In his recent article in EdSurge, Jeff Young (formerly of the Chronicle) profiles an emerging fringe world of post-secondary education where “Nanodegrees,” “MicroMasters,” and “MicroDegrees” are proliferating. Companies like Udacity and edX are looking to stake out territory in this emerging market and trademarking new degree types is one way they’re attempting to do that. Earlier branding efforts were meant to establish legitimacy across the board for this type of mini-degree or credential, but now the branding (and accompanying trademarking) seem to be an effort to signal quality and raise barriers to entry for other providers looking to enter the space. In order for this strategy to be successful, the timing has to be just right. Too soon and the category fails to establish itself, too late and and the category is awash in competition of uneven quality. The risk here could be that the incumbents are pulling the trigger too soon.
Category: Business & Economics
The “Business & Economics” category covers the business aspects of ed tech, including the financial health and business models of individual companies, economic aspects of selling in education that shape the available offerings, and coverage of markets and investment.
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Instructure’s Current Market Position
With the proliferation of so many privately funded educational technology companies, the quarterly earnings call of a publicly traded company like Instructure is a rare opportunity to get a detailed look at company performance and hear directly from executive leadership as they respond to analysts’ questions. Sometimes those responses can be guarded, at other times very frank. Regardless of which, it’s almost always very revealing.
During Monday’s third quarter earnings conference call with Instructure we saw the company showing considerable confidence in their current market position and trajectory for the next couple of years. Quarterly revenues of $30.1M are up 44% over Q3 last year. Of that $25.8M (86%) is recurring revenue from subscriptions, the remaining $4.3 is derived from professional services. In the domestic higher education market, CFO Steve Kaminsky cited research from e-Literate and MindWires that attributes a win rate of 77% to the Canvas LMS when it comes to new implementations and said that he expects that number to remain consistent over the next few years. With a current market share of 17-20% in the U.S. and Canadian higher education markets, Instructure said that they are expecting Canvas to gain another 10-30% of the market over the next 2-3 years. See Instructure’s full third quarter financial report here. (more…)
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About That Cengage OER Survey
Last month Cengage Learning released a white paper titled “Open Educational Resources (OER) and the Evolving Higher Education Landscape” where the headline called out expected increases in OER adoption:
Open Educational Resources (OER) in higher education have the potential to triple in use as primary courseware over the next five years, from 4 percent to 12 percent, according to a survey of more than 500 faculty by Cengage Learning. In addition, the use of OER for supplemental learning materials may nearly quadruple in size, from 5 percent to 19 percent.
The 4 percent adoption of OER as primary courseware aligns with the Babson Survey Research Group (BSRG) finding of 5.3% using open textbooks (yes, we’re assuming the terms are interchangeable at least for the survey results). But the expectation that OER adoption may triple for primary usage and quadruple for supplemental is new. The BSRG did not estimate market growth – they just identified perceptions and barriers.
There were enough causes for skepticism, however, that prevented me from taking the report at face value. A traditional textbook publisher touting OER growth while offering little data or methodology to back up their claims. The tendency for some OER advocates to run with half-baked numbers. The question of open-washing and associated risk of redefining OER.
I contacted Cengage and spoke to Cheryl Costantini, VP of Content Strategy to learn more about the study. Unfortunately, the deeper I dug the more credence I give to the results (unfortunate in terms of attention-grabbing blog post headlines). Long and short – the report seems like solid information despite a few flaws and need for broader sample size. (more…)
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PEARSONalized Learning
I have been pretty relentless in mocking Knewton CEO Jose Ferriera for his “robot tutor in the sky” description of the company’s adaptive learning product. And I pledge to continue this proud tradition. It’s the gift that keeps on giving.
But the truth is that most of the vendors in this space, both startups and traditional textbook vendors, are not doing a whole lot better than Knewton. The reason the “robot tutors” quote remains so useful is that it is a beautifully compact and self-explanatory illustration of the same symptom that shows up throughout the industry. Vendors struggle find ways to pitch their products that educators won’t find both offensive and ridiculous. In today’s episode of the evergreen marketing sitcom, we’ll see examples of Pearson making analogies or prominent references to Netflix, Google Ads, and one other surprise tech hype guest. (You don’t expect me to give you all the spoilers up front, do you?)
