MIT now offers 1,800 courses for free online. A number of other premier universities are also leading the way by doing the same. They are not just putting course notes or a syllabus online. No, they are putting the full course online - lectures, notes and recorded videos.
Is this incredible? Is this the signal of the end of the on campus university experience in which a student (or his parents) pays in excess of $100k to go to a top tier university? Maybe everyone will now just stay home, get a good broad band connection and sit in their rooms somewhere for four years while they take all the courses for free?
Or is all of this just some sort of big marketing move on the part of MIT?
The answer is both yes and no.
Open Source software companies have long understood the value of giving something away. It builds brand, builds community, provides instant feedback on new product releases, and can quickly catapult a brand to the top of the fray. Most software companies now also understand the danger of not giving something away. It is tough to compete these days against the likes of a SugarCRM, Mindtouch, Openbravo, Pentaho, Knowledgetree, or ProcessMaker. These companies drive so much traffic and so many hundreds of downloads each day that a newcomer in their respective software genres has very little chance of competing. This gets magnified by a loyal community following which provides lightening fast feedback whenever new features are released so that the software continues to improve at a pace that further weakens any would be competitors.
Open Source Software is not just about giving away a small freebie or limited edition software. It is about giving away the whole enchilada – the full code. This is commercially viable under the assumption that totally pervasive distribution of a software product is worth more than the potential lost sales to those same users. This, of course, is possible only if a company has a plan to then sell higher value add services (premium services) to the much larger user base it acquires by giving away its software.
Thousands of students and small companies in developing countries download my company’s open source bpm software every week. Why would I want to stop them? If we chose to sell our software, most would never have paid for it. Or if they would have, the cost of engaging with them and collecting money from them would not have covered the associated costs. But these same users may later join larger companies where the value of support and other premium services will be much larger than the revenue potential of selling to them when they were smaller and less able and willing to pay.
The most successful commercial open source companies are the ones that do the best job of offering real free and open value while also delivering true differentiated premium services that a segment of their market wants to pay for.
So, let’s turn back to the universities. They actually have always had a much better reason to give away their content (i.e. courses) than the open source software companies. The reasoning is simple – they have an incredible bundled premium service and there are people that are willing to pay for it. When you sign up for MIT’s premium plan for $100k + per year, you get the following:
- Physical experience – you are on a beautiful campus on the Charles river in Cambridge and this is the ideal setting for true contemplation for 4 years
- Access to the professors – you can actually talk to them and form a lasting relationship
- Network – MIT has pretty rigorous entrance requirements, so if you pay to go and they accept you, you gain access to a network which may help you find a spouse, a job, a business deal, and other significant relationships for the rest of your life
- Collaboration – real collaboration with other students – after all that’s where the real learning ocurrs
- A diploma to hang on your wall – it may just look like a piece of paper, but if the right person walks into your office later in life and sees it on the wall it could be worth a lot to you
So does giving away its courses in any way jeopardize MIT’s ability to sell to this premium group? No, in fact it does just the opposite. MIT’s superior free offering will make it’s name and brand so universally known in the coming years that it will probably edge out its other rivals (Harvard and the rest of the ivy league) to the point that the value of the MIT diploma only goes up. Therefore, they will expand their base of those willing to pay for their premium services.
Of course, at the same time, MIT will spawn a whole new industry which will appear mostly in the developing world but probably even to a lesser degree at colleges in the US (maybe this is the answer for Obama’s plan to breathe life into community colleges). Without a doubt, a legion of facilitators will appear at these institutions to “help” students take MIT courses. The institutions will make use of their classrooms to bring together local students and teacher’s aids to help students take the video taped MIT courses.
These institutions will, of course, charge tuition for access to these free courses and may even issue local credit in their institution’s name brand for students that take the course through them. Does this sound unfair to MIT or somehow strange? Well, it shouldn’t. This is exactly what happens with free software. Just look online at all the companies offering services around the most popular open source software packages. The vast majority are not official distributors or partners of the software company. They are simply tapping into the demand created by the companies massive open source machine.
I would assume that MIT has already thought about these consequences. And if they believe that they are entitled to some revenue from all of the revenue that will be made from these other universities using their courses, then they simply need to turn once again to the open source software industry and see how it solves this problem. I’ll give MIT a hint (you need to attract, retain, and certify your distribution channel :).
