Khan’s Biggest Impact: Changing the Economics of Education

A lot has been and will be written about Salman Khan. Though he already arrived in the spotlight of mainstream media, he is clearly just at the beginning of his mission. And with fresh money in the war chest, Khan and his team are now planning the next attack on the education system. 

Besides growing the faculty of the Khan Academy, Khan is planning to open the system to teachers around the globe who can then use the Knowledge Map to build their own courses and also have access to the in-depth analytic tools Khan Academy is providing at the back-end. 

But here is the deal: the content must be put up to Khan Academy’s noncommercial public domain. Noncommercial. 

I believe, this is an aspect of Khan Academy most people have not thought about or didn’t pay attention to yet but that has the potential to change the economics of education profoundly. 

At the moment, there are basically three business models in online education. Ad-supported, freemium and premium. But there are also two large scale operations that have no business model at all, Khan Academy and Wikipedia. Let’s go to the three most popular for-profit ones before we focus on the noncommercial examples. 

Ad-supported education are in most cases smaller projects of individual educators who upload videos to YouTube and display Google ads against them. From my own experience you will earn enough money to pay for a couple of fancy coffees every month but as the revenue per click or impression for education related ads is not comparable with other topics, it is not suitable for bigger operations. 

Freemium is a very popular model amongst education startups. Users have access to a big chunk of the product for free, though this part is usually also supported by display ads. If learners then want to have access to extra content, usually grammar charts, worksheets or videos, they will have to pay. 

Premium, as the name suggests, is content that is only available to paying customers. Language learning platform Babbel famously switched the popular freemium model to premium only back in November 2009 and soon afterwards announced that the startup was profitable. Another reason was the problem the team saw in displaying ads. 

Ads are far from being an ideal revenue stream in an educational context. You cannot really control what is displayed next or even inside of the video lesson. Ads can be a distraction, especially when they are animated or feature sound effects and they have the draw-back that they are seen critically in a public school context and I think this is also part of Khan Academy’s success amongst educators. Khan Academy has always been ad-free although nowadays Khan could make some significant income based on either Google Ads or by selling sponsorships based on his reach. 3.5 million unique visitors a month are worth a ton of money yet Khan Academy stays a noncommercial platform.

The same is of course true for Wikipedia. Jimmy Wales is also fighting the idea of displaying advertisements or sponsored links on the site though it could earn Wikipedia a lot of money based on the page views. Yet he chooses to go in the trenches, raising money to keep Wikipedia up and running. Though Wales has no big success in getting the basic user to donate he usually meets his goal through big donations like the lastest $500k grant by Google founder Sergey Brin and his wife whereas Khan always had a steady flow of small donations to keep the Academy alive.

So both, Khan and Wales, are proving that there is “a better way” to deliver true free education on the Internet. And I think this is the really radical part. If you take a look at what the Khan Academy is going to offer for free to educators one could ask why anyone would pay for similar products? Khan has no commercial interest something that resonates with the ideals of most educators. Khan is independent from big brands and publishers in education that take more and more influence in promising education startups lately by either investing and / or partnering with them. 

One could say that at the moment Khan is “untouchable” and he and his team can do whatever they think benefits their mission. No investor can take influence in order to streamline the operation for a potential exit in 5 years like being sold to Pearson or Blackboard. 

Currently, Khan Academy is supported by three big donors, Bill and Melinda Gates, Google and the O’Sullivan Foundation. I think, there is little doubt that others will follow suit in order to keep Khan Academy going for the next years. The interesting part begins when we start thinking what is going to happen when the first students will tie their financial success to what they learned for free at Khan Academy. 

Universities receive large sums from their alumni every year who want to give something back to the institution that provided them with the tools to succeed in life. What happens when Khan Academy was responsible for the success of a new breed of entrepreneurs in developing countries. A recent article on Forbes suggests that the next Internet billionaires will come from Africa. 

Free, quality education has been a dream of many educators and of course students for a long time now and Khan might be on the road to establish that mindset in the generation of users he and his faculty are teaching every day.

Photo: Khan Academy