Apr 14 2015

The Big Business of Online Education

Startups and older institutions alike are grappling for mindshare in the growing online-learning market.

As higher education continues to evolve in the digital age, new avenues for online coursework are being pioneered. This has created a fertile ground for investors and startups to champion new ideas for the future of learning.

Earlier this month, LinkedIn, the business-oriented social networking service, announced its plan to purchase lynda.com, an online-learning company, for $1.5 billion. The move will merge LinkedIn's network with lynda.com's library of 267,000 videos that serve corporate, government and education customers.

LinkedIn's head of content, Ryan Roslansky, detailed the purchase in an April 9 blog post.

“Imagine being a job seeker and being able to instantly know what skills are needed for the available jobs in a desired city, like Denver, and then to be prompted to take the relevant and accredited course to help you acquire this skill,” wrote Roslansky.

There's much to learn from LinkedIn's valuation of lynda.com. Namely, online learning has become big business. According to Inside Higher Ed, colleges and universities are projected to pay $1.1 billion this year to online program management providers, which facilitate online coursework.

Even the upper crust of higher education institutions is bolstering online coursework to meet a growing, nontraditional audience. Harvard and MIT in particular have built thriving brands with HarvardX and MITx. Steve Kolowich a columnist for The Chronicle of Higher Education, charts the future of online coursework in higher ed on three distinct paths: massive open online courses; paid online courses for graduate programs; and online programs that facilitate traditional undergraduate courses.

These distinct online pathways for learning are part of what Harvard Business School professor Clayton Christensen was referring to in his EDUCAUSE 2014 keynote on disruption in higher education.

Christensen said the higher education experience was becoming increasingly modular as a result of growing online options. But that growth may dilute the brands of historic universities.

“When it becomes modular, then anybody can declare themselves a university,” Christensen said.

The shift in mindshare to online coursework has led to an influx of online startups, which are seizing an opportunity for growth in a new industry distinct from accredited institutions.

In 2011, Skillshare raised $3.1 million in venture financing. The service empowers average people to teach classes on a variety of topics not typically seen in traditional schools.

Students taking computer-programming courses now have a bevy of options. Among them is Codecademy, which began in 2011 and received $10 million in seed funding shortly after its launch. The service offers tutorials for several programming languages, and it has become a hub for aspiring coders. As of 2014, the site had accumulated 24 million members.

Similar to Codecademy, One Month is a subscription-based service that also offers computer-programming courses. The service started its life on Skillshare and in 2014 acquired $770,000 in seed funding.

But are these succesful startups on a collision course for established higher education institutions? Time will tell.

“Disruption is always a great opportunity before it becomes a threat,” Christensen said.


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