Argument: elite colleges offer MOOCs because they can afford to

Here is an interesting argument about MOOCs, massive open online courses, that a hot topic of discussion these days: elite colleges can offer them because they accrue status and can afford the financial losses.

Millions of people were already taking online courses in 2011, when The New York Times noticed that thousands were taking a Stanford course online. The MOOC surge has been driven by the warm feelings associated with elite American colleges. Brand equity is obviously the principal admissions criterion for edX and Coursera, and for Udacity by implication, with its pedigree of Stanford origination and Silicon Valley cool.

Ideally, this will allow elite colleges to profit from and enhance their brands at once. Penn can’t ever be Coca-Cola. Its brand is tied to the noble purpose of higher learning. If it’s seen as a crass profit-taker, the whole thing falls apart. Many observers have asked where the “business plan” is for Harvard, MIT, and other institutions leading MOOCs. That misses the point.

Elite colleges are ultimately in the business of maximizing status, not revenue. Spending a lot of money on things that return a lot of status isn’t just feasible for these institutions—it’s their basic operating principle. It’s not hard to make money when you’re already wealthy—witness the performance of the Harvard Management Company over the past 20 years. The difficult maneuver is converting money into status of the rarefied sort that elite institutions crave.

MOOCs offer that opportunity. Elite colleges are willing to run them at a loss forever, because of the good will—and thus status—they create. Free online courses whose quality matches their institutional reputation (a tall order, to be sure, but MOOC providers have strong incentives to get there) could ultimately become as important to institutional status as the traditional markers of exclusivity and scholarly prestige.

In other words, MOOCs offered by elite colleges can reinforce existing status structures where these elite schools can continue to amass resources, financial, knowledge-wise, and social status and still claim they are helping the masses. On the other hand, can takers of MOOCs use them as real stepping stones to move up in society?

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