University Teaching as E-Business?
Research and Policy Agendas

Case Study: NYUonline

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CSHE > Research > University Teaching as E-Business > Case Studies > NYUonline

NB: These draft case studies, compiled by Shannon Lawrence, are an internal resource for the University Teaching as E-business? research project. Originally released in October 2001, they were updated in March 2002. They were gathered from numerous sources, including news articles, press releases, scholarly reports, and company websites. In many cases, information presented herein was taken directly from The Chronicle of Higher Education's longitudinal series of articles on Information Technology and Distance Education, which represents the single best source for information about this evolving universe.

Founded in 1998, NYUonline is the first for-profit e-learning subsidiary of a major American university. NYUonline is located in New York City's SoHo district, neighboring New York University (NYU) and the heart of NYC's Silicon Alley. NYUonline provides customized learning resources for corporations looking to bolster professional growth by providing continued education and training for their employees. As a for-profit subsidiary of New York University, NYUonline functions as a single point of contact to provide complete e-Learning solutions to the business, professional, and educational world.

Products/Services

NYUonline contracts with corporations to develop online courses for in-house training and has licensed some of its curriculum to companies that want to deliver it themselves. Education products include both for-credit degree programs and non-credit certificates programs marketed to "corporate universities" and other corporate training programs, to individuals interested in continuing professional education, and to educational institutions that do not have the capacity to offer online education. NYUonline works with the corporate education needs of Fortune 1000 companies. Their current clients include Fortune 100 financial services firms and Fortune e-50 companies, including companies like American Express and Morgan Stanley Dean Witter. Corporations pay either a flat fee based on the length of the course or the number of students taking it, or, in some cases, purchase a license.

NYUonline provides corporate services such as e-Learning strategic consulting, customized content solutions, instructional and knowledge design, assessment analysis and design, foreign-language translation, instructor training, NYU faculty integration, e-Learning support, web-based authoring system, technology integration and hosting, and 24-7 technical support.

NYUonline works closely with corporate clients to understand their goals and assess their needs. Drawing upon NYU's exceptional courses, the expertise of NYU's faculty, and the company's own instructor-led training and material, NYUonline then creates a tailor-made, web-based program of study for employees. Content can reflect company-specific material only, or a combination of the company's material and NYUonline's. Specifically, NYUonline can: 1) develop an online program with input from the company’s experts, depending on the subject; 2) train a company’s in-house trainers to teach online in synchronous sessions; and/or 3) provide the e-Learning authoring system, iAuthor, which the company’s subject matter experts can use to create online content.

NYUonline delivers many certificates and courses from NYU's School of Continuing and Professional Studies (SCPS), including information technology, e-business, and e-commerce courses, as well as programs in marketing, foreign languages, public relations, healthcare, finance, law, and real estate. NYUonline also developed and marketed SCPS's new Masters of Science Degree in Management and Systems, and offers an online-teacher-training course for professors who want to learn how to instruct in the medium.

In addition to its corporate training programs, NYUonline develops online courseware for NYU's traditional degree-granting programs, which can then be used as a distance-learning complement to its usual classroom courses. For instance, it is putting together an online class on portfolio management for NYU's Stern School of Business, and intends to provide similar services for the university's continuing-studies, nursing, and dentistry programs.

In its first year of operation, NYUonline provided about 55 courses to approximately 500 students. The biggest collection of NYUonline courses is in information and Internet technology. It also offers courses in finance, as well as e-banking, e-law, and media. Courses cover topics from global marketing and management to e-commerce and finance.

NYUonline courses can be either synchronous or fully asynchronous (anytime, anywhere), or a combination of both, with an assortment of complimentary media assets. Tools that can be incorporated into the e-learning offering include chat rooms, bulletin boards, e-mail, and voice-over-IP. Rather than solely using components that other online courses use, such as compact discs, books, or instructor-mediated sessions, NYUonline utilizes those tools as complements to the foundation of an environment delivered entirely via the Web. NYUonline has an array of offerings for both live, instructor-led delivery and for anytime, self-paced delivery. For the live portions, NYUonline either has NYU faculty members deliver the coursework/lecture, or they can train a company's in-house instructors to teach online. Students can begin a course of study any month of the year.

