Coursera vs. 2U/edX? Noodle Joins the Fray

The two behemoths in what one might call the online degree and training platform space, Coursera and 2U, took different paths to their respective perches. 2U began by promising to help prestigious colleges take their academic programs online in a big way; in recent years it has swallowed companies that also allowed it to offer short training courses, bootcamps and -- assuming its stunning proposal to purchase the nonprofit edX goes through -- non-degree courses and programs and low-cost degrees.

Coursera took the opposite route: It started nearly a decade ago promising to help universities market free, open online courses to the world, expanded into career training, and a few years ago began working with its higher education partners to build and market low-cost degree programs to its tens of millions of learners.

Now the two publicly traded companies, both valued in the billions, describe themselves as "lifelong learning platforms" that provide the full gamut of offerings that learners might want to advance in their careers or stay vital after high school and well into their lives. Both of them are aggressively expanding their client bases and offerings, competing against each other and putting distance between themselves and the rest of the market -- and the main question seems to be which gets a bigger share.

Not if John Katzman has anything to do with it. The serial education technology entrepreneur has a history of trying to upend the status quo in postsecondary education, from founding The Princeton Review to challenge the standardized testing industry to creating his current company, Noodle, because he thought 2U and other online program management companies charged colleges too much money to help them launch virtual academic programs. (The fact that he started 2U in between, and then aggressively challenged it, remains a story for another day.)

Having "utterly disrupted the degree space," as Katzman declares with his usual immodesty, he and Noodle aim to do the same in the marketplace for helping colleges and universities earn their rightful place as providers of non-degree courses and credentials for a lifetime of learning. The University of Michigan, Case Western Reserve University and Columbia University, all of which also work with some combination of Coursera, edX and 2U, are the first three institutions to sign on to work with Noodle on promoting non-degree courses and programs.

Katzman argues that colleges and universities themselves already have the most necessary elements to successfully become providers of lifelong learning: the intellectual content and large audiences of potential learners (their alumni). Yet by depending so heavily on external partners, he says, institutions are "giving them your brand, your content, and what are they doing with it? Taking between 50 and 65 percent of tuition revenue?" He describes that decision as "selling rope to the guy who's going to hang you."

(The institutions that work with Coursera and 2U praise their relationships with the companies and believe their partnerships to be valuable and productive. The companies themselves did not have a chance to comment on Noodle's announcement, which was embargoed until today.)

Noodle will differentiate itself from Coursera and 2U (before and after its purchase of edX) in two main ways, Katzman says.

First, Noodle says it can give its existing university partners (and others it thinks it can woo) a better platform for distributing online courses, certificates and other credentials to their alumni and other learners looking for the best option to help them reach their goals, professionally or personally. Noodle will use D2L's Brightspace learning management system to deliver its partners' non-degree offerings, supplemented by a network of teaching assistants and technology designed to create sections of students to create a more social and active learning environment than that found in many MOOC-based courses.

Second, Noodle vows that it will take a smaller share of the tuition revenue (a maximum of 35 percent) than the half to two-thirds that Coursera and 2U keep for themselves in non-degree programs. Noodle plans to charge institutions 15 percent of tuition revenue for use of its platform to stage the courses, and 20 percent more if the university chooses to have Noodle market the programs, too. (Universities will keep the 20 percent for themselves if they bring in students on their own.)

Noodle is betting that by giving colleges and universities a better platform and allowing them to keep more of the revenue from the courses and programs they produce, institutions can tap into their already large alumni bases to continue to be their educator of choice. All things being equal, alumni would rather take courses from their alma maters than from another college or provider.

Noodle's partner universities already have "four times as many visitors to their websites as Coursera does and 10 times as many as edX," Katzman says. "If universities overall engage their alumni, we collectively are wildly larger and better branded [than those companies], and on a platform that pulls students together and gives them the tools to work together," he says.

The Lift

Since its founding in 2013, after Katzman left 2U, Noodle has evolved fairly constantly and taken a while to find traction. But it has hit a stride in the last two years in signing universities to contracts to build and market degree programs, launching more than half of the new programs that selective colleges have begun with outside providers this year. Institutions have been drawn by the fact that Noodle doesn't lock them in to long contracts and helps them lower their marketing spends.

Degree programs remain in demand, but more and more learners (and employers) are beginning to favor shorter-term certificates and credentials that cost less and are more targeted to their workforce goals. So it's not surprising that Noodle itself wants to enter that space in addition to the degree-granting market.

But there are many legitimate questions surrounding Noodle's likelihood of success in that market.

Coursera and 2U (especially with the pending addition of edX) would appear to have massive headstarts and advantages over Noodle as major players in the online education and training space: they work with many more colleges and universities, have a huge advantage in financial resources (both valued at multiple billions of dollars), and enormous audiences of learners (Coursera nearly 90 million, 2U with more than half that including edX's audience. Noodle, by contrast, has about 600,000 visitors to its course search website each month.

But several things about the current moment make it a potentially unpredictable time. Online education was ascending before COVID-19 hit, and the pandemic has almost certainly accelerated the interest of both colleges and learners to engage in it, or at least try it. College leaders are increasingly questioning the value they get from their relationships with outside providers, putting pressure on the system of revenue sharing and long-term contracts that traditional online enablers have favored. (Those partnerships have drawn growing scrutiny from policy makers, too, and could be a target of a Biden administration, especially given how influenced it is by the regulatory ideology of Sen. Elizabeth Warren.)

Recent developments could also reshape the market. Documents related to Coursera's massive initial public offering revealed just how much its valuation was being driven by the favorable nature of its arrangements with universities, causing heartburn among some of its clients. And 2U's planned purchase of edX has shaken some of the latter's longtime educational partners, some of whom chose to work with it because it was a nonprofit and a collaborative effort from within higher education.

Some observers in the education technology space roll their eyes when Katzman and Noodle seek to portray themselves as a "white knight" alternative to major corporate players such as 2U and Coursera, noting that Noodle is no less for-profit than they are.

Katzman doesn't contest that. He focuses instead on the company's transparency on its pricing, in sharing data on learners and how and where it spends its marketing dollars, and the "high integrity" of its relationships with institutions. "We do what we say we're going to do, and there's nothing up our sleeve," he says.

The University of Michigan already works with both Coursera and edX (but not 2U) on an array of online academic offerings, and it offers online M.B.A. and master's in nursing degrees in conjunction with Noodle.

"With the launch of the new [Noodle] platform, we are excited to be able to engage around U-M's more comprehensive approach to integrated online education, which includes open learning initiatives, perpetual learning models for alumni engagement, and an evolving approach to stackable learning that supports greater access and more flexibility in tune with the future of learning and work," James DeVaney, associate vice provost for academic innovation and founding executive director of the Center for Academic Innovation at Michigan, said via email.

Pierre Yared, vice dean for executive education at Columbia Business School, said via email that the graduate school saw working through Noodle's new platform "as an opportunity to tap into a broader audience while also doing it with a partner with whom we are already collaborating closely on long-form high-touch programming." Money was key, too: "The economics are also more advantageous relative to other MOOC providers."

How many more institutions join Michigan and Columbia will ultimately depend on whether Noodle and Katzman can deliver on their promises.

Katzman himself, of course, has no doubt. "Given our track record, there's no reason to believe we can't find our place."