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Lessons Learned at Dot-Com U

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Lessons Learned at Dot-Com U Lessons Learned At Dot-Com U. By KATIE HAFNER Published: May 2, 2002, Thursday GO to Fathom.com and you will encounter a veritable trove of online courses about Shakespeare. You can enroll in ''Modern Film Adaptations of Shakespeare,'' offered by the American Film Institute, or ''Shakespeare and Management,'' taught by a member of the Columbia Business School faculty. The site is by no means confined to courses on Shakespeare. You can also treat yourself to a seminar called ''Bioacoustics: Cetaceans and Seeing Sounds,'' taught by a scientist from the Woods Hole Oceanographic Institution. Or if yours is a more public-policy-minded intellect, you can sign up for ''Capital Punishment in the United States,'' a seminar with experts from Cambridge University Press, Columbia University and the University of Chicago. What's more, all are free. That part was not always the plan. Fathom, a start-up financed by Columbia, was founded two years ago with the goal of making a profit by offering online courses over the Internet. But after spending more than $25 million on the venture, Columbia has found decidedly little interest among prospective students in paying for the semester-length courses. Now Fathom is taking a new approach, one that its chief executive likens to giving away free samples to entice customers. Call it the Morning After phenomenon. In the last few years, prestigious universities rushed to start profit-seeking spinoffs, independent divisions that were going to develop online courses. The idea, fueled by the belief that students need not be physically present to receive a high-quality education, went beyond the mere introduction of online tools into traditional classes. The notion was that there were prospective students out there, far beyond the university's walls, for whom distance education was the answer. Whether they were 18-year-olds seeking college degrees or 50-year-olds longing to sound smart at cocktail parties, students would flock to the Web by the tens of thousands, paying tuitions comparable to those charged in the bricks-and-mortarboard world -- or so the thinking went. ''University presidents got dollars in their eyes and figured the way the university was going to ride the dot-com wave was through distance learning,'' said Lev S. Gonick, vice From tech2.nytimes.com/mem/technology/techreview.html?_r=1&res=9E01E5DA1531F931A35756C0A9649C8 B63 10 July 2011 president for information services and chief information officer at Case Western Reserve University in Cleveland. ''They got swept up.'' American universities have spent at least $100 million on Web-based course offerings, according to Eduventures, an education research firm in Boston. Now the groves of academe are littered with the detritus of failed e-learning start-ups as those same universities struggle with the question of how to embrace online education but not hemorrhage money in the process. New York University recently closed its Internet-based learning venture, NYUonline. The University of Maryland University College closed its profit-based online arm last October and folded it into the college. Temple University's company, Virtual Temple, closed last summer. Others have reinvented themselves. In the process, the universities have come to understand that there is more to online learning than simply transferring courses to the Web. ''The truth is that e-learning technology itself, and those of us who represent the institutional and corporate agents of change in the e-learning environment, have thus far failed,'' Dr. Gonick said. ''Across U.S. campuses today, e-learning technology investments are at risk, and many technology champions are in retreat.'' Since the mid- 1990's, most of the purely virtual universities that sprang up -- from Hungry Minds to California Virtual University -- have been sold or scaled back or have disappeared altogether. The same is true for the lavish venture-capital financing for start-ups that designed online courses for colleges or put the technology for such courses in place, for a high fee. In 2000, some $482 million in venture capital was spent on companies building online tools aimed at the higher education market. So far this year, that amount has dropped to $17 million, according to Eduventures. Kenneth Green, founder of the Campus Computing Project, a research effort based in Los Angeles that studies information technology in American higher education, pointed to a combination of reasons that universities have stumbled in distance education. Mr. Green said that college campuses and dot-coms had looked at the numbers and anticipated a rising tide of enrollment based on baby boomers and their children as both traditional students and those seeking continuing education. In short, the colleges essentially assumed that if they built it, students would come. One conspicuous example is Fathom. Last week, Columbia's senate issued a report saying that the university should cut spending on the venture because it had little return to show for its investment. The report urges better coordination among the university's digital efforts, notably Columbia Interactive, a site aimed at scholars seeking academic content. From tech2.nytimes.com/mem/technology/techreview.html?