For the most part, it’s not that these companies are conspiring against educators (although we do get periodic outbreaks of “disrupting education” talk driven by Silicon Valley bros who are want to make a virtue out of the fact that they don’t know how to sell to schools). Nor is it that the people in these companies are stupid, or that they don’t understand their own products. Rather, it’s a manifestation of a larger problem of our culture. Most people who are not teachers, whether they work for education vendors or not, don’t understand what teaching is. They have a very rough Gradgrindian sense of it. Learning, in this view, is not an activity undertaken by learners but something that is done to them. You screw off the tops of the students heads, pour the knowledge in, and voila! They have been learned! Learning can be done to students equally well by a person or a machine, since it is not “personal” in any way that relates to normal understanding of the word, and it certainly is not interpersonal.
The people inside education companies that work with customers closely in designing the products often (though not always) have a more sophisticated understanding of teaching than this. But the further away the employees are from product development, the less likely they are to understand how teaching really works. The inner workings of the classroom are just not part of their daily lives. As I wrote in my review of InstructureCon, it’s very hard and rare for any company of over, say, 100 employees to be strongly aligned and consistent across its culture. This is doubly (or even trebly) true when the alignment you’re trying to get cuts against the grain of strongly held cultural notions like the ones we have of teaching. So there are a lot of employees inside most of these companies that don’t get it. Some of them are decision-makers. Some of them are allowed to speak in public. Some of them are both. The result is generally…not good.
It’s probably worth providing a more detailed version of the full disclosure thing than usual for this particular post. Pearson is a client of MindWires, the consulting company that Phil and I run together. When we do consult for vendors (as opposed to universities, which is the other half of our main business), our focus is on helping them understand the needs of students, educators, and schools. We don’t take money to advise them on marketing except in the narrow sense that we try to help them understand the kinds of educational problems that their customers want to hear (and talk) about how to solve. One of the reasons we try to be meticulous about drawing this line is that it leaves our hands clean to write the kind of public critique that I am about to offer here. We always tell this to our corporate clients and let them know that we could write a critical piece about them at any time without warning or editorial review, as long as we are not writing about proprietary information that is part of our consulting work with them.
So here goes….
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Educational Software Patents: A Call to Vendors
A number of people responding to the Chronicle’s article on the Elsevier patent asked me to write something about it. For those of you who haven’t been following ed tech for at least a decade or just haven’t been following e-Literate for that long, the main reason that people who weren’t my mom started reading this blog in significant numbers was the work I did explaining the patent that Blackboard was asserting against D2L, the mechanics and progress of the lawsuit and, more generally, how software patents work and why they are bad for ed tech. So I felt obliged to respond to requests for my thoughts regarding the Elsevier patent. I published them in my reaction in our column at the Chronicle. Since it’s behind their pay wall, I’ll briefly summarize the points here:
- For a variety of reasons related to the legal complexities of software patents, we can’t really know the legal scope of Elsevier’s patent unless and until it goes to trial.
- Trying to figure out what the patent means before is not only hard but could put you and your employer at increased legal risk, so read it at your own peril. Seriously.
- Elsevier’s public statements indicate that they might be willing to assert it (i.e., sue somebody for infringement of it).
- Whatever your general opinion of software patents may be, offensive use of them in education is really bad because the companies are too small and the profit margins too thin to support that kind of legal activity (in contrast to, say, the mobile phone and pharmaceutical industries). Offensive use of software patents could destroy progress and innovation in educational software.
- Inevitably, more and more leaders of education-related companies—including Elsevier’s current CEO—were not around during the Blackboard patent suit and have not seen the massive brand damage that Blackboard did to itself in the process. The danger of patent assertion is increasing because the deterrent is fading.
- There are few legal tools available to deter patent assertion. The best tool universities have is economic.
