The marketing intensifies in distance learning
Goldie Blumenstyk

04/09/1999
Chronicle of Higher Education
A27
Copyright UMI Company 1999. All Rights Reserved. Copyright Chronicle of Higher Education Apr 9, 1999

Some educators value the options; others fear vendors set the agenda

SOME ADVICE for provosts, deans, and anyone else involved with offering "virtual college" courses: Duck. The marketing brochures, information kits, and CD-ROMS that distance-education companies use to promote course-design tools and other services are going to be flying faster and more furiously than ever in the months ahead.

With colleges racing to offer distance education, such companies as Blackboard, Convene, Embanet, and Real Education are moving vigorously to get more visibility for their products.

Administrators and faculty members, meanwhile, are hashing out issues of cost and control over course content. And they're trying to calculate how quickly they need to begin offering on-line options to students, and how broad those options should be.

DIZZYING ACTIVITY The companies are maneuvering on multiple fronts. Real Education, of Denver, which some educators consider one of the most aggressive marketers in the field (with advertising in The Chronicle and other media), is more than quadrupling its sales force. Blackboard, in Washington, is wooing professors with free World-Wide Web sites for on-line courses, in hopes of winning more business from their departments and universities. Convene, in San Francisco, has just hired a top official away from the University of Phoenix's 6,000-student distance-education operation to head up marketing.

For an industry that barely existed three years ago, the level of activity is dizzying, say many observers.

Some skeptics, however, say the activity is also a bit dismaying, and they are beginning to question whether colleges' educational interests or companies' aggressive marketing tactics are what is fueling the frenzy.

"It's a little of both," says Michael R. Zastrocky, research director of academic strategies at Gartner Group, a technology-- oriented consulting company. Colleges "see a need to get active in this world," he says, noting that many institutions lack the technical expertise to manage such undertakings. "They're looking at companies like Real Education to jump-start it."

The Connecticut State University System, for example, signed a three-year contract with Real Education in October, after its trustees had made clear that they wanted the system to use technology to make education more widely available throughout the state. "Real Education helped us launch 13 courses in 35 days," says Herman D. Lujan, the system's chief academic officer.

INTEGRATION OF FAITH AND LEARNING

The full-service model offered by companies like Real Education and Convene also appealed to the 30-some colleges in the Christian Universities Global Network, a new venture that recently chose Real Education to create its virtual campus.

Officials of the network's member institutions, which range in size from 500 to 6,000 students, wanted to put up distance-- education courses dealing with "the integration of faith and learning and living," says Julie Jantzi, chief academic officer for the network of Christian colleges. But many of them, with tiny technology operations, "really didn't know where to start," she says.

For San Jose State University, which uses Convene, the faculty-training program and help-desk were key factors. "They're there for me," says Steve Zloto-- low, director of distance education. "It's one headache I don't have to deal with."

On many campuses, says Mr. Zas-- trocky, decisions to pursue distance education arise legitimately from the colleges' missions or from students needs. But some colleges, he says, are charging into distance education because companies have told theM that peer institutions, not to mention those in what marketers like to call their "aspiration group," are already doing it. "The vendors are putting the pressure on."

Faculty unions paint an even less flattering picture.

"We think a lot of it is vendor-driven, not educator-driven," says Jamie Horwitz, spokesman for the American Federation of Teachers, which says many institutions are rushing headlong into distance education. He cites a " `Keep up with the Joneses' mentality that's out there."

Company executives respond that they are not driving the market, but responding to it. And colleges' distance-education officials resist the suggestion that they are reacting to hype-although a few of them acknowledge that commercial pressure is a factor with which they often contend.

'PANIC MODE' "People have gone into panic mode," says David A. Wicks, director of instructional-technology services at Seattle Pacific University. But companies aren't causing all of the panic, he says. "Western Governors University scared a lot of people," he notes, referring to the new, virtual institution that would involve-and compete with-colleges in 17 Western states.

