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Your saying so don’t make it so
151 Plays13 days ago
This conversation delves into the evolving landscape of the Online Program Management (OPM) market, particularly focusing on the shift from revenue share to fee-for-service models. Recent reports present a false narrative, and we don't buy it. The discussion highlights the challenges in defining OPMs, the role of Coursera, and the implications of these changes for educational institutions. We express skepticism about the reported trends and emphasize the need for clearer definitions and understanding of the market dynamics. This conversation delves into the evolving landscape of online education, focusing on revenue models, particularly the dominance of revenue share versus fee-for-service arrangements. The speakers discuss the implications of regulatory pressures, the maturity of institutions, and the strategic shifts of platforms like Coursera, which is moving away from traditional degree offerings towards more flexible, unbundled services. The discussion highlights the complexities and nuances of the market, emphasizing the need for a deeper understanding of these dynamics as they continue to evolve.
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Transcript
Introduction to OPM Market
00:00:08
Speaker
Hello and welcome back to Online Education Across the Atlantic. And today we're going to be looking at the online program management market, the OPM market.
00:00:19
Speaker
particularly based on some claims that have been made in the U.S. about whether we're moving from share fee-for-service models and also what it looks out like outside the U.S., obviously.
00:00:31
Speaker
But we also want to drill ah drill down a little bit into Coursera and what they seem to be doing in the market and what that tells us. So, Uh, that's going to be the big discussion today, but, uh, it, as Neil already pointed out when he got on, he noticed that we're all, um, adopting his uniform style of the black shirt and
Light-hearted Banter
00:00:51
Speaker
got the bookshelf. So I think we all got the memo.
00:00:54
Speaker
Can I just say that you have to be very careful when you're mentioning black shirts and people with my surname because there's this bad connotations relative to that, unfortunately.
00:01:07
Speaker
ah But I'm not going to suggest we go with brown shirts because that's got its own problems there. Just as bad. Yeah. By the way, I got a chance, Neil.
00:01:18
Speaker
um I was in Shea Morgan in Salt Lake City recently, and I got to see both of the studios. The ah Morgan must use this studio upstairs and the much nicer studio downstairs.
00:01:33
Speaker
So you you were able to confirm that, you know, not just over video conferencing, but actually in real life, but the one she's in at the moment is that the optimum one. Well, the one she's in right now, she's in the downstairs, and it is optimum for visuals unless you try to look out the window.
00:01:52
Speaker
Yeah, it's in the basement, so whereas i'm in a my my regular office upstairs in the trees, and there's birds and vegetation and things, and it's it's it's very salubrious.
Memorial Event Reflection
00:02:06
Speaker
I just hope listeners and watchers appreciate the lengths that we're going to to make sure that you know the backdrop is is is suitable. Beyond Shea Morgan and having a lovely brunch with them as well, um it was also quite interesting. This was for the memorial event for Misty Frost at Instructure.
00:02:26
Speaker
and it was interesting seeing a lot of the people who came in for the memorial service, because you sort of had people from early and in Instructure, the early 2010s.
00:02:37
Speaker
You had sort of peak growth in Instructure, people in the mid-2010s. 2010s because Misty, I think, started there 2014 or so and left maybe um But then also you get people who are there now. So you got a variety of Instructure people, but it was also nice. You got to see some people who have left Instructure. Mike Rakowski used to work there. He's now at D2L. Got to spend some good time with him Sonny Washington was there. She was there back when they were doing their famous 1984 commercial and some of their early advertising. Obviously a very sad event, but it was really nice.
00:03:15
Speaker
seeing people, a lot of people we haven't seen for years, including Josh Coates, the longtime ceo I don't know if you guys have had anything exciting on your side. I'm struggling. I'm struggling, to be honest. I can't do exciting for you. I can do
Leeds Conference Plans
00:03:30
Speaker
mundane. but Well, I will say that we are getting much closer to get everything locked in for the Leeds Conference that's going to be in July. I think that's exciting. Going to get the three of us together, do some live podcasting at the conference.
00:03:47
Speaker
And see other things. So we've mentioned that before, but ah it's looking to be a pretty impressive conference. I know you've enjoyed that in the past, Neil. As you said, it's a pretty impressive who they're getting to come to the conference as well.
