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Web Vendors Sell Online Learning
Jim Lichtenberg -- 4/17/00

The cherry blossoms were just in bloom as some 350 faculty and academic technologists gathered in Washington, D.C., for the second annual Blackboard.com convention, which is devoted to the electronic transformation of higher education. Although not exactly a household name in the publishing industry, Blackboard.com is fast becoming a big name on campus, along with three similar digital learning companies: eCollege, EduPrise and WebCT.

WebCT CEO Carole Vallone told PW that "1,328 institutions [out of approximately 3,300] are using WebCT for some of their electronic courses, representing a total of six million active accounts." This is an impressive number, since the original product, created by Professor Murray Goldberg at the University of British Columbia five years ago, was "just a nice little piece of academic shareware," as one of WebCT's competitors put it.

The $4 billion-$5 billion in annual sales of new and used textbooks and other courseware (mostly ink on paper) represents about 2% of the $200-billion industry of American higher education. Publishers are paying increasing attention to the exploding developments in the use of the Internet in academia (News, Dec. 13, 1999). Thus, it is not surprising that Pearson Education, now one of the largest textbook publishers, was a major sponsor of this year's Blackboard.com event. In fact, all major college publishers (as well as some trade publishers, professional and scholarly publishers and even new content providers) are becoming involved with these four companies. In addition, a crowd of scrappy wannabe.coms are knocking on publishers' doors.

A significant issue, however, is trying to understand exactly what these companies do and whether they pose a threat to traditional college publishing. Essentially, each has carved out an approach to the process of "webifying" higher education. They come in a variety of flavors--from teaching and learning at one end to infrastructure at the other, with many shades in between.

EduPrise's flavor is exclusively on the infrastructure side. Bill Graves, a former professor and founder and CEO of the North Carolina-based company, describes EduPrise as a "typical applications service provider for institutions and systems. We help them choose the basic software and infrastructure for online learning, and we host it for them." Thus, EduPrise's services include 24-hour customer support as well as professional consulting to administrators for planning, developing, implementing and evaluating these systems in a technology marketplace that Graves said "will continue to churn and change for quite some time." With regard to publishers, Graves is clear that EduPrise d s not provide content, for which it "turn[s] to publishers," such as Houghton Mifflin. EduPrise's customers are academic institutions, although Graves foresees corporate and lifelong learning opportunities down the road.

Graves cites eCollege (formerly RealEducation) as his main competitor. One of the early players, eCollege originally offered a "black box" solution. Based on a business model that assumes academics have little interest in technology, eCollege defines the academic specifications with its faculty customers, then builds and hosts the entire course or courses.

According to eCollege CEO Rob Helmick, "Our goal is to develop the total infrastructure, to be an ASP across the institution, [providing] both technical support and instructional design," a mission based on extensive market research about the arriving electronic learning space. Pointing out that college publishers have not been willing to provide much more than electronic supplementary materials, he added that "some publishers will invest in high-quality multiple media in order to provide excellent teaching material for delivery over the Web--including actors, programmers, graphic artists." This is quite different from what college publishers traditionally do. Helmick predicts that higher education will be "webified" in three years; he told PW he believes that publishers who do not "move with the media" may shortly find their products on the down side of the demand curve.

WebCT's Vallone also has ambitious plans: "In five years, we want to be not only the global leader in online education, but the leaders on Mars as well." In a similar vein, Blackboard.com CEO Louis Pugliese explained, "Other competitors have features, whether as educational portals or instructional platforms. Instead, we provide an end-to-end play, embracing back-office and administrative functions along with the academic. We want to be lifelong partners of the entire institution. Our goal is to enable colleges and universities to become totally digital, integrated, entrepreneurial organizations in themselves," moving from learning to administration to alumni relations to e-commerce on one seamless Web. With regard to publishers, Pugliese foresees the complete disaggregation of current textbooks into "digital learning objects" that professors can easily assemble on the Web by themselves to create learning materials for their courses each semester, whether on campus or across the globe.

As for WebCT, there are reports that the company is already competing with publishers as content creators: by both recruiting professor authors and hiring editors out of the very houses with whom they are now partnering.

Twenty years ago, college publishers woke up and found themselves staring down the barrel of a technologically savvy used-book industry. That may prove to have been a relatively mild shock given the potential of these new online education providers.
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