Aswath Damodaran, professor of finance, Stern School of Business, New York University, doubted massive open online courses (MOOCs) were actually going to be the “next big thing” in education. Then, he watched as the initial buzz over MOOCs gave way to criticism about completion rates, which has some administrators ready to scrap the idea entirely.
That would be a mistake on the level of record companies celebrating the demise of Napster only to have Apple iTunes blow the industry apart just a few years later, according to Damodaran.
“The MOOC model represented the first serious foray of online entities into education and, like Napster, it failed because it not only came with flaws, but because its promoters failed to fully understand the business it was trying to disrupt,” he wrote in a column for eCampus News. “It is also worth nothing that the failure of MOOCs really rests on your definition of the word ‘fail.’”
Damodaran points out that his own MOOC on corporate finance had a completion rate of about 10%, but also saw more than 50,000 people registered, meaning around 5,000 individuals finished the course. Those are enrollment and completion numbers that would take years to achieve in a traditional classroom.
The problem lies in the perception of what college tuition actually pays for, and it’s not always about education. According to Damodaran, colleges and universities are really more than just a collection of courses taught in a classroom. He points to networking, career advice, and entertainment as part of the bundle.
“As my third child went off to college last year, I had a chance to revisit the question of what it is that you get in return for that check you write out to the educational institution of your choice,” he said. “The first thing to note is that universities operate like cable companies (and other monopolistic entities) and force you to buy a ‘bundled product,’ whether you want the individual piece or not. The second is that classes are only a piece, and perhaps not even the most critical piece, of the ‘education’ bundle.”