00:04:00
Speaker
Yeah, absolutely. And I think, you know, it it in a way, sort echoes this podcast because there's a really nice balance of people from our side of the pond and your side of the pond. So I think it's going to be a really good one. We're definitely looking forward to that. Morgan, we need to start talking travel fairly soon, and although knowing you, you've already been doing some pretty good planning around that.
00:04:19
Speaker
And I have some thoughts, so we we should we should talk, um even apart from taking you to Headingley. I will go. I will go.
Critique of Validated Insights Report
00:04:28
Speaker
um So let's turn to the topic for today, which is really looking at the OPM market. And we'll start with that, and then we'll jump a little bit deeper into Coursera.
00:04:39
Speaker
And I think part of what made this a timely topic, there was a report here and well, out of a company in the US, Validated Insights, put out a market analysis report and their headline was really that the market, the new norm for the OPM market is fee for service.
00:04:58
Speaker
And the data was looking at new, I guess you wouldn't call it implementation, new partnership deals and saying for the first time, the majority of new deals in 2024 were deals for OPMs and not revenue share.
00:05:15
Speaker
Obviously, that would be huge news. The problem was the data and the methodology huge. it was quite disappointing in my mind. so I got called by a reporter and that it started off with that assumption. So given that the market's moving to fee for service, what does that mean?
00:05:33
Speaker
And, I derailed her and I said, yeah, I don't buy it. I i think I stole that phrase from Morgan, by the way. Um, But it was just, that's not what the data showed. i mean, essentially, the biggest problems I had is it was a very low activity year. They were dealing with 81 deals out of installed base of, let's say, 3,000 deals that they're working off of.
00:05:57
Speaker
So a very small base. And because of that, the actual increase in fee-for-service contracts was only 2.2%. It wasn't a huge thing. Really, what the data was saying is people were waiting to do any kind of contracts, particularly on revenue share, because of, well, most likely because of all the regulatory push where people were saying, we don't know if this is going to get outlawed. We've got to wait to see what's going to be safe.
00:06:27
Speaker
And then the second point I made, but then let's open it up and discuss it, was the fact that their definition of OPM, I mean, it wasn't just that you had rev share and fee for service.
00:06:39
Speaker
You had things like EAB, which is not, there's just not even close to an OPM provider in my mind. But that raises the question, what is the definition of an opium? I get the fact that the category is broadening and it's not the same thing it was 15 years ago, but you can't just redefine it so broadly that it means nothing.
00:07:03
Speaker
Or if you do that redefinition, it's hard to draw any kind of conclusions from it. So I think that's really the setup of why this became a topic again. What's actually happening with the OPM market, and particularly in terms of business models moving forward?
Defining OPMs
00:07:21
Speaker
Given that sort of stage setting, and i ah what were your initial reactions when you saw that report? Yeah, i ah apparently I said I didn't buy it, and that was ah that was sort of really it. It's it's certainly just the the top-line news about increasing fee-for-service just didn't make sense to me. It's just not what I'm seeing in terms of clients, and I know...
00:07:47
Speaker
many of the companies are struggling to try and figure out what that means as well. So yeah, you know, it it was a slow, it was a slow year. it was a year when there was a sort of a specter hanging over the space in the US anyway. So I had difficult difficulty with the top line news. I also just, at some point we do need to sort of draw some more clear definitions about what an OPM is because that definition was very, very broad. Yeah. EAB b jumped out at me, you know, they do do enrollment, but It's generally on campus, um you know, so it it it starts becoming um just just so broad as to not be meaningful.
00:08:28
Speaker
What was your reaction, Bill?
UK vs US OPM Market
00:08:30
Speaker
Yeah, I mean, i i obviously I'm far more acquainted with the UK market than US market, but my impressions based on conversations we've had and just generally reviewing the reporting has been in line with what you've kind of outlined in in the sense of there's a lot of noise around fee-for-service, but it's not necessarily um playing out in the way that people would like it to play out or people are reporting it kind of playing out. And I think I think definitely that um is something I've seen over here in terms of um a ah kind of greater openness to explore different business models for partnerships.
00:09:13
Speaker
um But I'm not sure the extent to which the company's hearts are really in it. And I'm not sure the extent to which it's been driven by and companies thinking that this is a good way forward, but rather they're just responding to a lot of the the noise and reporting. So um I struggle sometimes as well in my context to think of universities that I know and clients that I have who are um kind of in this place of thinking about partnerships.