As a subsidiary of New York University, all NYUonline content must meet the rigorous standards of NYU's faculty and curriculum, but NYUonline is not accredited. All the university content NYUonline delivers comes from NYU, an institution accredited by the Commission on Higher Education of the Middle States Association of Colleges and Schools.

NYUonline works with various NYU schools, departments, institutes and faculty members to develop content for the online courses, but NYUonline does not grant degrees. NYUonline coursework may be recognized for credit if a student is admitted to and matriculates into one of NYU's schools. This is dependent upon the student's success in the coursework and the rules of the accepting college that has academic responsibility for the program. Though no formal pathways for earning credit exist, NYUonline works closely with the School of Professional and Continuing Studies1 to create a pathway for learners to complete coursework through the school for certificate/degree-earning purposes.

Through their Faculty Services Program, NYUonline also works directly with New York University to equip professors to meet the needs of the educational world by using web-based technology as a learning tool to enhance performance, comprehension, and exposure, emphasizing effective teaching and learning through technology. The Faculty Service Program is designed to be a total immersion learning experience. All sessions, both live and self-study, occur online in a Web-based environment. Participating faculty can work from their home or office, and the lessons are designed to emphasize teaching over technology, focusing on the development of techniques that foster interpersonal interactivity. The program is voluntary and relies on a magnet program approach to attract faculty interested in exploring the possibilities of e-learning. Its basic curriculum provides for about nine hours of training meant to give participants a foundation in basic online techniques and a level of comfort sufficient to let them express their own teaching style. Teachers learn how to adapt their best techniques to the new environment and develop new methods that take advantage of the wide range of educational assets available in the e-learning medium. Through this program, NYUonline encourages instructors to develop and improve techniques, such as teaching hard skills and soft skills, using assessment, providing learning support, and mentoring. NYUonline’s "Train the Trainer" program, targeted to the corporate market, is modeled after this program.

NYUonline develops the front-end program based on how they see the landscape for corporate demand. Usually NYUonline brings in a team consisting of an instructional designer, a project manager, graphic artists, and writers, who work with the faculty member over an intensive beginning stage. Then they create the content. Faculty members spend approximately 8 to 10 hours over an 8-month period of time in this process. Currently all courses are developed by NYU faculty, with a representation of both full and entering faculty. NYUonline worked with the university to structure it so that the NYUonline company contracts with the faculty for most of the work, in terms of creating the syllabus and creating the course. At that point, the process works on a school-by-school basis. For instance, at the Stern Business School, a significant portion of the royalties paid Stern go to the faculty member whose content is being sold. So faculty are compensated, at least for creating the course, and then they’re compensated on a worldly basis with the sale of the course. Instructors at NYUonline typically make slightly more than instructors teaching the same courses in a traditional classroom, but specific salary figures were not provided.

Part of NYUonline's learning philosophy revolves around delivering education in the form of "learning objects." A learning object is a piece of instruction that can stand on its own and teach one thing. It can contain various multi-media features, including audio, video, text, flash animation, and simulations, as well as complete pre- and post-assessment. A typical learning object might consist of 15 to 30 minutes of online learning, which makes it easily digestible. Related learning objects may be strung together in what is called a "curriculum object," which is similar to a course. The modular design also functions well for the university, which wants full-length courses. The university can market these curriculum objects through its distance learning program. NYUonline’s technology also separates the content from the branding.

NYUonline is just starting the process of evaluating pedagogical success. They use a combination of surveys and interviews with students to gain feedback.

Technology innovations include iAuthor, NYUonline's knowledge management system, and SCORM interfaces (Sharable Content Object Reference Model, an object oriented technical standard for Internet instruction). NYUonline also uses software from InterWise Inc to offer live online lectures and the Prometheus platform (see Partnerships below).

