensions rather than a fundamental incompatibility.
This framing leads Konkol et al. to explore a wider set of propositions than those that are, strictly speaking, OER based. They identify the following models (organised into three categories):
In the Community-based model, the members of an OER community or network collaboratively create and use OER. Revenue can be generated by hosting the required infrastructure or charging for related activity. One advantage here is that communities have resources (especially human resources) which can be drawn upon to use and develop peer expertise.
A core team could coordinate the network and generate income by hosting OER infrastructure and organising activities to distribute the content (Geser et al., 2019). Nevertheless, if they leave, the project will likely end as well. One of the main advantages is that the network can be used to peer-review educational resources (Elder, 2019). Disadvantages are that many faculties do not see the long-term value of joining the network with in-kind contributions. Also, many researchers resist using materials developed by other institutions (Tlili et al., 2020). However, collaborating with other universities can be cost-effective. An example of an academic network is Open Education Consortium; non-academic networks are Wikipedia and WikiEducator.
The Online Programme model is realised by extending presence-based education to online or blended courses. This is somewhat problematic since the content is typically only accessed by registered students rather than being “open”. This approach has perhaps become more common with the pivot to online education resulting from the Covid-19 pandemic, though. (I’ll say more about MOOC and other online education offerings below.)
In the Governmental model, national and international governmental agencies provide funding for creating OER. This (along with philanthropy) is how a lot of OER has traditionally been funded but is rather dependent on the political and strategic priorities of those outside the business itself. There is also fierce competition for some of these funding streams which can make longer-term planning complex.
Operating in a similar fashion but at a smaller scale, the Institutional model sees higher education providers set aside some part of their budget for OER programmes. This is often implemented in ways that are consistent with the philosophy of open, but again involves competition for scarce resources without much in the way of longer term capacity building. There is also the risk that strategic priorities can change quickly.
The Donations model involves donations from, e.g., foundations, society, industry, government, or non-governmental agencies. This form of funding is very dependent on external sources and can be seen as a scaled down version of the philanthropic model with obvious risks – but could still work in the case of, for example, significant endowments. There is also the risk of transactional elements – how does being dependent on donations effect educational practice?
The final model focused on higher education institutional actions is the Substitution model which sees cost savings from redundant services (e.g. obsolete systems) being redirected towards OER programmes. Obviously this is an approach which has inherent limitations.
The Selling course experience model or “Freemium” model where educational materials (e.g., slides, texts, data) are offered for free. Sustainability here is derived from income streams offered alongside this, such as answering questions, giving feedback on submissions, supervising research and examination, and certification.
It’s worth noting that there doesn’t need to be any open licensing involved here, since the main attraction is that course materials are available without charge (gratis rather than libre). The key thing here is the conversion rate: the proportion of those who experience the free materials who become paying customers. It inherently favours larger scale operations who can benefit from economies of scale and leverage their profile.
Along similar lines we have the Sponsorship/Advertising model which relies on generating revenue by exposing students to commercial messages. Perceived by many to be both unethical and antithetical to the goals of education, this model also raises questions about what is involved in the transaction between educator, learner and sponsor as well as the metrics by which success is evaluated.
On a related note, we have the Selling data model where revenue is generated by selling data about the activities of those using a learning environment (which can be used to try and improve learning, link candidates to jobs, or just to flog stuff online). This is another approach riddled with ethical concerns but could be done in ways which people could consent to assuming there was enough transparency about what is going on. The advantage is that there are plenty of organisations willing to pay for this kind of data.
Perhaps somewhere between the community and revenue based models we find the Membership model which relies on organisations contributing to the university with money, services, and goods in exchange for privileges such as early access to roadmap decisions and code releases. This requires a good fit between the priorities of the university/business and those of the sponsor over time in order to be sustainable.
The Segmentation model is an approach that relies on selling paper copies of OER to students. (I don’t want to downplay how important it might be for some to have this option, but it’s likely to be limited to fairly specific, smaller-scale contexts such as replacing a proprietary textbook.)
