Universities are facing mounting threats from learning platforms — online marketplaces that connect learners with courses and programs from multiple providers. This article explores the challenges and offers strategies that learning institutions can employ.
Learning platforms are online marketplaces that connect learners with courses and programs from multiple providers. Examples include Coursera, edX, Emeritus, Guild Education, Pluralsight, Skillsoft, Udacity, and Udemy. They have the potential to transform and disrupt the education market in similar ways that platforms have transformed many other industries. Think how they have impacted hospitality (e.g., Airbnb, Expedia), transportation (e.g., Lyft, Uber), journalism (e.g., Google News, Substack), and retail (e.g., Amazon, eBay).
Learning platforms are already prevalent for non-degree courses (e.g., Udemy, Skillsoft, LinkedIn Learning) and professional education (e.g., Emeritus, Masterschool, Udacity), and some are already making inroads into the degree program space (e.g., Coursera, edX). Currently, there is little understanding of what this means for established degree-granting educational institutions and how university leaders should react to their growing presence. Drawing upon our research in platform economics and our experience working with learning platforms at a large university, we can provide some answers and offer actionable suggestions.
Learning platforms pose challenges to educational institutions similar to those posed by Booking.com and Expedia to hotels, by Amazon to third-party brands, by Apple’s iOS and Google’s Android to app developers, and by DoorDash and Grubhub to restaurants. (Those challenges are explored in depth in this HBR article.) To summarize, large platforms have made it much easier for brands and merchants to be discovered and reach new customers. However, participation on such platforms also poses significant risks of being held up or commoditized.
The risks can take several forms:
Platforms can extract higher fees over time, particularly as they become more powerful and entrenched, and face less competition.
The environment on large platforms inevitably becomes increasingly competitive over time: This is the result of natural growth (platforms with more customers also attract more merchants) and can also stem from platform design changes (e.g., the recommendation algorithm places a higher weight on offerings with lower prices). Moreover, growing platforms don’t just attract existing brands; they also make it possible for a long tail of new and highly specialized offerings by formerly “amateur” providers to become viable. The entry of such new providers in formerly brand-dominated markets (e.g., Airbnb, Uber, and most notably Udemy in the education space) further erodes incumbent brands’ market power.
Finally, and perhaps most important, platforms tend to weaken merchants’ relationships with buyers (their customers). This occurs naturally because buyers, seeking broad choice and effective search and matching capabilities, come to (and typically register with) the platform first. As a result, brands lose power as they become dependent on large platforms to reach their customers. The top brands are challenged but usually find ways to cope, whereas anything from the mid-tier and below faces severe existential challenges.
While there is not yet a dominant learning platform analogous to Amazon.com or Booking.com or Apple’s App Store/Google’s Play Store, it is quite clear that investors are betting that learning platforms will substantially impact the education industry by targeting some glaring inefficiencies:
Platforms have introduced low-cost alternative courses at all levels — undergraduate and graduate, degree and non-degree — pressuring incumbent institutions to either follow suit or lose market share.
By offering “one-stop” access to a broad selection of programs and increasingly sophisticated search and selection tools, learning platforms have the potential to help learners break away from the limited options and opaque matching process offered by incumbent institutions in a largely fragmented market space.
This will occur as more institutions enter the same markets (e.g., online degrees) and traditional marketing channels (e.g., Google, Facebook) become saturated. Learning platforms will then become an increasingly attractive learner acquisition channel for many institutions.
By hosting innovative new types of programs and credentials, often in collaboration with employers, learning platforms have the flexibility and agility to better appeal to career-focused learners and provide courses that are more aligned with employers’ needs.
Learning platforms are here to stay. The question is not whether to engage with them but rather how to do so. Based on what we have learned from studying the experiences of other industries and helping our own education institution (Boston University) work with learning platforms, we can offer a set of recommendations for incumbent institutions. We group them into two buckets.
This first bucket of recommendations is meant to help individual institutions make the most out of participating on learning platforms.
Every university should identify areas where there are not that many course offerings on learning platforms and aim to be one of the first (early) movers in those areas since this can create a lasting competitive advantage. Conversely, there is little value in adopting a me-too approach — i.e., offering certain types of courses on learning platforms just because “peer institutions” are doing so.
Indeed, education is largely a credence good (i.e., students are often unable to fully assess the true quality of a program until long after they graduate), and research has found that ratings and reviews are less reliable signals of quality for credence goods. This means that aside from strong university brands, the most effective “quality” signal for a program is the number of previously enrolled learners, which favors early movers in any given subject area.
Furthermore, some learning platforms (especially when they first launch) offer exclusivity agreements to the first institutions that partner with them in selected areas to help them grow in those areas. This presents an opportunity for an individual university to negotiate for the right to be the exclusive provider (even if for a limited time) of a well-defined course or program area.
Platforms accumulate valuable data about education supply and demand, which can assist institutions in designing programs that are likely to have maximum appeal to learners. Institutions should insist on having access to this valuable data as a condition of participating on learning platforms.