NYUonline created its authoring system, iAuthor, in April 2001. iAuthor is entirely Internet driven, so developers from any part of a corporation in any country can work together independently, or with NYUonline, to develop courses. NYUonline initially created iAuthor for its own use and to produce content the way companies and institutions want it--quickly, easily, and in short segments that can be readily updated. iAuthor's leading principles are collaborative development, content in learning object format, and ease of use. More than a simple authoring tool, iAuthor is an advanced content management system. It is a collaborative publishing system that enables a team of people to work over the Internet to build online courses, learning objects or any form of document. It stores objects in a database, and then compiles them as an HTML document or a document that conforms to SCORM standards developed by the US Department of Defense or to AICC (Aviation Industry CBT Committee) standards. The first release of the product focused on web publications, but Dan Daniel, CIO, expects to expand to other media such as PDAs, ebooks, and paper with future releases. iAuthor is focused on allowing people to author sophisticated, multimedia web pages based on learning objects. The system requires authors to define objects using metadata, including rights and royalties. With that information, managing payments is a relatively simple task.

Partnerships

Currently NYU Online works with a variety of partners (see Table 1). Content provider partners supply branded content to NYUonline, which is then incorporated into their e-Learning programs. Once developed, the courses are fully hosted and delivered by NYUonline over the web. Content provider partners benefit by enhancing their visibility in the market, reaching new customers, and realizing significant revenue streams. Channel partners collaborate with NYUonline by bringing their specific areas of expertise and offerings, which complement and extend our e-Learning solutions. Resellers take courseware developed by NYUonline and sell it to increase revenue stream.

While outside partners provide useful technology or resources to enhance NYUonline products and services, in-house partnerships are two-fold. First there are enabling partnerships with NYU schools through integration and creation of e-learning technology (e.g., development of the collaborative web-based authoring tool, iAuthor, or integration of Prometheus into the university) as well as due diligence (ensuring that technology is suitable for university needs/capacity). There is the hope that someday NYUonline will accrue some benefit as a result of this sharing, though no NYUonline resources are dedicated to this activity. Secondly, there are revenue-getting partnerships with NYU schools. When NYUonline enters into strategic relationships with corporations and participant NYU schools create value-added to products/services, they share revenue with participant NYU schools.

Governance/Management

President and CEO Gordon Macomber joined NYUonline in December 1999, roughly a year after the University's Board of Trustees and senior administration established the for-profit subsidiary. Macomber spent his first twelve months overseeing the development of NYUonline's courses. The company currently has a staff of fifty employees.

Decision-making resides with the Senior Management Team (see Table 2). The CEO reports to a governing board, which is made up of two types of members: university-employed and NYU trustees.

Finance/Strategy

NYUonline came out of the School of Continuing Professional Studies (SCPS), the extension division of NYU. At the time NYUonline was being developed in 1998, there were two main approaches to e-learning: online education and online corporate training. NYU was interested in addressing the economic issues, the lifelong learner, and how to get into that marketplace. Internally, the academic culture suggested that those goals would not be met if NYUonline were placed within one of the schools at NYU, or if it were placed as an appendage within the NYU structure, because NYU’s prevailing thought was that individual schools were not prepared to coordinate fast enough in order to provide a sustainable business model. Therefore, NYUonline was formed as an external entity that was internally financed with a $21.5-million investment from the university. When NYU formed the company, university leaders said they might seek outside investors and eventually take the company public on Wall Street. Though the university provided initial funding, the idea of going public--or selling out to another private buyer--is still part of the long-term plan.

One reason NYU opted to create its own company rather than deal with outsiders is that the university is more comfortable controlling the venture itself. The major driving force was to use the construct of continuing education, but to step outside the constraints of the university. In this way, NYUonline was better able to capitalize on both the financial and the intellectual capacity of the institution in order to get into the extended learning market much more substantially. There was a $60 million market in the New York metropolitan area alone. The idea was that if NYUonline could capture the market in New York, the global possibilities were intriguing.

When the company was launched, its mission was to create full-length on-line courses for a consumer audience. It quickly became apparent that such efforts were too costly, and customers too few. Executives did stray from the initial strategy of catering to a corporate market, but they also learned that because of the fast pace of the corporate marketplace, the traditional semester is not appealing to corporate clients. NYUonline shifted its focus toward addressing corporate needs through the development of shorter learning objects, which, in turn, promised lower costs for curriculum development. The university’s Stern School of Business and its SPCS are likely the biggest beneficiaries, since most of the material developed by NYUonline to date relates to business and financial management.

