Online Programs: Profits are There, Technological Innovation Is Not

Online programs are generally profitable. But despite the buzz about Web 2.0, the education they provide is still dominated by rudimentary, text-based technology.

Those are two key findings in a recent report, “Benchmarking Online Operations: Snapshots of an Emerging Industry,” produced by the consulting firm Eduventures.

Online education has grown in popularity, yet it remains dependent on learning-management systems, with content-delivery built around text, says Richard Garrett, an Eduventures managing director.

“The underlying delivery model or pedagogical model hasn’t really changed much in the last five, 10 years,” Mr. Garrett says.

The survey of 96 institutions, which is not publicly available online, was released to Eduventures members and subsequently to The Chronicle. Mr. Garrett describes it as the first attempt to benchmark online-specific operational activities across a large number of schools — activities like technology, outsourcing, and marketing. Data were collected in the fall and winter of 2008-09. The Campus Computing Project is expected to soon release an expanded, updated version of the survey.

The study found that nearly all programs were either profitable or breaking even. Overall, 65 percent reported that their online programs were profitable. For for-profits, 100 percent were profitable; for nonprofits, 62 percent were. (With nonprofit colleges, “profit” is used in the sense of a surplus, with revenues being larger than expenses. Universities have various systems for handling the surplus).

The profitability findings underscore how the recent — and widely publicized — demise of University of Illinois’ online Global Campus program does not reflect the typical experience, Mr. Garrett says.

The finding “gets away from any notion that online is somehow a flash in the pan, or it’s all up-front investment and no return, like the Illinois Global Campus,” Mr. Garrett says.

But when it came to technology, the Eduventures survey found that the widely used tools are email, text discussions that don’t happen in real time, physical textbooks, and word and pdf documents.

That contrasts with what you find on the programs of distance-learning conferences, where the talk is often about Web 2.0 technology that allows students to interact with the content or the provider in tangible ways. Those tools might be social-networking platforms or wikis or virtual worlds.

“Any innovation is really on the periphery in terms of the odd synchronous session, or the odd video clip, or the odd simulation,” Mr. Garrett says of online


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