EdTech 101 Series : Why only bundled pricing works in digital learning today?

On April 9, 2015, LinkedIn announced its purchase of lynda.com for $1.5 billion, a company that generates $100 million+ in revenue and has been profitable since 1997.

Pluralsight, another privately held, subscription-based, online education company is valued at $1 billion+ and has been ranked #42 by Forbes on America’s Most Promising Companies List. In 2013, author Scott Allen became the first of its authors to earn over US$1 million in royalties from his courses.

On the other hand, Coursera and edX that offer access to individual courses for free, but request a fee for verified certificates from rather reputed universities, have found it difficult to sustain this model. edX, being a non-profit, has been able to sustain this model through donations, whereas Coursera, has moved away from its initial promise of open access to content offered, by reserving parts of it only to paid users.

From the customer perspective, it is important to understand, what are the jobs that they want to get done. Learning is obviously a common objective, but apart from that, I would categorize them into two groups.

  • Industry users
  • Academic users

Industry users have a problem to solve and they prefer to have a subscription, to the entire offering, from which they could refer to any section of interest. A learning platform is then used as a reference and user switches back to work, without bothering about course completion.

Instead, academic users want to acquire a credential, which may be a stepping stone for their next career progression. Course completion and verified certificates are important to these users, but only if their industry values these certificates as well.

In digital learning, industry users are generating most of the revenue, either through personal subscriptions or business funding, because there’s no verification bottleneck, that forces a trust deficit like that between academic users and their target industries.

Recently, Coursera has started offering monthly subscriptions to various specializations. LinkedIn Learning is trying to combine subscriptions with credentials. This is just the beginning, but only bundled pricing will work till verification bottleneck is resolved and digital learning becomes mainstream.