Finally we have the Author pays model where publishers generate revenue by charging content creators (as in the case of article processing charges, for instance). In the case of OER, however, there is often minimal need for a third party publisher. Furthermore, the issue of who pays remains but with the added consideration of needing to pay a publisher. Approaches like this have been seen to favour those who have access to funding and discriminate against less established professionals or those from areas where less funding is structurally available.
Business Models for Online Education
We can see from the typology proposed in Konkol et al. (2021) that many of the proposed models are based around some form of online education where charges are made. In this sense, the challenges for a sustainable model for OER is much the same as for MOOCs (Massive Open Online Courses). Here I reproduce the range of such models described by the European MOOC Consortium: Labour Markets project.
If MOOC are understood to be free at the point of delivery, how can they make business sense? A study of 35 MOOC platforms and 6,351 MOOCs (Rothe, Täuscher & Basole, 2018) found that market leaders imitate the business model innovations of smaller competitors to augment their market position. The majority of MOOCs are exclusive to a single platform, and volatile battles for market share take place through ecosystem differentiation. Companies therefore converge towards common business models by incorporating the innovations of others.
Rothe, Täusche. & Basole (2018) suggest that MOOC platforms tend to differentiate themselves by leveraging the uniqueness of its ecosystem partners. Early to market platforms experience an advantage due to an established place in the ecosystem. Gilliot & Bruillard (2018) find that certification represents the nodal point held in common by MOOC business models. Slavova (2017) suggests that business models (certification/academic credit/advertising/subscription) tend to be tailored towards the communities that form around specific MOOCs.
Friedl et al. (cited in Ubachs & Konings, 2018:918) suggest three potential business models:
- Supplement existing study programmes with MOOCs;
- MOOCs are sponsored by industry or government bodies;
- MOOCs are incentivized by fiscal policy (accompanied by quality regulation)
Slavova (2017:58) alternatively suggests a simple division of two main business models:
- Free basic part of the course (video and additional materials, tests) and a paid part, which includes examinations with certification or accreditation of the module as part of a programme for educational degree;
- Selling the course at a price below its cost in order to attract a large number of students to the traditional paid bachelor and master programmes of universities.
Padilla Rodriguez et al. (2018:2) review five business models for MOOC (with some overlap to the models discussed above):
- integration with mainstream education (supplementary courses; upselling; offering credits; additional services)
- freemium approach (charge for additional services such as examination)
- partnerships with enterprises (focus on human resource development)
- involvement of target audience (peer assessment, moderation, support)
- philanthropy (funding provided by charity/foundation/NGO/government)
Belleflamme & Jacqmin (2015:155-162) suggest the essential features of six potential business models (again with some overlap):
- Platformization (facilitates interactions between stakeholders; subsides the participation of each side; requires understanding of mutual needs
- Certification model (retains the degree as the prestige qualification; revenues depend on completion, not enrolment; risks lowering academic standards
- Freemium model (free learning followed by paid content; costs associated with paid services decrease scalability; lack of platform differentiation; can result in sub-optimal experiences (King et al., 2018); monetary benefits are hard to calculate (Littlejohn & Hood, 2018:104))
- Advertising model (preferred online route to monetization; possible negative effect on learning, brand)
- Job matching model (uses user data to address asymmetry in job market information (c.f. GMV Conseil, 2018); continuous monitoring raises privacy concerns; unproven in practice)
- Subcontractor model (outsources some core HEI function; judicious use could improve productivity in other areas; sell content; design learning/training)
Alternative business models outlined here indicate that there are a range of options available to achieve sustainability. These can involve alternative provision or augmenting existing provision; freemium or ‘taster’ models; seed funding through governmental initiatives; subscription; credentialing; and involvement with a wide range of stakeholders to deliver specific services. However, there is still no obvious path to monetization.
This article included remixed content from the following CC BY publications: Farrow (2019); Konkol et al. (2021).
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