Coursera is a for-profit, education technology company providing massive open online courses (MOOCs). Currently, Coursera has 15.3M users (or “learners”), 1,371 courses, and 128 content partners (generally universities).
For learners, Coursera provides exposure and access to high quality academic content that might otherwise be unavailable if learners are in low income countries or if they come from low socio-economic backgrounds. Beyond providing access, Coursera allows learners to develop critical skills that make them more employable. A recent survey of over 50,000 individuals who have completed a Coursera course found that 85% experienced an intangible boost (e.g. enhanced skills) while 33% gained tangible benefits (e.g. got a new job, started a business, received a pay increase or promotion). Lastly, Coursera promotes and enables “lifelong learning,” going against the notion that education should end after college or even graduate school.
For content partners, Coursera allows brand building for institutions and individual professors. It allows universities to explore MOOCs and related technological developments that enable a blended learning model that combines online and offline components in the classroom. Coursera also provides content partners with valuable data about learners and engagement.
- Learners can pay for verified certificates (“Signature Track”) upon course completion to prove to employers that they have successfully passed a university-level course; these can range from $30-$100/course. Coursera reported $1M in revenue from Signature Track in 2013.
- Coursera has also partnered with corporations and received revenue for employee training via the Coursera platform, as well as through corporate sponsorships of course development.
The learner side of the Coursera platform exhibits direct network effects. Through taking Coursera courses, learners are expected to evaluate and provide feedback on each other’s work. The more users there are, the more perspectives a single learner is likely to get on his/her work. In addition, Coursera has set up web forums for courses that allow students to interact and have a virtual classroom with other learners around the world. Some students even arrange face to face study “meet-ups” with other learners, which increases affinity for the platform as well as learner engagement.
At the same time, there are indirect network effects at play between the learners and the content partners. Creating a course on the platform actually involves a large investment from content partners because Coursera does not help with content production or cover any associated costs. Therefore, content partners require a large and engaged learner base to encourage content production. A large user base ensures a revenue stream for content partners (they get a revenue and profit share from Coursera verified certificates), as well as a high level of brand exposure. In addition, higher quantity and quality of courses will attract new learners to the platform, and keep existing learners coming back for more.
Going forward, Coursera may continue to move into corporate collaborations, which could become another key player on the platform exhibiting indirect network effects. In addition to the employee training and corporate sponsorships described above, Coursera has also developed “specializations” that involve a series of courses culminating in a capstone project for a corporation.
Scaling a business with network effects
Coursera did a good job in recognizing the network effects inherent in its business, and scaling accordingly to become one of the largest MOOC players in the market today. In its earliest days, Coursera offered all courses for free. After verified certificates were rolled out, learners could opt to pay for the certificate at the end of the course, or take the exact same course for free (just without the certificate). In this way, Coursera grew its user base very quickly.
In terms of partnerships with content providers, Coursera started with a handful of very forward thinking, prestigious universities (e.g. UPenn). Once other universities saw the traction the platform was gaining, along with the credible universities that were already on it, they jumped on the bandwagon as well.
Overall, this growth has been sustainable because learners cannot easily bypass the platform and access content directly from the source (e.g. barriers to entry are high to get into universities). In addition, Coursera has maintained its “logic of conversion” of tangible learner results and positive press for content partners that continue to drive both sides of the platform. Going forward, I think the challenge will be combating multihoming tendencies of both learners and content partners across multiple platforms (e.g. Udacity, edX, Khan Academy, etc.).