MIT Sloan Executive Education innovation@work Blog

MOOCs: the true costs of free online education

Faculty Author: Michael Cusumano, MIT Sloan School of Management

Free isn’t necessarily good, especially when it comes to Massive Online Open Courses, or MOOCs—a recent development in distance education. While traditional online courses charge tuition, carry credit, and limit enrollment to a few dozen to ensure interaction with instructors, the MOOC is usually free, credit-less, and caters to thousands of students at a time. The New York Times dubbed 2012 "The Year of the MOOC," and it has since become one of the hottest topics in education.

But how free are MOOCs? Given that there are real costs and quality issues associated with any type of higher education, what are some possible downsides of a free or low-fee college education?

For one thing, while high-quality institutions with global reputations will likely continue to survive, second and third-tier universities and community colleges that play an important role in their local communities may not. A negative effect of this trend is the potential reduction of the variety and opportunities for learning.

Also, while online courses can be construed as less expensive to create, there are still expenses associated with these classes, including research, marketing, sales, and administration. In most industries, the real costs of “free” are absorbed by other areas. For instance, companies that are able to compete with free alternatives usually have business models that allow them to take advantage of “multi-sided markets”: their products are “free, but not free.” In other words, these companies subsidize one side of the market to gain users and make money from another side of the market.

Other industries that have gone the “free” route have not been as successful. For example, where once they offered their content for free, the New York Times and other newspapers have found they now need to charge for some usage. Likewise, many software product companies that were around in the late 1990s disappeared partly because of the availability of free or cheap alternatives downloadable from the web. Even today, most software product companies need to sell services or some portion of their product. For example, Adobe gives away their Acrobat Reader, but sells billions of dollars worth of servers and editing tools to cover the cost of those freebies.

Although universities and colleges can benefit from this free concept in terms of attracting more students, for free to work economically, it still needs to be “free but not free.” Those who have survived have found a way to cover their costs and generate a surplus at the same time.

Certainly, free online learning is not going to disappear. As with many things in life, it will likely be most valuable in moderation and as a complement to a traditional university education. On the plus side, it may even force educational institutions to reduce education costs, which has positive implications for many.

In essence, for free online courses to be successful, institutions of higher education need to ensure that the true costs of MOOCs do not become too high for society by destroying the economic foundations of less-prominent colleges and universities, or even themselves.

Michael Cusumano teaches in executive education programs at the MIT Sloan School of Management. You can read more of Cusumano’s opinion on MOOCs here.

Comments (2)


Posted: 4 years and 19 days ago

You raise some excellent points about the meaning of "free" but I wonder why MOOC courses don't go the route of Facebook or online media publications and use advertising to generate an income?

Amy Kirby

Posted: 2 years and 11 months and 30 days ago

Ah, I agree, that people shouldn't depend on the idea of online education too much. It might be helpful if you want to study a small are of your course or refresh something, but to expect that you will become a real specialist by just sitting near computer is a little silly. If you are already student and need some assistance I’d recommend services like . But it is just a small help, you still need to study diligently and visit your college or university routinely. I don’t believe there is other way to get educated.