Established education providers v new contenders

THE HYPE OVER MOOCs peaked in 2012. Salman Khan, an investment analyst who had begun teaching bite-sized lessons to his cousin in New Orleans over the internet and turned that activity into a wildly popular educational resource called the Khan Academy, was splashed on the cover of Forbes. Sebastian Thrun, the founder of another MOOC called Udacity, predicted in an interview in Wired magazine that within 50 years the number of universities would collapse to just ten worldwide. The New York Times declared it the year of the MOOC.

The sheer numbers of people flocking to some of the initial courses seemed to suggest that an entirely new model of open-access, free university education was within reach. Now MOOC sceptics are more numerous than believers. Although lots of people still sign up, drop-out rates are sky-high.

Nonetheless, the MOOCs are on to something. Education, like health care, is a complex and fragmented industry, which makes it hard to gain scale. Despite those drop-out rates, the MOOCs have shown it can be done quickly and comparatively...