Mr. Wicks says he felt company pressure himself about a year ago, when Seattle Pacific was deciding whether to use outside help to create on-line courses. The university considered 10 companies, with Mr. Wicks going so far as to create a sophisticated matrix to compare the various options and services. The winner was Blackboard, a company that was known only for course-conversion software.

However, Mr. Wicks says, the evaluation process was complicated by a zealous push from Real Education. "They did a very good job of making sure that different administrators at our university had heard of them," including the provost, the vicepresident of business planning, and several deans, he says. "It was almost to the point where we had to prove that they weren't the one to go with."

Virginia Tech encountered a little of the same-from the Toronto-area company Embanet-during its evaluation of distance-education vendors last spring, according to Tom Head, director of instructional services. "They were quite persistent," he recalls.

Virginia Tech chose a new product from SCT, a company based near Philadelphia, that allows professors to create their own on-line courses instead of relying on the company to do it for them. Professors didn't want to give a company responsibility for converting courses and insuring that they went on line as designed, Mr. Head cvc "We've rent the capacity to do that. "

For many institutions, the decision on which company to use-or whether to use one at all-turns on how much technical know-how the college itself has. Costs of the services and issues of faculty control over the content of courses are also important considerations.

And choosing among companies can be difficult. Most offer a similar core product-a software platform from which professors can present an array of textual and multimedia course material, conduct online discussions with students in real time or asynchronously, and manage testing. But the bells and whistles vary greatly.

A few of the companies, like Convene, Embanet, and Real Education, bill themselves as full-service providers, offering to convert courses to electronic formats, train professors to teach on line, maintain the servers from which the courses are delivered over the Internet, and operate help desks for students and professors.

3 BROAD CATEGORIES Other companies, as Mr. Zastrocky of the Gartner Group classifies them, fall within three broad categories: those that sell course tools (including Blackboard, WebcT, TopClass); those that sell "groupware" (including Lotus, with its Learning Space, and Microsoft, with its suite of online-learning products); and those that have hitherto sold chiefly administrative applications (including SCT, Oracle, and Datatel) and are now developing software for distance education.

But the industry is evolving quickly, and colleges are finding-sometimes to their frustration-that what was true about a company's services in one semester may not be so by the next.

Changes are being driven even more rapidly by the giant publishers and media companies, like Jones International, that are dipping their toes into the water. Meanwhile, many existing compAnies are adding services and forming alliances to avoid missing out on potential market niches.

A few months ago, for example, Real Education joined with WebcT to offer a new package of services to colleges that preferred Webc's course tools to Real Education's proprietary teaching platform. Blackboard, meanwhile, has been talking with Convene and Embanet, and is expected to announce a collaboration with one or both of those companies soon, marking its move into the full-service category. It's a new industry, says Matthew Pittinsky, chairman and co-founder of Blackboard. "A lot of companies are trying to build market share and names for themselves." Reda Athanasios, president of Convene, puts it more sharply: "Some of the companies are going for a land grab. They're just trying to get numbers."

By many accounts, Real Education is the most ambitious marketer. In addition to its extensive advertising, the company has sponsored distance-education seminars for college leaders around the country, at which its officials preach the virtues of on-line learning-and of Real Education. Robert N. Helmick, the company's founder and president, also serves as a cohost of periodic Webcasts about on-line education, and has written columns as "Dr. Distance" for Community College Times, the newspaper of the American Association of Community Colleges.

He makes no apologies for his company's aggressiveness. "Real Education is filling a need that the market is demanding," he says.

A number of insiders speculate that Real Education is seeking a high profile to help build its image in order to go public. Mr. Helmick says that investment bankers do call "constantly," and that some of his own investors consider going public an option. But he maintains that his chief concern is selling services that colleges find useful. "We're not going to be selling airplane tickets on the Internet next week, like some of these other guys."

WHAT THE NUMBERS MEAN For all of the corporate jousting and publicity, however, the numbers of students and professors the companies are reaching appear to be relatively low.

