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EIC / Distance Learning / Articles / E-learn and earn

E-learn and earn.

As dot coms mostly fade, online universities are proving that there's gold in them thar screens

Director Steven Spielberg recently received his diploma from California State University-Long Beach after dropping out in 1968 to conquer Hollywood. A great example to dropouts everywhereЦthough, unlike Spielberg, most students probably couldn't get their natural sciences professor to visit them at work. At least notin person. Through E-learning, however, college students can have instructors visit them via the Internet. They can download video and audio of lectures and attend class discussions through chat rooms and message boards.

Whatever the quality of these E-courses, more and more people are taking advantage of their convenience. Online-learning enrollments are growing 33 percent a year and are expected to hit 2.2 million by 2004, according to International Data Corp. And a study by Bear Stearns found that 150 institutions offer undergraduate degrees online and that nearly 200 offer online graduate degrees.

But can companies and institutions make a profit from E-learning? People are still reluctant to pay for online content generallyЦone study found that 70 percent of adult surfers didn't see why anyone would pay. Yet the University of Phoenix Online, a division of distance-learning company Apollo Group that trades as a separate tracking stock, made $31.8 million in fiscal 2001 and $23.6 million in the first six months of fiscal 2002. Rivals like DeVry and Strayer Education don'tbreak out online results, but "they are either already profitable or soonwill be," says Greg Capelli, education analyst with Credit Suisse First Boston.And while shares of most E-stocks have tanked, E-learning stocks are up anaverage of 14.5 percent this year.

Apollo Group Presidentand CEO Todd Nelson says that he agrees with "new economy" prophets who callE-learning the "next great application of the Internet." Still, it is hardlya can't-miss business. Academic institutions have found E-profits elusive.New York University, the University of Maryland, and Temple University haveshuttered their for-profit ventures. Columbia University's Fathom has yetto make a profit and is shifting its strategy. So what's the key to making E-learning make money?

Keep it useful.
Columbia University's Fathom was born from a vision of having millions of Internet users sign up for semester-length liberal arts courses like Greek and Roman Mythologyfor $414. But Anne Rollow, Fathom's head of strategicalliances, admits the firm overestimated the willingness of so-called lifelonglearners to "experiment"Цespecially at several hundred bucks a pop. So nowFathom has added free, quickie intro seminars, 10-week courses for $50, andlonger career-development coursessuch as Define Your Core Business."It helps when you offer classes that students actually care about," saysLehman Brothers analyst Gary Bisbee.

Keep it real.
An E-firm with an established offline presence has the marketing advantageof a brand name. Indeed, a poll of human resource managers found that 77percent thought online degrees from offline institutions were more crediblethan those from pure E-learning firms. "It helps to be both bricks and clicks,"says Bear Stearns analyst Jennifer Childe. She points out that pure E-learning firm Jones International University has only 6,000 students, while the University of Phoenix Online has 37,569. Helping power that growth has been the 26-year-old University of Phoenix, with 78,700 students, 38 campuses, and 78 learning centers in the United States, Canada, and Puerto Rico.

Keep it simple.
Many academic efforts, says Bisbee, had "lots of whiz-bang features likevideo and high-end graphics, even though not everyone could use them." Andwhile sticking a camera in the back of a lecture hall is the simplest wayto do E-teaching, most college students will attest that lectures are theleast important part of the educational experience. "A lot of the peoplewho rushed into this business were refugees from cable television and thoughtyou did this the way you do a talk or cooking show," says Andrew Rosenfeld,CEO of Cardean University, which offers business courses online, includinga full M.B.A.

Creating a profitable little business may be a comedown for bold entrepreneurs looking to build the Amazon.Com of education. Then again, Amazon would have been profitable long ago if it had stuck to selling just plain books.

Author: James M. Pethokoukis

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