00:09:43
Speaker
How can I put this? It feels difficult for me to imagine that the fee-for-service thing fits based on where where they are. And I can kind of elaborate that on that in terms of the UK context a bit.
00:09:54
Speaker
So my reaction wasn't necessarily that I don't buy it, but I just thought it was kind of a continuation of this theme of fee-for-service. And, you know, that your debate over there is so...
00:10:06
Speaker
um so much so much more prominent around OPMs. There's barely any reporting here about OPMs. um there's no There's no narrative as such around that kind of thing. So when I look to the US, and I guess because of the people I follow and the circles that I move in, I see a lot of this, whether it's you know revenue share bad fee for service good at the most basic level or you know a narrative that says look actually there's a legacy of evidence that shows that actually um giving away your revenue and entering to these these agreements is kind of damaging for an institution so i feel like that's where all the noise is sort of so amplified over there that
00:10:49
Speaker
you know I think you're doing a good job in terms of actually delving into the reality of what's happening and cutting through some of that noise. I thought you were going to say
Franchising vs OPMs in the UK
00:10:58
Speaker
that we as a country are doing a good job of creating noise. um Listen, look, i much credit I'm not going to go there.
00:11:08
Speaker
I did actually read a piece this weekend about the UK and he seemed to be conflating um and I don't offhand remember. It was one of those ones I'm trying to find things to write about in my weekend post.
00:11:19
Speaker
But he seemed to be conflating franchise provision with OPMs. But he mentioned OPM in the piece, you know, but my understanding from you is that they're different. I saw that post as well. And I know Nick.
00:11:30
Speaker
So it was Nick Mount at Nottingham who, who mentioned that. And I think Nick is a big advocate for in-house um investment in online education activity, which I think is fair enough.
00:11:41
Speaker
um Like there's have been a lot more scrutiny on franchising of provision over here. I think he referenced the particular article that ah highlighted kind of increased scrutiny because there's been, there's been fraud around those kinds of partnerships and,
00:11:57
Speaker
None of the examples in the article they cited um relate to OPMs. The universities that are mentioned don't have OPM relationships. And I know universities that are growing franchising for a range of private providers, and it's not really OPM. So I saw that post and my initial thinking was, look, the article said OPMs.
00:12:20
Speaker
you know at least 10 universities are really dependent on the revenue from the franchise relationships that they have, and that's a big risk for them, particularly in the current climate. I would love to know who those 10 or 10 plus are, because I'd then be able to say, well, look, actually,
00:12:36
Speaker
you know, X proportion have an OPM partnership or not. So I actually contacted the regulator over here at the ah Office for Students to understand, you know, the extent to which their gaze was on OPMs in that realm of franchise provision.
00:12:51
Speaker
and and the extent to which it was on kind of other types of relationships. um And I think really their focus is on any kind of partnership that has where 50% or more of the teaching is kind of outsourced.
00:13:03
Speaker
So it depends a little bit on the nature of the relationship with the OPM. But i my my initial hunch is that that's not really about OPMs. It's about different ah relationships and different types of partners.
00:13:18
Speaker
um Can you describe to me what a typical franchising relationship looks like? Because I struggled from that article as well. Yeah, so I mean, I guess kind of some of the kind of key key examples would be there's kind of evidence of UK universities who um ah may be partnering with providers in areas where there's not a university nearby. it might be in business provision. and They're kind of franchising out their degrees to these private organisations who are often...
00:13:49
Speaker
um better set up around um kind of recruitment and the university gets kind of a percentage share. So there are similarities, definitely, but these aren't OPMs that we're talking about. And I think, you you know to just zoom out to the wider context, one of the reasons why this is happening is is also actually a factor why more universities considering OPMs over here. And it's it's another area of diversification um and um and income generation. They can do it through online education, maybe through an OPM. They could do it through a college in a town that's maybe not served by a university.
00:14:28
Speaker
um Those are the kind of macro factors behind it. And obviously there's some good actors and some less good actors in that space.
Role of OPMs in Online Education
00:14:37
Speaker
Well, let's actually jump into our definition. I mean, because part of what we're saying is that the definition in this case a validated insights, was stretched to a ridiculous stage where it's not useful at all.
00:14:50
Speaker
In my mind, I like the term online program enablement. um i tried to argue for this. Obviously, it didn't win. OPM is really the nomenclature. But the reason I like to enablement is it captured the the key areas. It's online education we're talking about.