I ended by calling for leaders of educational institutions to gather together and sign a pledge that they would not procure products from companies that assert education-related software patents. But I don’t have a lot of hope that it will happen. After all, if they weren’t sufficiently motivated to take collective action during and immediately after the Blackboard suit, why would they be now? This doesn’t mean that they will fail to act in the face of an actual patent suit. Schools voted with their feet in response to Blackboard. In fact, the brand damage was so profound that I believe it is impacting the company’s sales to this day, even though the CEO during the suit left a long time ago and the legal architect of the suit has left the company as well. There will be consequences for companies that assert educational software patents. But there is no visible deterrent for companies that do not remember Blackboard v. Desire2Learn. Blackboard spent a lot of money and retarded the LMS market for a long time before they finally admitted defeat.
This is an area where vendors could show leadership. As I mentioned in the piece, the fact that educational software patents exist means that there is strong motivation for companies to file for patents that they can use in defensive counter-suits, even if they have no plans to ever use them offensively. D2L didn’t have any patents at the time of the lawsuit, but I would be shocked if they didn’t have any today for exactly this reason.
The right thing for vendors to do here is to create what’s known as a patent pool. Any patent owner who contributes to the pool pledges to only use that patent for defensive counter-suits. In return, the owner also gets to use any other patents in the pool for defensive purposes. The rules would be a little more complex to work out than a typical patent pool because there is no single well-defined software category or product that they are protecting (like Linux or video streaming technologies, for example). But it could be done. And it would only take two or three players to get it rolling. The most obvious candidate to lead this is Blackboard. They have a strong need to define themselves as “not your father’s Blackboard” and probably still have patents. If they could get Pearson, McGraw Hill Education, or D2L at the table and hammer out the structure for a patent pool, then they could begin to invite other players in.
In an era where algorithms are increasingly important differentiators in educational software, we can expect patents to proliferate and the temptation to assert them to grow accordingly. We really need corporate leaders to step up and demonstrate their moral commitment to protecting education from this growing threat. I’d love to see this happen and would love to help make it happen.
Any takers?
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Exclusive: Worldwide LMS market size expected to triple in 5 years . . . or get cut in half
Well these two reports will help us narrow down our estimates of the future LMS market size [emphasis added].
According to a new market research report, “Learning Management System Market by Application, Delivery Mode (Distance Learning and Instructor-Led Training), Deployment (On-Premises and Cloud), User Type (Academic and Corporate), Vertical, and Region – Global Forecast to 2021”, published by MarketsandMarkets, the LMS market size is expected to grow from USD 5.22 Billion in 2016 to USD 15.72 Billion by 2021, at a CAGR of 24.7%.
The growth rate for Self-paced eLearning platforms is distinctly negative at -14.6% and the global platform market is in freefall. Revenues for platform will plummet by $3.8 billion over the forecast period. Essentially, the global LMS market is imploding. [snip]
The worldwide growth rate for LMS products is very negative at -14.6% and revenues will plunge to $3.2 billion by 2021, down from $7.1 billion in 2016.
I’ll give this to them – I’m willing to bet that the five-year reality will lie somewhere between those two forecasts.
Of course both market analyses make a fundamental flaw in combining all things labeled LMS as a single market. As Michael pointed out in his comment to my earlier post on the MarketsandMarkets report:
Lumping higher ed, K12, and corporate LMSs into the same category is a little bit like lumping railroad cars together with automobiles because they are both called cars, have wheels, and carry things and/or people from one place to another. On top of that, nobody has decent data on the size of the global market, never mind the growth of it. MarketsandMarkets’ “analysis” effectively gives us made-up numbers about a mythical automobile/train car market.
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Marketing Claims From Adaptive Learning Vendors As Barrier To Adoption
In Spring 2016, faculty, support staff and administrators at Oregon State University met to candidly share their experiences with adaptive learning technology. ((Disclosure: Our e-Literate TV series of video case studies and explainer videos is funded by a grant from the Bill & Melinda Gates Foundation.)) I shared two different videos from the event at EdSurge in this article.
At one point I asked what people saw as risks or barriers to further adoption of adaptive learning courseware, and two people had very similar responses. In a nutshell, the over-active marketing claims from many vendors could be the biggest barrier. This is somewhat counter-intuitive as over-active marketing is commonly seen as the cause of technology being adopted even when it should not be. Listen to their responses (< 30 seconds).