I’ve spent a lot of time over the past couple years thinking about business models for OER in K-12. (As an entrepreneur who has worked in education for 15 years but was trained in business, it’s just where my mind goes.)

Given the fact that OERs are not free to develop or implement and that it takes a lot of money to get a K-12 program in use (even if its’ “free”; you can thank the system that the textbook publishers and the states have established for that), there needs to be a solid business model to get OER successfully used in K-12.

I’ve settled in to a model that offers core assets (in this case, basic content) free under an open license and also offers additional optional upgrades on a pay-per model  (ala Red Hat, etc.). This makes sense to me, not only from the standpoint of an OER start-up but also from that of an educational user.

But what I don’t have in mind here is a model in which the only free, open-licensed version is a scaled-down trial or demo version.  And I’m seeing way too much of this lately.

Here are a couple examples. I was using a textbook from Flatworld Knowledge (an organization I have enormous respect for) and was prompted to pay for printing a PDF on my own printer. Really? This seems to be taking the pay-extra-for-premium-services model a little too far. This CC BY NC SA book has been published in a PDF that is embedded with Flash via Scribd such that it can’t be downloaded or printed (easily at least).

printforpay

Now I understand the business reasons for charging extra for premium services, but this can’t be what was intended by anyone who intended this as an “open” venture. (Remixing this would be a gargantuan pain in the ass.)

Another example is DimDim, a piece of software licensed under GPL. If you didn’t know this is (was?) open source software, you would never know it from their web site. They promote a “free trial.” If you dig in and really look at the options, there is a scaled back version for individuals that is free.

There is a vigorous discussion of this issue on their Sourceforge page, on which people allege that the company “used the open source idea long enough to generate revenue” and that “even their own sales people have admitted that they are no longer supporting the community version, which is in total violation of the GPL license under which it was originally created.”

These are the sorts of problems that users have with free, proprietary software and that open source software (or open licensed content) is supposed to avoid.

Both of these examples cause me concern with regard to the “slippery slope” of an OER business model that tries to support an open-licensed core product with pay-per services. If someone isn’t keeping in mind the core values of “open,” the model will quickly erode to something that is virtually indistinguishable from proprietary commercial products.

Biz models for OER
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3 thoughts on “Biz models for OER

  • Pingback:OER Business Models in K-12 |

  • December 30, 2010 at 9:45 pm
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    In the OER and digital world everyone focuses on the fact that marginal costs approach zero. Unfortunately, as you mention, the fixed costs to produce the first copy are decidedly non-zero. Additionally, the cost of deployment to the customer is non-zero even if the nominal OER cost is zero; you can’t simply dump OERs into a K-12 environment and expect adoption by any more than the most motivated and skilled practitioners.

    Part of the confusion is that there always will be friction (costs) – so all OER business models boil down to some form of cross-subsidy (or sustained charity by someone with cash to burn). Therefore, the trick is understanding the different components of the offering and the segmentation of buyer/user personas. If you understand the needs and problems of the personas within various segments, you can understand which components can be paid and which should be free (or which market segments happily pay and which ones don’t). Since users and buyers can migrate from the “free” segments to the “paid” ones, you need to build smooth transitions so folks start paying as they reach certain value-transfer levels.

    In K-12 there are at least five components:
    1) Curated content – flows from producer to customers. For example, this can be “curriculum” or “teacher professional development courseware”.
    2) User-generated (meta)content – flows among customers. This can be revisions a la Flat World Knowledge or wikis, forums, and other socially-networked commentary.
    3) Learner-response quiz results – this can be everything from directed-response quiz results to constructed-response portfolio artifacts. This category is inherently sticky and often a valuable component worthy of payment.
    4) Outcome/usage analytics – a significant value-add to the previous category. It goes beyond “are they learning” to “are they learning ENOUGH”. “Enough” differs among customer segments, but whether it refers to “enough to pass the high-stakes state test at the end of the year” to “enough to be college and career-ready” actionable and timely analytics are worth their weight in gold for most educational institutions.
    5) Training and support – as I mentioned before, you can’t simply dump-and-run even the best product into the K-12 space. You have to constantly tempt teachers to virtue even when the students are enthusiastic and engaged.

    Once you understand where your value lies among these components you can build a business model. For example, the traditional publisher model charges for the first components (textbook) which cross-subsidized everything else! PD companies charge mostly for the fifth component and cross-subsidize the takeaway materials. Some companies (e.g. assessments) charge for only one component and totally ignore the others.

    In the context of OERs, you probably get the most sustainable business if the OERs are dynamic and introspective and generate a stream of data that gives insight into how students’ mental models develop. The analysis of that stream of data (plus the ability to automatically recommend the next OER for a student’s learning path) is what you can charge for. The car is free; the gas or chauffeur or tour guide costs money. If all the users want to do is crack open a beer and make out, it costs them nothing. If they want to go somewhere it costs money. If they want expert guidance and aid it costs money.

  • December 31, 2010 at 9:47 am
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    Good points. Thanks for sharing.

    One of the challenges for OER in K-12 is that the models have mostly come from higher ed, where the economic models are vastly different. In higher ed, cost is everything, and free textbooks are immensely appealing to students struggling to make ends meet.

    In K-12, cost isn’t so much of an issue. Even in this time of severe budget cuts, there is A TON of money being spent on instructional materials, as well as assessment, PD, and many other services. Every educational business charges for somethings and lets that subsidize other “free” things. But schools have lots of money to spend, and honestly it isn’t that hard to be profitable in K-12.

    What’s interesting is that the “free” (in terms of cost to the users) aspect of OER is not the most compelling benefit to the educational establishment. (It is appealing to teachers who spend a lot of $ for supplemental materials out of their own pockets, but as most ed businesses will tell you, teachers are not the true “customer.”) In fact, OERs don’t always compete well in a system where the textbook price is fixed and set by the state, and the real game is how many ancillaries and other goodies you can throw in to the deal.

    It’s a very wacky system, but despite all this, I believe that OER can make huge contributions to K-12. I think the big value propositions are in reaching a whole new level of achievement through differentiation and deeper learning. If we’re going to get there, we need to stop pouring billions into static boring textbooks and get on with the real work at hand.

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