00:15:08
Speaker
It's program-based as opposed to institution-based. So it's targeted at a cohesive set of academic courses and a cohesive set of students. So it's program-based.
00:15:21
Speaker
And it's enablement. And enablement to me, and the reason I like think this is descriptive, is because we're not just talking any vendor. I mean, just because you have an LMS and it's supporting online education, you're not an OPM. Just because you're EAB and you do institution-wide enrollment services, that's not an OPM.
00:15:43
Speaker
Enablement means it is taking a non or a non-profit traditional school and enabling them to create an online program in a way that they don't feel they could do on their own.
00:15:57
Speaker
but And it's got to be The primary partner. So if you went to a school and you said, hey, you have an online MBA, you have an online this, how did you create and how do you run that program? And who's your primary source of help?
00:16:13
Speaker
They would have to say, oh, this is the partner we're working with to do it. as opposed to a laundry list of vendors. And that, to me, is the key distinction that got lost in this report.
00:16:26
Speaker
Primary partner that enables program to exist and ideally to be profitable. think the enable one is an interesting one in terms of um um thinking about this. i so I still like the management thing because I kind of think ah the enablement side of things you know ah you're enabling someone to be able to do something. But one of the facets for me around these relationships is actually the kind of long-term nature of them. And so it's that that's what speaks the management piece.
00:16:54
Speaker
So, I mean, generally I find this difficult year on year to to kind of define, but I think generally it is that kind of managing a more of a portfolio, I think more of a product focus around degrees um and a kind of a broader set of services. it's It's tricky. It is tricky. If I could put some kind of meat on the bones, it's is that 10-year relationship.
00:17:18
Speaker
It's those suites of degrees. It's that bundle of services. um you know that's That's the main the main way I think about OPMs and what they do.
00:17:33
Speaker
Does that pass muster with Morgan? I think so, except it gets complicated with a company like Coursera, you know which is very much an OPM, I think, but yeah offers ah a much more limited set of capabilities. you know It's much less a bundle with this degree its degree partnership. boom When is a bundle a bundle? you know but again, to the enablement, the schools that are using Coursera for a program They're doing it almost because of Coursera. You couldn't do it without them, at least the approach that they took.
00:18:10
Speaker
That's the key to me. I think the bundle, it's for me, you know that gets to the vendor versus partner. Is it just providing one function or multiple things? But a bigger one to me is that...
00:18:22
Speaker
this wouldn't be happening without the partner. This is not just a vendor relationship. And it's not easily swapped in and out, you know, in a way. And we can argue about particular marketing agencies, but if you throw all marketing agencies that in there, then 100% of places in the United States are working with an OPM, which is not true, you know, because everybody uses some some sort of service from somebody.
00:18:47
Speaker
um but Let me pick up on another thing that's already been mentioned. Because in our definition, you can have a fee-for-service OPM provider. They're your primary enabling.
00:19:00
Speaker
I'm not, I'm certainly don't believe we're arguing that fee-for-service doesn't exist or shouldn't exist. It's just, first of all, get your definitions consistent to the point that it's usable comparisons that are happening.
00:19:14
Speaker
and But then there are vendors who have tried this. ah Neil, you said, I think you said that this has been a little bit half-hearted in the UK. But take Wiley, that's now part of RisePoint.
00:19:26
Speaker
They absolutely gave an option of models. You can go fee-for-service, you can rev-share,
Business Models of OPM Vendors
00:19:33
Speaker
in-between. And they've, in the past, been pretty consistent saying, our customers, the universities,
00:19:40
Speaker
are choosing, I think it's well over 80%, maybe even up to 90% of customers say, no, we choose RevShare. Again, that's not to argue that fee-for-service doesn't exist, but let's not pretend that it's taken over the market.
00:19:56
Speaker
2U has remained RevShare, and they've changed the definition of bundles, and that's what they do. Coursera is RevShare. That's all they do in their degrees business.
00:20:07
Speaker
um We've already mentioned Wiley, slash which is really RisePoint. They are RevShare, KeyPath. So i look at all the vendors. Their model, even when they've tried to go beyond it, remains RevShare.
00:20:21
Speaker
The only one of the primary or well-known vendors who I believe is strongly shifting to fee-for-service is boundless learning. that used to be Pearson Online Learning Services.
