Free Massive Online Education Provider, Coursera, Begins To Find A Path To Profits

Online education providers may very well disrupt the higher education establishment, but, first, these for-profit companies need to find a way to finance the mammoth technical infrastructure needed to support millions of students. It’s a challenge that all mission-based businesses wrestle with, and why many have wondered whether Massively Open Online Course (MOOC) providers will ever become big business — or be around in five years — let alone “transform higher education,” as they’ve so often promised.

Today, one of the biggest MOOC providers on the Web, Coursera, showed skeptics that it has indeed found a way to monetize free educational content and may just be on the road to riches. In a blog post this afternoon, Coursera announced that it has raised over $1M for paid certifications, which verify that students passed (an otherwise free) online college course.

For those unfamiliar, Coursera partners with top-tier universities — more than 83 institutions on board — to make their classes and lectures available online, for anyone in the world to consume. The company burst onto the scene with millions of dollars in backing from big names, and ever since its buzzy debut has been dogged by questions over whether or not MOOCs will ever be able to make enough money to justify $65 million-worth of venture capital.

In July, Coursera added a significant round of funding (bringing its total to $65 million), saying that it would use its new capital to develop mobile apps and increase its presence internationally (among other things). Of course, with so much capital and so many investors now on board, Coursera’s road to monetization and profitability became that much steeper.

The news today is reason enough for optimism, especially considering how quickly it has been able to turn a new feature into $1 million in revenue. The startup unveiled “Signature Track” back in January — a program that has been designed to allow students to earn “Verified Certificates” for a small fee.

Through Signature Track, students are able to verify the work they complete on Coursera, with the idea being to supplement the value of the work students do on the platform. While this represented Coursera’s first step (really, tiptoe) into credentialling and doesn’t include credit towards a degree program, it does give students something tangible to prove that they’ve completed the course and know the material.

While $1M every 9-months wouldn’t pay back their total $65 in investment, there’s every reason to believe that there’s orders of magnitude more students who would pay for this service. First, beyond being nine-months-old, Signature Track really hasn’t been aggressively promoted. Second, Coursera is quickly expanding to more universities, both in the U.S. and around the world.

Third, and perhaps most importantly, tech companies are exploring an alliance that would weight these types of certificates as equal to a college to a degree in the hiring process. While this Alliance is still very much in the nascent stages of development, if MOOC providers like Coursera and Udacity are able to come together with the Googles and Apples of the world to develop some kind of standard, it could have big implications for higher education.

In the future, we could see these platforms (and others that are sure to launch in the interim, like MOOC.org, for example) allow students to mix and match classes from MOOC and traditional universities, with MOOC providers offering some kind of paid certificate to its students.

There are, of course, many very valid concerns that need to be discussed as MOOCs, tech companies, startups and schools themselves rush to integrate technology and tear down the ivory walls around traditional higher education. Questions like these are becoming increasingly important to ponder: Are MOOCs best used as a platform for continuing education — to re-train, brush up on subjects and for general edification purposes — or as a viable alternative (or even replacement) for the traditional college degree?

For now, it’s the former, but as Coursera and others plow more time, resources and capital into their Signature Track-style programs, the more they will compete with campuses, institutions themselves — and the diploma. This is a great thing for education in the long run, as long as Coursera and MOOC providers aren’t just content with the bar set by traditional education, but look to push that bar higher. That’s what we want to pay for, and that’s what will shape the next big education technology business — not just a digital version of the same old thing.