In addition to sharing course material, NYUonline splits the proceeds of its corporate initiative with the university's component schools, as well as with individual professors. Such arrangements have greatly helped faculty members see the upside of e-learning. While they were initially concerned about issues such as intellectual property ownership, many now express a willingness to work with the e-learning arm.

In this model, the university and its faculty benefit, as well as the business enterprise. Whereas faculty have resisted developing distance-education curricula in some cases, many NYU business faculty have embraced this partnership. NYUonline works closely with faculty who collaborate on subject matter with instructional technologists to determine the most effective online ways to deliver the subject matter. The faculty get paid as consultants. NYU gets the rights to the intellectual property. Partners provide the courseware, media production and technological expertise; NYU provides the prestigious educational brand and the subject-matter experts. That translates into increased revenue, which enables the school to hire more faculty. Gordon Macomber claims that relationships with faculty are critical to producing a quality product. "Within a normal university structure, development of this kind is cost-prohibitive. The content development is often an add-on to faculty responsibilities, so it becomes a low priority. By using a business model, the university exploits the strengths and resources of a company to develop the full product, which in turn gives the university the opportunity to expand."

There may have been less controversy at NYU than other universities because fewer people and universities were talking about for-profit distance learning when NYUonline was first discussed in 1998. That doesn’t mean that it was always smooth sailing. In fact, the greatest challenge early on in getting the program operational for NYUonline was dealing with faculty. When Gordon Macomber was brought on board, responses from professors and individual school deans ranged from utter indifference to open hostility towards the new e-learning venture. According to Gordon Macomber, "At NYUonline, we are basically business people and education technologists, with an emphasis on technology. So we have tried to integrate faculty, and only now can I report that we’re having some modicum of success. It has taken a full 15 months of heavy lifting to begin to integrate properly with the faculty" (Teaching as E-Business, 27 March 2001). Officials of NYUonline are always aware that they must move more slowly than other corporations have to. "Just because you have a for-profit status, it doesn't mean you can operate like any other dot-com," says Gordon Macomber. "If you get too far out in front of your own troops, you can get killed by friendly fire."

After surveying the landscape of the online learning market, NYUonline shifted its strategy to deliver small pieces of content to users. NYUonline tested curricula with four Fortune 100 corporations and about 150 students. They kept the pilot phase small so they could focus on delivering the high quality content. NYUonline's first program, the Certificate in Management Techniques, was introduced in February 2000. By early 2001, NYUonline was ahead of their business plan, according to Gordon Macomber. A major initiative for NYUonline in 2001 will be forging partnerships with blue chip firms. NYUonline has expanded to 50 employees from half a dozen. Nonetheless, the school faces brutal competition in the e-learning sector. Players range from big-league institutions such as Columbia, Stanford, and Duke to corporate training specialists such as SkillSoft Corp. and SmartForce. Even though the marketplace is crowded, some analysts insist that NYUonline looks like a solid bet because its name recognition gives it an advantage in marketing to the corporate community. The company expects to be able to cover 40 percent of its operating costs by the end of this calendar year and 100 percent of the costs by the end of 2002.

Traditional drivers for education, especially within the tier one or research university climate are, in Gordon Macomber’s opinion, economic, cultural, and educational, the latter two being integrally linked. The perspective of the research university has been geared towards education and towards a culture through which to provide that education. However, in the e-learning marketplace that is currently emerging, the perspective is entirely different; the catalyst is economic now, rather than academic. The traditional academic mindset and the academic culture has not had the impetus from the outside coming in as aggressively as it is today. The numbers that are driving the economic piece of this puzzle are huge, even though the scale of the industry is quite small and it is also fragmented. But the economic issue is a big one, because it tends to be the driver, at least at NYU. NYUonline has received certain amounts of capital to build a business plan, which is in one sense purely an economically-driven model, and they have to provide a return on that investment. As a result, they have set out to define the corporate education training market, and they’re engaging in that market to try to get the proper return on their investment. One strategy is to re-use and to leverage the investment in the content so that it can be used in multiple markets. The multiple buyers or licensers of that content would be licensing it to use it tactically, the way they’re going to deliver it.

