The quest continues among venture capitalists to find the next Facebook, the next Google, the next eBay—and the Silicon Valley hype machine is suggesting that it might be Coursera, the “leader of the pack” among companies trying to make money with massive open online courses, or MOOCs. The hype, and the money behind it, are creating new pressures on colleges and universities to replace faculty members in the classroom with online video lectures. That, they say, would bring the genius of the free market to higher education by reducing labor costs (i.e., professors) and introducing economies of scale (teaching tens of thousands of students in a single course). Time magazine included Coursera’s two co-founders on its 2013 list of “The 100 Most Influential People in the World,” and Inc. magazine named Coursera one of its “25 Most Audacious Companies” this year. Since April 2012, Coursera has raised $65 million in venture capital; investors include Yuri Milner, the Russian billionaire whose earlier picks include Facebook, Zynga and Twitter. One IBM director declared that “Coursera will be the Amazon of this industry.”

Coursera, which claims that 4.5 million people have registered for its 431 courses, has a lofty mission statement: “We envision a future where everyone has access to a world-class education that has so far been available to a select few.” That’s an appealing idea for the millions who can’t afford or get into elite colleges: students in MOOCs could learn online from legendary lecturers like Simon Schama on British history or Robert Hughes on modern art, instead of some boring mediocrity on the faculty at State U. This will appeal to students, it is said, because they won’t have to go to class; they can watch the lectures on their laptops, anytime and anywhere they want. It’s win-win for everybody, except the professors who will lose their jobs. (Disclosure: I’m a professor.) 

But it turns out that the millions of college students who need credits to graduate don’t need Simon Schama or Robert Hughes; they need Algebra 1 and Economics 1 and English Composition. If they find those courses difficult and boring in the classroom, imagine what it’s like watching them on laptops, alone—even with lectures by the Simon Schama of Algebra 1. But if Coursera is going to make money, it will have to be from those kids—and how do you make money if your product is free, as Coursera’s is? Maybe that’s why Inc. said the company’s next big obstacle is “finding a revenue model that satisfies investors.”...