Economies of Not-so-Scale and Marginal Costs of Not-Quite-Zero

One additional point about the Circuits and Electronics course stats I cited yesterday. Most of the talk about MOOC-scale has been about the number of sign-ups.

But that’s the wrong end of the problem. What we care about is cost per completion. And at 7,000 completers, there’s certainly some scale to this course but it’s not quite the scale we think of when we are looking at “marginal cost of zero” sorts of solutions.

That may sound nitpicky, but it’s not. Back in the late 90s/early aughts I had the honor of working on some of the best online learning ever produced, at Roger Schank’s company Cognitive Arts. And we would spend a million a course because of this marginal cost of zero idea. If each additional enrollment costs no more money, you can afford to build elearning that is designed at the level we normally see in videogames. And I don’t just mean in terms of flash — when you put a million dollars into an online course, every piece of that course is carefully designed to have the maximum impact.

But you have to have scale to do that. At a million dollars a course, for 7,000 students it’s costing you about $150 a completer. That’s a deal for society, but it’s not the deal Silicon Valley interested in. If Silicon Valley is ever going to take completion seriously (which they may not, since an eyeball is an eyeball is an eyeball) then the cost per completion is going to have to get a lot lower than that. And my guess is the way they will do that is not by making classes better, but by keeping the cost per class pretty low.

What this means, unfortunately, is the marginal cost of zero thing might be a lie we are telling ourselves. Someone somewhere recently said “You promised us jetpacks and all we got were these lousy video lectures” (was it Audrey?). I’m saying that if there really was a marginal cost of zero, or if the players involved even believed they were paying a marginal cost of zero game, we would have jetpacks, not these substandard courses.  The fact we don’t either indicates the market is not there yet or that, maybe, the market is not heading there at all. I hope Let’s hope it’s the former case and not the latter.

2 thoughts on “Economies of Not-so-Scale and Marginal Costs of Not-Quite-Zero

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