1 e-Learning: markets and pricing Understanding them? Paul Bacsich “Financial considerations for e-learning projects”, Birmingham, March 2004

2 Contents  Myself  Some costs-related reminders  Assessing the size of the market  Business plan  The commodity value of e-learning  Funding Councils’ funding of e-learning

3 Myself 1  Currently two main part-time roles  Director, Matic Media Ltd  Director of Special Projects, UK eUniversities Worldwide Limited: research and competitor research on virtual universities and MLEs  And some other bits and pieces:  External Examiner for several distance learning programmes  Treasurer, Association for Learning Technology  Member of JISC Committee on Networking

4 Myself 2 – formerly  Jobs:  Professor of Telematics and Head of Dept of Networks and Multimedia, Sheffield Hallam U - several DL courses  Many years at Open University finishing up as Assistant Director, Knowledge Media Institute  Roles:  Several “costs of e-learning”, evaluation and policy studies for EU, JISC, HEFCE, LSC, DfES  Many years work on “virtual university” analyses, especially critical success factors  E-University studies for HEFCE since 2000  Ran several big projects in e-learning including the SHU Virtual Campus

5 Some costs- related reminders

6 Problems of different perceptions  There is slowly increasing agreement on the methodologies of costing e-learning  So why is there a dilemma where Education see “No Significant Difference” whereas Training sees “Return on Investment”?  The challenge is to find a uniform evaluation/planning methodology, including costs, which copes with a world without borders  Borders are not only geographic

7 Hidden Costs – the bane of financial planning  Increased telephone call and printing bills for students due to Internet usage  Entertainment expenses “necessarily” incurred by staff at conferences but not reimbursed  Administrator time answering student queries  Support costs of a new Learning Environment  Costs of content - “created in one’s spare time”  Costs of institutional collaboration  Costs of conformance to standards

8 The other stakeholders

9 Course Lifecycle Model Planning and Development Production and Delivery Maintenance and Evaluation Three-phase model of course development

10 Assessing the size of the market

11 Hard data  “Hard data on student demand for distance learning in overseas countries is difficult, if not impossible, to locate” (Fielden, 2000, for HEFCE)  Commission your own research, do not share  Do not be a slave to market research. A lesson of the dot.coms: products can create markets  “Brand” is elusive, time-lagged and subject- dependent  What would you do if you found 1,000 students?  Do not assume your (country’s) pedagogy will transfer

12 Competitor research  Whatever the size of the market, it will usually be contested - there are few unoccupied niches  Attractive subjects, eg MBAs, are over-contested  Focus on student preferences, views, including value proposition to them  Make sure you compare like with like - what is an MSc?  Try to track non-sales (dept store analogy)  global pricing is rare; global syllabi also

13 Business Plan

14 Can use HEFCE’s planning model

15 The commodity value of e- learning

16 What does e-learning content cost?  average £12000 per study hour, but very large standard deviation  10% of this for simple material  could one aim for < £1000 per study hour?  This is still around £8000 per CATS point.

17 Rule of thirds 1: Study of “engaging” multimedia: expensive 2: Study of existing or slightly modified (learning) resources: mid-price 3: Working on assignments (maybe in collaboration): cheap

18 How to reduce the price  Forget research  Go for templates  Economies of scale: long runs of similar material  Professionalism  Outsource to specialists (outside HE/FE)  Outsource development - and support - to cheaper countries close to UK culture (provincial Canada, Australia, New Zealand)

19 Funding Councils’ funding of e-learning

20 Funding councils - issues  Different home nations  I shall focus on England  Different post-16 regimes (HE and FE)  Different policies at different times

21 Funding councils - HEFCE  Funding (for operational courses) is now by formula, mode-neutral (but not subject-neutral – discuss…)  Not quite true…  Access premiums  Studies on differential effects, in particular “The costs of alternative modes of delivery” (JM Consulting, August 2003)  One suspects a slow drift away from mode- neutrality, perhaps preceded by complex premiums  Lots of HEFCE funding for development and special initiatives in e-learning (TLTP, CETLs, etc), and the ongoing IT aspects (JISC, JANET)

22 Funding councils - LSC  Funding (for operational courses) is by complex formula, but NOT mode-neutral  Several studies to think about simplifying this  Some LSC funding for development and special initiatives in e-learning (not as much as for HE – if one excludes Ufi?), and the ongoing IT aspects (JISC, JANET)  Issues  What about Foundation Degrees, HE in FE, etc?

23 Funding councils - DfES  DfES e-Learning Strategy  The overarching strategy under which HE and FE (and ACLs now) will operate  Beginnings of integration of schools, via the borderlands (6 th form colleges) – UKERNA, etc  Studies on long-term embedding and sustainability of e-learning  One suspects this means “no special money”

24 Further reading (on costs) Thank you for listening Paul Bacsich