00:20:35
Speaker
So they haven't rolled out their full marketing and new strategy, but all the signs are there that they are moving to primarily fee-for-service, or certainly that's their strategy.
00:20:49
Speaker
But other than them, i don't know of any vendor or any OPM provider who has shifted their primary model from one to the other. It's more different, so you know, Noodles and iDesign and different sets of providers who are fee-for-service versus the ones who are mostly share. I don't see a lot of movement with the main exception of Boundless.
00:21:14
Speaker
Yeah, I'd agree with that. i think I think there are some providers who, you know, to to to the way you described it, they haven't changed their core model and they may have been a little bit more um ah more fixed on that in terms of how they approach discussions with um universities.
00:21:33
Speaker
i think what i see now is this sense of a need to provide other options, but I'm not sure that that's driven by the actual needs of the of universities. And that's the kind of interesting thing for me in this kind of area. What's What's driving what's driving this Because I don't see fee-for-service model being ah con as congruent with the needs of universities over here as as a revenue share.
00:22:03
Speaker
um And i I just think there's just so much wrapped up in revenue share.
UK Universities and OPM Partnerships
00:22:10
Speaker
And I don't think the voices that are often advocating for different models have kind of been there at the coalface sometimes in terms of making these decisions and and kind of balancing off the aims of a university, the realities of that university,
00:22:26
Speaker
and the alignment between the partner. And I think that's the that's the key thing. you know Universities want to achieve a certain aim. they They really recognize the need for a partner to get there.
00:22:39
Speaker
But the the the partnership has to work. the investment The financing vehicle and the investment vehicle kind of have to have to work. So certainly in the UK, don't think the fee-for-service um is not just about it not being dominant across the different companies. It's just I'm not sure that it's well aligned with where um the universities are wanting to enter the market through an OPM, our app, really. And I think that's the key that's the key thing.
00:23:12
Speaker
Well, here in the US, I mean, we're broader, much bigger, have a lot more variety, if you will. And I definitely see fee-for-service cases where it makes sense that's what a university wants. So we see true movement to fee-for-service here.
00:23:29
Speaker
My biggest argument is It hasn't redefined the market. It's still a minority at this stage. And so ah my biggest concern is honest data analysis so we know what's happening and not just what we want to believe.
00:23:44
Speaker
But here you do see some real cases. I would say that regulatory pressure and a lot of that is state-based, will be pushing schools clearly in Minnesota with ah with their law, um in Washington and California, where schools are going to naturally and want to go fee-for-service because of regulatory pressure.
US Regulatory Pressures
00:24:09
Speaker
But there's also a case of in specific specific leadership and specific cool schools where they're saying, we know how to do this and we can do a better deal for us because we know how to put this together ourselves.
00:24:24
Speaker
So I think in my mind, it's regulatory pressure in specific leaders where it does make sense to go fee for service here in the US. Yeah. And I think that's a really important point because I think People can easily forget that a la carte, it's not just about going a la carte or going full service. It's actually, are you are you capable and experienced enough to actually do a la carte?
00:24:50
Speaker
Do you know what you actually... need Do you know how to deploy it? you know That's not that's not as straightforward as it as it sounds. And so you know you need either the right people in or to have achieved a certain level of maturity to be able to determine that. I've seen things over here where there's been an attempt by institutions to take that approach and it's failed because they haven't had the maturity or capability or experience to actually manage that a la carte
00:25:22
Speaker
thing, it's not just a simple case of you know choose this route or another route. And I think that's one of the reasons why the kind of revenue share um kind of dominates because those bundle of so it's not just about those bundles of services. It's about um that you know that partnership taking on board taking on board a lot of the responsibilities and a lot of the decision-making and a lot of the um ah kind of knowledge around how to approach things and what you need to kind of have in place and all that kind of thing. So I think I've always reflected on that in terms of comparing our two countries because my impression has always been, well,
00:26:04
Speaker
actually the US is kind of more mature in head. So it makes sense that there's more noise around fee for service because there's probably greater maturity across more institutions to know how to manage online learning. were just Yeah, yeah, yeah, in online in online learning. So I don't think we, you know, with probably a few exceptions, I don't think we kind of got to that stage over here. So it makes sense that that's not as live a debate over here as it is maybe over there.