Mr. Helmick says Real Education has signed up 29 colleges as clients in its fouryear history and has "more on-line campuses, with more on-line courses, with more on-line students than anybody else." But he acknowledges that some of those clients are signing up for an initial commitment of only 10 to 20 courses over three years. The company does not release figures on the numbers of students it serves, he says. Blackboard says that it has 125 collegeand-university customers, and that more than 200,000 students have received courses through its software, including some whose professors used Blackboard's free Web site. The Blackboard product differs from Real Education's, with professors sometimes using it as a supplement to traditional on-campus courses.

Convene, which was founded in 1993, says more than 2,500 professors and 50,000 students have used its course-delivery software. But the company is soon to lose one major client: The University of Phoenix, which accounts for 10 to 15 per cent of ct business, has decided to manage its distance-education program with its own computer systems and personnel.

Mr. Athanasios says Convene has hired six salespeople and is expanding its marketing. The company hopes to more than make up for the loss of Phoenix's business by helping existing clients expand their own on-line course offerings, he says. COST CONSIDERATIONS Terri Hedegaard, vice-president of distance learning for Phoenix and its parent company, the Apollo Group, says it had not been a traditional Convene client-the university handled most of the course conversion and marketing itself. It has now become sophisticated enough, she says, to handle technology operations as well.

The decision to move away from Convene is no reflection on the company's viability, she adds. In fact, Apollo considered buying Convene, as well as Real Education, a year ago. (It decided that the companies did not fit with its corporate strategy and would cost too much to buy, she says.) "The companies do make sense for the colleges that want to get it up and running rapidly," Ms. Hedegaard says.

Cost considerations, however, aren't always so black and white. With Convene charging $90 per student per course-its fees elsewhere run from $80 to $140, depending on the duration of the course and whether a student is a repeat user-San Jose spends more money to offer a company-run course than one created for off-campus delivery by a faculty member.

But since the overall number of on-line students at San Jose is still fairly small-- about 30 using Convene-Mr. Zlotolow says the costs are still manageable.

If enrollments were to reach 750 or so, the distance-education director says, the economics would change, and it might be worthwhile for the university to start running the entire program itself.

Real Education and Convene make most of their money from their per-student charges, which are assessed each time a student takes a course. Real Education charges $120 per student per course. Embanet charges on a per-semester basis, with a maximum of $100 a year per student no matter how many courses he or she takes.

For some colleges, the per-student charges are a deterrent. At Virginia Tech, with tuition running at about $300 a course, officials realized that a deal with Real Education didn't make financial sense, says Mr. Head, the director of instructional services. "We don't want to be giving away one-third of our tuition to a company," he says.

The University of Colorado at Denver was losing so much money on its Real Education courses that administrators got permission from state officials to add a 30-percent tuition surcharge for those courses last fall. Most of the 1,000-plus students taking them didn't mind, says David R. Kassoy, associate vice-president for technology in the University of Colorado System. "They were willing to pay the $100 for the convenience of not having to go downtown, park, and pay baby sitters."

Control over course materials is a more sensitive issue. All of the distance-education companies say they assume no ownership of the content of a course. But in some instances they claim rights over the specific way the material is presented on line. If Real Education animates a professor's graphic, for example, or integrates video clips with text into a two-minute presentation, the professor would have no right to use that animation or presentation in a course not offered under a Real Education contract.

What's more, if the college later decided to switch companies, or to create its own virtual campus, it would have to re-create electronic versions of those courses. Licensing terms of other products could create similar situations. Few colleges have had to tackle such problems so far. But with competition in the industry getting fiercer, distance-education officials predict that the issue soon will loom.

Seattle Pacific's Mr. Wicks, for one, says colleges and professors can at least take steps to avoid some problems. He recommends that institutions have professors keep copies of lecture notes, course graphics, and audio-visual materials in a form as close as possible to the way they originated, so they can be used in any number of electronic formats.

That way, he says, "if you decide the ship you jumped on is sinking, you can jump to another one."