Stephen Downes on the e-learning market

by Yule Heibel on July 18, 2005

A quick reminder to myself: reread Stephen Downes’s July 10/05 article, The Economy of E-Learning, where he responds to a reader who wrote to him as follows:

I just finished a PhD in elearning, and I’m looking for my next steps. Thankfully I have many options but I realize that elearning looks more like a non-profit, charity sector than a normal, economically-viable activity. So I’d like to ask you a question: Where do you see the money being made in elearning today?

I’m skimming through this inbetween doing 15 other things, but I’ll get back to this for a reread:

There will be a short-term market for software tools designed to produce content, distribute content, to manage content and to display content (by short-term, I mean about 3-5 years). A good analogy is the market for MP3 creation tools; in the Windows environment, there existed a proliferation of tools available for recording and storing audio content; these tools marketed for $30 – $60. However, with the development of a free and open source audio content creation tool – specifically, Audacity – the market for these tools disappeared. In blogging, we see a similar phenomenon: early bloggers desiring a tool would purchase Userland or Typepad, however, the free Blogger service essentially closed that market; similarily, the thriving market for Movable Type was significantly impacted by the free WordPress alternative.

Therefore, the spending on learning content will drop significantly over the next decade, with allocations shifting from the purchase of commercial content on a restricted license, to the production of content in-house for free or effectively free distribution; this content will be viewed essentially as a public service (and may eventually qualify for tax credits) and, in commercial environments, as a loss-leader for greater value-added services. For example, IBM is investing heavily in the production of Linux and other free and open source applications, and has shifted its business model from hardware and software sales to services and consulting. Smaller markets will open up for other companies in more specific niches; Vancouver-based Bryght, for example, contributes to the open source Drupal online community application, and generates income through support and service.


Software, as numerous commentators have already observed, is rapidly becoming a commodity, and at a pace even more accelerated than content, is rapidly becoming [something?] people can produce for themselves. There is no inherent constraint on the continued expansion of open source, though factors similar to those related to content – substantial lobby support by commercial publishers, their membership on college and school boards, quality-assurance and quality-control concerns, existing (and increasingly broad) copyrights, existing royalty-holders within the educational system, lack of marketing and distribution for non-commercial software – will ensure that the expansion of open source software is gradual. As noted above, there will be short windows for commercial applications, but since in most markets these applications will not be protected by software patents this window will be a short one (in the United States, patent protection will not protect the market, and the development of free and open source software, along with its economic advantages, will move offshore). [More…]

That last bit about sitting on boards…. Hmmm….

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