00:26:29
Speaker
i I have way too much um evidence of that at the moment. you know I sort of have a gut feel of that from from conversations and and things like that, but I'm working on piece about how much it costs to launch a program.
00:26:43
Speaker
And so I've i've looked at a lot, a lot, a lot of institutions doing it themselves, proposals for starting new programs and and They're really not very mature at all. Like they're their ability to actually forecast just cost, let alone anything else, is not great.
00:27:02
Speaker
it I was thinking of two examples here, but they're really not fee-for-service example. They're really unbundling. um Arizona State University famously started out with the Pearson Denver E-College Group, not the M-Binet Group, by the way.
00:27:17
Speaker
They were Pearson's largest customer as recently as two years ago, 33% their total revenue in the OPM market. But they're doing it themselves now.
00:27:29
Speaker
But if you go in and visit EdPlus and see the groups who are running the stuff internally, well, first of all, it took years for them to build it up. And they're doing it themselves. And they're managing it. And it's a very mature organization. But...
00:27:46
Speaker
ASU is typically the exception that proves the rule. I've always mentioned University of Florida Online, UF Online. they so They also started out with Pearson and flipped it to get rid of the OPM arrangement and handle it in-house. And they didn't scale to the level that was originally promised, but they became self-sustaining and highly rated program.
00:28:07
Speaker
So... Let's put it this way. We definitely see examples where it no longer makes sense for specific schools to work with an OPM because they truly can do it
Coursera's Strategic Shift
00:28:18
Speaker
themselves. And their long-term financial payoff is going to be better because of it.
00:28:23
Speaker
um That's not necessarily saying they're going to fee-for-service OPMs. um And it takes a lot of specific leaders to make that happen. So again, I'm not arguing there's not a place there. It's just that hasn't taken over the market.
00:28:40
Speaker
But I would like to turn us a little bit more on the Coursera case. Let's talk about where Coursera is changing. And just I'll set the stage. You know, when Coursera started out, it was very much the best universities in the world going online. So very elite school, elite brand and implications of elite content.
00:29:01
Speaker
um And it was originally free MOOCs, the massive open online courses. Then they had specializations, but then they eventually had a their degrees business. And that is straight rev share, OPM, but primarily master's programs that they've been doing. And the most famous, I believe, is the University of Illinois IMBA or Geis and MBA.
00:29:25
Speaker
I've seen it branded. both ways. So that's where they came from, even though they still do consumer and enterprise work. But we're seeing a lot of signs that they're, well, not just signs, they're saying it in their earnings call that they're de-emphasizing the degrees business.
00:29:42
Speaker
And they're creating a lot more of their own content. So particularly focusing on the OPM, but we can expand a little bit broader. What do you guys see that ah Coursera is doing? Like ah how big of a change is this? Just the fact that they're de-emphasizing but not stopping their degrees business.
00:30:04
Speaker
One of the explanations that I saw was about their revenue per student was going down, which is sort of interesting. And and and I sort of have some questions about that. ah You know, certainly what I hear is, you know, ah it's Illinois and Colorado that are the big actors there. I wonder how some of the others...
00:30:23
Speaker
are doing um sort of smaller ones. And especially as the the degrees are fairly concentrated in things like data science and and things. So theyre there's not a broad spread of things there.
00:30:35
Speaker
I guess I read it, i mean, the earnings call is really interesting, isn't it, in terms of getting into the detail of the kind of degree side of things? Because ah I guess I read it in a few different ways. I think it felt like it was a ah moving away from degrees was um also to do with the fact of just remedying their kind of growth trajectory. So focusing on things like consumer and enterprise where they get more rapid returns. You know, you're kind of putting a degree out there and it takes a while for a bunch of cohorts to kind of come through and for you to to get anything. So I think there's kind of, it was, there's a financial motive in terms of getting them back on track in terms of the growth trajectory that they want to be on.
00:31:15
Speaker
um But I think it was really interesting to kind of, to your point, Phil, in terms of it felt like it was a move away from, you know, in the past we thought of degrees and even just university relationships as getting elite universities on the platform and plonking degrees. And that was kind of the proposition that, look, in the early days of the move, you need to go, so you do a free call. I still see it on LinkedIn now where you get people saying,
00:31:43
Speaker
you get those posts where you're like, these are top 10 free courses from the best universities in the world. And invariably that Coursera is one of the ones on there. But it felt to me like they were saying, look, we're not kind of totally backing away from degrees, but it's about degree partners that align with our model around using open content, feeding into degrees and um credit bearing electives through Coursera for Campus. So it's kind of, you have you know this is more of our business model now and more of our approach. And so degrees um and therefore the universities that want to offer degrees on our platform or that we work with,
00:32:24
Speaker
have to sort of be aligned with that pathway kind of model and relating the degree to the other things that Coursera do.