_r=1&res=9E01E5DA1531F931A35756C0A9649C8 B63 10 July 2011 Fathom started in 2000 by offering elaborate online courses replicating the Ivy League experience. The company has an impressive roster of a dozen partners, including the London School of Economics and Political Science, Cambridge University Press, the British Library, the University of Chicago and the New York Public Library. Many of Fathom's courses are provided by its member institutions, and many offer credit toward a degree. Although Fathom's courses were impressive from the start -- for example, ''Introduction to Macroeconomics,'' taught by a University of Washington professor for $670 -- the idea that many students would pay $500 or more for them proved a miscalculation. ''If you listened to some of the conversations going around on campuses, it was, 'Gee, this looks to be easy, inexpensive to develop and highly profitable -- throw it up on the Web and people will pay us,' '' Mr. Green said. But business models were flawed, he said, and university administrators did not fully understand the cost of entering the market. ''It's really, really expensive to do this stuff,'' he said. ''It costs hundreds of thousands of dollars to build a course well.'' There are substantial costs in designing the course, Mr. Green said, like creating video, securing content rights and paying the faculty member who teaches it. ''This doesn't migrate painlessly from classroom onto the Web,'' he said. ''It's more like making a Hollywood movie.'' Michael Crow, executive vice provost at Columbia, said that Fathom had yet to generate significant revenue, let alone turn a profit. ''Right now we're trying to figure out how to make it work intellectually,'' he said, ''and we have to figure out later how to make it work financially. If anyone had asked us how anyone was going to make the university work financially as the first question asked, it would never have been built.'' Now Fathom has decided that instead of students seeking degrees, it will focus on those looking for courses in professional development and continuing education. Fathom is also offering courses that are less expensive to produce and cost less for students, as well as several dozen others that are free. ''We've broadened the kinds of courses in recognition of the fact that most people aren't familiar yet with online learning, so they need different price points,'' said Ann Kirschner, Fathom's president and chief executive. ''We need to introduce learners to the concept before they will commit money.'' Part of the problem, distance learning experts say, has been an emphasis on technology -- streaming video, for example -- at the expense of more careful thinking about how remote learning might best be conducted. Some critics say that university administrators confused tools with education. From tech2.nytimes.com/mem/technology/techreview.html?_r=1&res=9E01E5DA1531F931A35756C0A9649C8 B63 10 July 2011 ''We figured a quick wave of the magic wand and we'd reinvent how people learned after 900 years of a traditional university mode of instruction,'' Dr. Gonick said. New York University has had a conspicuously difficult experience with distance education. The university started NYUonline in late 1998 to focus on corporate education and training, not degree programs. The company sold the courses as packages to corporate customers. By the time it opened its virtual doors to students in 2000, NYUonline employed 45 people and offered online courses with titles like ''Train the Trainer,'' for human resource managers, and ''Management Techniques,'' aimed at young managers. The NYUonline courses were not cheap. ''Train the Trainer,'' which included live Webcasts as well as self-paced online courseware, cost around $1,600. The tuition for the management techniques course was close to $600. In two and a half years of operation, NYUonline received nearly $25 million from the university, but enrollment remained anemic at best: just 500 students at its peak. After closing NYUonline, the university moved some of the company's activities into its School of Continuing and Professional Studies, which was probably where it belonged in the first place, said Gordon Macomber, the former chief executive of NYUonline, who is now a consultant on electronic learning in New Canaan, Conn. ''Along the way it became apparent that a major university that wants to get into online education can do it without forming a separate for-profit online company,'' Mr. Macomber said. ''If you're going to invest money in anything, the university might as well invest it within the university instead of supporting a for-profit company.'' There are a few success stories. The technically oriented University of Phoenix has an online enrollment of more than 37,000, with four-year and post-graduate degree programs aimed at older students.
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