NYU is in a very good position right now. It has the brand and the ability to deliver education, and it understands education like very few of the for-profits do. But Gordon Macomber agrees that it doesn’t have a culture that’s willing and ready to move in this environment yet. Despite the long-standing struggle that has existed between universities and extension education, NYU is moving beyond vitriol into who can really do what.

In the future, NYUonline also hopes to establish a string of NYUonline outposts in Europe. Given that NYU has the highest foreign enrollment of any U.S. university and is the nation’s largest translation school, its brand name may be as well-known in Europe as in the U.S.

References

• Blumenstyk, Goldie. "Temple U. Shuts Down For-Profit Distance-Education Company." The Chronicle of Higher Education, 20 July 2001. http://chronicle.com/weekly/v47/i45/45a02901.htm
  
• Carr, Sarah. "A Day in the Life of a New Type of Professor: For faculty members at NYU's online subsidiary, selling goes hand in hand with teaching." The Chronicle of Higher Education, 15 December 2000. http://chronicle.com/weekly/v47/i16/16a04701.htm
  
• Carr, Sarah. "Faculty Members Are Wary of Distance-Education Ventures: Talk of 'brand name' offends Cornell professors and illustrates tensions over for-profit units." The Chronicle of Higher Education, 9 June 2000. http://chronicle.com/weekly/v46/i40/40a04101.htm
  
• Carr, Sarah. "Publisher of 'Dummies' Books Buys the Hungry Minds Portal Site." The Chronicle of Higher Education, 8 September 2000. http://chronicle.com/weekly/v47/i02/02a06002.htm
  
• Evans, Tom, and Lorin Previte. "NYUonline Thinks Small to Get Big." Eduventures.com, 22 January 2001. http://www.nyuonline.com/vn_1/news/press/eventure.html
  
• The Heller Report (Vol 6, No 10). April 2001. http://www.nyuonline.com/vn_1/news/press/heller.html
  
• "NYUonline and Generation21 Partner to Integrate Learning Solutions: NYUonline's iAuthor Software Integrates With Generation21's Total Knowledge Management(TM) System." NYUonline/Business Wire Press Release, 8 August 2001. http://biz.yahoo.com/bw/010808/2253.html
  
• "NYUonline and McGraw-Hill Announce Strategic Partnership For Corporate Learning; McGraw-Hill to Provide Channel of Distribution for NYUonline Courses." NYUonline/Business Wire Press Release, 24 May 2000. http://www.nyu.edu/publicaffairs/newsreleases/b_NYUON3.shtml
  
• Sagun, Adele. "NYUonline brings Web-based e-learning to corporations." E-learning Magazine, January 2001. http://www.elearningmag.com/issues/jan01/applications.asp
  
• Sanford, Stefanie. "Start-Up U: Mixing Business and Education at NYU online." Converge Magazine, October 2000. http://www.convergemag.com/magazine/story.phtml?id=2030000000001241
  
• Stellin, Susan. "Colleges Try Distance Learning Off Campus." The New York Times, 21 March 2001. http://www.nytimes.com/2001/03/21/technology/21EDUCATION.html?searchpv=tech
  
• Totty, Michael, and Ann Grimes. "The Business --- The Old College Try: Traditional universities are taking to the Net with a wide range of strategies." E-Commerce (A Special Report). The Wall Street Journal, 12 March 2001. http://webreprints.djreprints.com/00000000000000000021254001.html
  
• Walsh, Mark. "Web-school master: NYUonline targets corporate e-learning." Crane’s New York Business, 12-18 February 2001. http://www.nyuonline.com/vn_1/news/craine.html

Notes

1 The School of Continuing Professional Studies at NYU, which is degree-granting, has 2,500 adjuncts, and they are adding to those ranks all the time. The school is also serving approximately 70,000 people annually through that program. [ back ]