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Comment by jknupp | Hacker News Reader

I'm still unclear what the business model for universities (as opposed to private companies) in this space is. The problem is, they will inevitably be compared to (and in some sense compete against) their non-virtual counterparts. Especially when they've essentially given away all their course materials and lecture videos for free, and considering these classes are not for credit, I just don't see the benefit for the average person over studying what's already freely available. And one can't even make the argument that the free resources aren't meant to be used to learn a subject (as is the case with most free reference material), since these were obviously created with precisely that goal in mind.

When they inevitably move to a tuition based model, the ever present question of "the real MIT or the online one?" may be too much to overcome.

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I can think of three reasons universities would do this.

First: Universities do not generally take pride in having a commercial "business model" approach. They almost all say education, rather than profit, is their aim. They say they don't charge $x because they want to extract the maximum rent from the market, they charge $x because that's what it costs to provide the course.

What better way to prove this commitment to education than to charge much less for a course that costs much less to run?

Second: Sony chariman Akito Morito reportedly once said "My job is to make our products obsolete before our competitors do."

If online learning is the next big thing, you want to be at the cutting edge of it. You don't want to end up a local bookstore in the age of Amazon, you want to be Amazon.

Third: 120,000 people signed up for the first MITx course (only 7,000 people went on to get a passing grade) and the system handled them OK. You can accept much less profit per student when you've got a thousand times as many students. Of course, there are more experiments needed to determine whether they can provide useful credentials people will get their wallets out to pay for - but people are used to paying a lot for university courses. If they made just $10 to $100 per student per course they could be looking at some serious money.

From the FAQ

Why are MIT and Harvard doing this?

To improve education on campus and around the world: - On campus, edX research will enhance our understanding of how students learn and how technologies can best be used as part of our larger efforts to improve teaching and learning. - Beyond our campuses, edX will expand access to education, allow for certificates of mastery to be earned by able learners, and make the open source platform available to other institutions.

Personally, I've started using Coursera (Stanford/Princeton/Penn) in my spare time and I love it. I used to be very skeptical about online education, but now I see I was wrong. Using this free resource, I have expanded my knowledge/skillbase in some pretty esoteric areas significantly than I could have done using books or the internet alone. Had my undergraduate university possessed a platform like EdX or Coursera, I can assure you I would have gotten a better education by being able to review lectures at my own speed and review them at will (as opposed to missing them altogether).

That said, I can't yet imagine a world where I would skip an opportunity to attend Harvard, MIT, et cetera simply because I could take some of the courses for free online.

That's why they do it. Nobody is going to turn down a place at MIT/Stanford/Caltech to do the course online and even if they did there are 20 other candidates.

But they might turn down a place at UVa to do the courses at @MIT - get a cert and spend the $50K they saved on a startup.

This free market increases MIT/Stanford's reputation, it hits 2nd tier state-U and totally destroys the online market for Phoenix University type places.

The issue isn't MIT competing with itself, it is, as the OP mentioned, MIT online competing with the second tier "me-too" institutions out there that are charging the same tuition for a far inferior experience. If you are considering getting a degree from a university few people have heard of or respect but will have to pay the MIT price for, you will at least have the option of choosing the online route to achieve a potentially superior education. The choice will be more and more difficult as online universities get A-listed and solve the many problems they currently have with their user/educational experience.

They don't need to generate a profit and it would be preferable if there was no profitable business model for it. Donations to both MIT and Harvard are considered charitable; making more of their classes freely available online would justify that.

To say it would be preferable if there were no profitable business model is short-sighted. It would mean that the only entities capable of undertaking something like this would be existing universities (and the wave of private companies offering a wide curriculum of online courses would end). Those universities that attempted something similar would at best be able to merely recoup costs. In short, the higher education revolution would amount to existing universities putting classes online. Why in the world is that preferable?

New charitable organizations would also be able to enter the market.

The universities that do this best will gain prestige. Not to mention that education is a significant component of the mission of the university.

"education is a significant component of the mission of the university"

I'm old enough to remember those days !

udacity makes profit by putting in contact their best students with recruiters.

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