They should also be open to learning platforms suggesting new program formats and other ideas that education institutions may not have considered (e.g., edX’s Micromasters, Coursera’s MasterTrack, Guild Education’s employer-focused programs) so they can use these platforms as valuable laboratories to experiment and accelerate innovation. This happens most effectively when an institution’s internal education innovation units (e.g., Boston University’s Digital Learning & Innovation or the University of Michigan’s Center for Academic Innovation) are intimately involved in co-managing the institution’s relationships with platforms.
Education institutions should also find ways to exploit the global reach that most successful learning platforms can offer. This can make niche programs or courses that would not be viable in each education institution’s local market (e.g., less-commonly-taught languages) economically attractive. Harnessing such opportunities is a strategy that can both avoid competition in crowded areas (especially for institutions with weaker brands), as well as engage parts of an institution (e.g., humanities) that are traditionally not as active in online education.
The second bucket of our recommendations aim to help education institutions prevent what in our view are the two biggest dangers posed by learning platforms:
While trying to extract as much value as possible from participating in online learning platforms, education institutions should be careful to encourage competition among multiple platforms. The most obvious way to do so is by multi-homing — i.e., participating on multiple platforms.
To that end, institutions should avoid being tied into long-term contractual relationships with a single platform. They should also avoid being locked into any single platform’s proprietary technology and limit their reliance on a platform’s “value-adding services” such as enrollment support, tutoring, career advising, etc. Although these might seem to offer short-term savings to institutions, they ultimately weaken their relationship with learners (more about that below).
Instead, education institutions should insist on using their own content delivery and learner-support-technology infrastructure whenever possible or adopt agile software and production processes that make it easy to port content across multiple platforms. It is also important to develop sufficient internal production and marketing capabilities that allow the institution to negotiate or switch when a platform’s fee structure or other terms are no longer advantageous to the institution. And institutions should also retain a direct channel that complements their platform participation (in the same way that, say, most hotels are bookable via Expedia but also support direct bookings on their own websites).
As indicated above, one of the biggest risks learning platforms pose to established education institutions is the weakening of their relationship with learners, who now go to the platforms first for their learning needs.
Institutions need to be creative in mitigating this risk by pursuing strategies that foster and maintain a close relationship with learners not only during but also after the completion of their courses. The primary and most natural audience for such strategies would be alumni of conventional programs, with whom an institution has built a close relationship.
Indeed, learners will most likely continue to consume education to upskill and reskill as career requirements continuously evolve, something which their original education institutions have a comparative advantage in helping with. Thus, institutions should consider developing alumni portals that provide high-quality tools for researching career opportunities, suggesting personalized up/reskilling plans, and leveraging alumni networks for career advice and opportunities.
To be viable, such portals should offer learners a broader choice of programs than what any single institution can offer. (After all, broad choice is one of the main selling points of learning platforms). To that end, institutions should explore partnerships with peers who offer complementary — and perhaps even competing — programs. In doing this, each education institution can leverage its deeper understanding of its alumni’s needs and the close-knit social networks created among alumni. Combined with impartial guidance between the institution’s own and the partner institutions’ programs, this should make it easier to keep learners on the institution’s portal.
Note that, by pursuing such strategies, institutions (or institution consortia) effectively act as platforms themselves. The difference with the “outside” learning platforms is that the institutions’ learning portals (platforms) would primarily compete on depth rather than breadth. Importantly, they would also provide a counterweight against the dominance of a single centralized platform.
Learning platforms will bring opportunities to expand institutions’ reach to new learners and new learning formats, but they will also mercilessly exploit the inefficiencies that are plaguing the current education market. Unfortunately, we have seen many institutions adopt something of a herd behavior approach to learning platforms — i.e., jumping to offer the same courses or programs that their peer institutions do. This approach doesn’t really create meaningful value for the institution, but it does help enhance the relevant platforms’ market position and their leverage over institutions.
Indeed, the problem is that, in some sense, the institutions are involved in a “prisoner’s dilemma” game with respect to learning platforms. Each institution sees some value in individually participating and offering a broad range of courses on learning platforms, but, of course, if many institutions do so, that helps to increase and entrench the power of such platforms, which may end up hurting all participating institutions.
The good news is that, despite their positive momentum, platforms are not yet as powerful in education as they are in other industry sectors. Therefore, educational institutions can still act in ways that favor the emergence of an industry structure that is more advantageous to them.
Specifically, they should selectively participate in multiple platforms from a position of strength (which implies having reasonably advanced internal capabilities), while also forming partnerships with select peer institutions and leveraging the strength of their own alumni networks to develop institutional lifelong learning portals. This is the strategy most likely to result in a market structure that will benefit learners while maintaining a balance of power between learning platforms and education institutions.
The authors thank Wendy Colby, associate provost and vice president of the BU Virtual unit at Boston University, for her helpful inputs.