00:32:35
Speaker
um So that was my reading of it all. Neil, being a very nice person, you seem to be giving a lot of credit towards, okay, we need to be choosier and sort of a carefully considered thing.
00:32:48
Speaker
I think there's more of an element of frustration there of, okay, we're tired of how long universities take, not just to create a cohort, but how long they take to react to generative AI and to new opportunities and to be able to quickly figure out how to create content that's appropriate and that's hot.
00:33:09
Speaker
Now, that's a double-edged sword um because it looks to me like Coursera is going whole hog towards generative AI and creating a pretty big risk on that they're belt they're jumping on the bandwagon too exclusively And that as things figure out where AI fits in, they might have bet too much on it.
00:33:32
Speaker
um But the other one is you have long-term partnerships. We're going back to the definition of OPM, the M part, as you called out, Neil. Well, as schools start saying, wait, aren't you competing with us with your own content and your own offerings? Because we're trying to do non-degree work as well.
00:33:53
Speaker
There's a real risk they're introducing of schools saying, wait, this is our partner who's competing with us to a level. And they certainly haven't fully worked out what the changes are. So I think that they have had some frustration.
00:34:08
Speaker
They got rid of their CEO. Trust me, he did not get let go so he could spend time with his family or play golf. He retired, Phil. I don't know what you're talking about. Oh, okay. Yeah.
00:34:19
Speaker
So whatever he did, they changed CEOs and they brought somebody in. Will you make this thing grow? But they've created two risks. Are they betting too much on AI in my mind?
00:34:30
Speaker
But the other one is alienating their long-term elite school partners. Maybe it makes sense. I'm just calling out the risks they've introduced. Yeah. I mean, i I think it's interesting in terms of the university side of things, because I feel like to a certain extent, i felt more and more that Coursera had been moving away from that anyway. And I think this was mentioned in the earning court earnings call, and I was assuming they're referring to Google, but they made a lot of play about renewing their partnership with their biggest industry backer. And, and you know, actually, those are the things
00:35:03
Speaker
you know Google is what Harvard might have been in 2014. I'm always fascinated by how these platforms are evolving because I think it's different, but think about where FutureLearn is going.
00:35:18
Speaker
And you just wonder like what the meta story is going to be about this journey because you know you've kind of picked up on a few things, Phil, in terms of you know, are these the best partners for responding to particular demands in terms of subject areas and course focus?
00:35:35
Speaker
Probably not. And we probably know that about universities in terms of how fast they move on that. Are they aligned with an organization that's really focused on the commercial aspect of online learning and willing to kind of align their strategies with with them? So I think it's It's understandable that there's this kind of, what I feel is like a bit more of a decoupling between universities and the partnerships that they have on these kind of platforms.
00:36:04
Speaker
I think it was interesting what they were saying around Coursera for Campus and saying how that that was more of a focus for them. And they were talking about the way in which... universities are kind of adopted and content from Coursera for Campus for Credit within courses, and they that seemed to be going well in India. But I certainly don't know that that would that would work or be that well aligned in the UK in terms of you're adopting Coursera for Campus and you're using that. But even in the call, they were saying that when universities adopt
00:36:37
Speaker
Coursera for campus, if they don't align it with programs and credit, then actually they don't see much activity from students. It's a bit like, you know, we have lots of universities over here subscribe to LinkedIn Learning for their students. It's kind of more that kind of thing, rather than being more embedded into degree programs, which just seems to be where they want to go. But some geographies are kind of more, um yeah, more more aligned with that than others, I think.
00:37:05
Speaker
Well, there's certainly India is a geography that's driving a lot of their strategy and their potential for growth.
Unbundling Trend in Education
00:37:12
Speaker
And that's where a Coursera for Campus, at least initially, has done very well.
