Is the current MOOC model in higher education sustainable?

This week I came across Coursera, a company which has partnered with several high profile universities to offer MOOC (massive open online courseware). The tagline that promises "The World's Best Courses. Online, for Free" seems like a no-brainer for potential attendees, and I readily signed up for a few interesting courses including Edinburgh's module on E-learning and Digital Cultures. But what is in it for Coursera, and indeed the institutions that produce the content?

This very issue, and in particular the contract between Coursera and the University of Michigan, is highlighted in the Chronicle of Higher Education. It seems Coursera themselves are not even sure how they will ultimately generate a sustainable revenue stream, but one possibility is through commercial advertising and sponsorship. However, The Chronicle states that "when and if money does come in, the universities will get 6 to 15 percent of the revenue"; in short, those investing in, developing and producing the content and materials will get less than a sixth of any revenue generated. One silver lining is that all IP rights remain firmly with the institutions.

Whilst there are obviously other potential gains offered by the promotional heft of the Coursera platform, I still wonder why the institutions have signed up to such a seemingly inequitable agreement with a commercial start-up. Surely the prestigious universities involved (Princeton, Stanford, UPenn) could focus on their own individual platforms, or more realistically, join the existing edX not-for-profit alliance started by MIT and Harvard?

Perhaps it is the lower up-front investment of the Coursera model that is attractive, even if a little myopic. A substantial $60m has already been invested in edX and "officials at MIT and Harvard said that eventually edX will have to figure out a way to be self-sustaining, and it does not have a business plan -- another aspect it shares with Coursera".

How open courseware will be supported long term - via institutional investment or commercial start-ups - remains to be seen. The near-zero marginal cost model of online education theoretically pushes prices close to zero also, and the trick will be to use these products to upsell or cross-sell to higher margin offerings such as degree programmes. The University of Washington has just announced exactly this - they will now be offering for-credit courses through Coursera, in line with the pricing of their existing UW fee structure (around $2000 per module, or $5000 for a set of three). Aside from these paid credit courses however, at present MOOC is generally being subsidised by the high tuition fees paid by the students who are attending the institutions and until the cost curve of higher education changes fundamentally, this will likely continue to be the case.