00:37:17
Speaker
I would argue that part of what you're seeing on a shift, free forget Coursera creating their own content or that distinction. The move from de-emphasizing degrees and increasing the emphasis on Coursera for Campus is Isn't that an unbundling argument saying, okay, we're going to participate, but we don't control the whole thing. And we're going to be just doing small components there.
00:37:44
Speaker
And that sort of gets back to some of the changes I do see in the market. And we mentioned ASU, uf Online, there are others where schools are saying the more mature they are, the more they want to have things unbundled. So to a degree, pun intended, I think there's an unbundling play that they're trying to do. And they see the degree part, you know, being the manager for a degree,
00:38:13
Speaker
that that's part of the burden. They don't want to have four or five years to get to profitability per program. They want to find ways where they can do it much quicker. ah i was wondering, because ah I kind of heard the news before,
00:38:27
Speaker
going through the earnings call, but I was also wondering if there would be any mention at all, and there wasn't, of a sense of ah the the degree not being as ah valuable a currency as well, but there was nothing in there to suggest that that was a factor in their decision-making, but I was looking for that.
00:38:46
Speaker
Well, Morgan, are you seeing Coursera for campus ah outside of India any significant adoption? not Not outside of non-US kinds of places. That's definitely where I'm sort of seeing most of it. I'll i'll sort of look into that more.
00:39:02
Speaker
um you You mentioned that at at a certain point universities going to wake up. um I think one of the things getting in the way of that is the way that a lot of these universities are organized where there isn't perhaps central...
00:39:14
Speaker
control of things. I know a friend of mine interviewed with one university that does a lot of content for Coursera, and it was very decentralized. was happening at the college level. The university wasn't sort of taking action there, but I think the number I saw recently was 49% of it was was external to the US. So that's that's where a lot of their business is happening. So um it'll be interesting to see what happens in the US. And I think they have a bit of a branding problem with Coursera content itself. I mean, there's still only a little bit of ah ah of it, you know, perhaps eight courses on Coursera, 200-odd Coursera instructor network, but it's very loosely branded. Like somebody starts talking and you don't know where they come from, except that they have 15 years of experience. and And that's going to be an interesting play to see how that plays out in an unbundled thing, because
00:40:06
Speaker
Certainly university brands are very valuable. Google and IBM and those sorts of things are very valuable. I think Joe Schmo standing up and saying, I've been doing this for 15 years, much less valuable.
00:40:19
Speaker
Yeah, there's a risk of becoming i'm just Udemy, directly you know enabling some random content to be produced. I realize that sounds pretty derogatory towards Udemy, but from a degree perspective, it is.
00:40:32
Speaker
But I think there's also a thing of they don't want this to be too prominent because of the risk of alienating a lot of their partners as well, who like the ego stroking of elite schools and what that does.
00:40:46
Speaker
So as I put these two together, i think they're all the same thing. um The OPM market and the report, and you're looking at Coursera, the market's changing.
Conclusion and Future Plans
00:40:56
Speaker
It's absolutely changing their pressures here and there on unbundling on both sides, schools and vendors.
00:41:04
Speaker
um Certainly revenue sharing percentages, there's market pressure to drive those down, what percentage goes to the vendor. Um, There's regulatory pressure. There's new options.
00:41:18
Speaker
So the market's fundamentally changing. It's just the last x explanation I would put is a simplistic, the market's become fee-for-service. People are running from share to fee-for-service. So it is a very strongly changing market, but there's a lot of nuance in there. We need to really understand that as well and come up with the right explanations for it.
00:41:44
Speaker
As always, fun talking on this subject. And i I think that we're going to continue talking about this subject of moving forward ah because there's still so much financial pressure on schools, to the revenue side, and this is one of the options. Again, i think we need to finish up this call so Morgan and I can figure out our travel schedule so we can maximize our fun in the UK in the summertime and seeing Yeah, so i podcast out there I'm going to send you a kind of a travel guidebook for Yorkshire, I think, with some, you know, suggestions of things to do maybe some you know common phrases as well, just so you can fit in.
00:42:20
Speaker
Well, I'm going to be watching old Monty Python skits as part of my research. so Well, I have this theory that almost every single British drama on TV is set in Yorkshire. ah Increasingly, they're set in Wales, but before that, they were set in Yorkshire. So I've watched so much British TV at various times, I found myself thinking in a Yorkshire.
00:42:39
Speaker
but Well, ah thanks for listening or watching, and we will be back in about two weeks.