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The Changing eLearning-Content Marketplace: Implications for Buyers and Vendors March 2002 Author:  Chris Hedrick Lguide About This Report Table of Contents   Download the full report (pdf) Executive Summary The eLearning-content marketplace is shifting dramatically, with important implications for eLearning users and the vendors of eLearning content. This report aims to explain recent developments in eLearning content and to frame an outlook for the future. It touches on the changing landscape of the eLearning-content industry, evolving models of pricing, and the outlook for the future. The Diverging eLearning Marketplace The major eLearning-content and -technology vendors are bifurcating into two camps: Single-source solution providers that own and offer customers both a technology platform and their own eLearning content Platform providers that develop tools for content authoring and management, along with learner management—learning-management systems and learning-content–management systems—and provide access to off-the-shelf eLearning content through relationships with third-party courseware providers. In this split marketplace, technical-interoperability specifications will be particularly important to learning-management-system providers and independent providers of eLearning courseware. Cost Factors and Pricing Models for eLearning Courseware Before adopting a pricing model, publishers must make basic choices about the level of resources they want to devote to course production and ongoing interaction with learners. Buyers who understand the factors influencing vendors’ course-production decisions will be in the best position to negotiate favorable pricing terms. Purchasers of eLearning courseware can choose from a variety of pricing options, including these four main models: Pricing for individual use of courses Volume-prepurchase pricing Curriculum-subscription pricing Full-library–subscription pricing. Each of these pricing models provides advantages and disadvantages for buyers and sellers. Successful buyers will take care to understand the cost factors that publishers face so that they can identify the best pricing model for their needs and negotiate the best deal. Developments in eLearning Content and Pricing Where is the eLearning-content marketplace heading? The following developments are likely: Single-source providers will continue to invest aggressively in the expansion of their courseware catalogs. The quality of eLearning courseware will continue to improve. Off-the-shelf courseware will continue to reach into new subject areas, particularly industry-specific training topics. Self-authoring of eLearning content will expand. eLearning-courseware pricing will split into two main segments, depending on the complexity of the courseware. Consolidation in the eLearning-content industry, and business failures, will continue to increase. Table of Contents Executive Summary 1   The Diverging eLearning Marketplace 1   Cost Factors and Pricing Models for eLearning Courseware 1   Developments in eLearning Content and Pricing 2 The Diverging eLearning Marketplace 3   Diverging Paths for Vendors 3   The Buyer’s Point of View 4   The Importance of Technical-Interoperability Specifications 5 Cost Factors for eLearning Corseware 6   The Vendor’s Point of View 6   Course Content 7   Elements of Content Quality 7     Course Design and Learning Outcomes 8     Factors Influencing Course Success 9   Production Costs: Scalability and Margins of Digital Products 11     Costs of Ongoing Learner Interaction 12     Other Costs 12   Course Inputs and Overall Course Costs 13 Evolving Pricing Models for eLearning Courseware 14   Pricing by Individual Use 14   Volume Prepurchases 15   Curriculum Subscriptions 17   Full-Library Subscriptions 18   Selection of a Pricing Model 19 Directions in eLearning Content and Pricing 19   Expansion of Courseware Catalogs 20   Quality of eLearning Courseware 20   New Subject Areas for Off-the-Shelf Courseware 21   Self-Authoring of eLearning Content 21   Pricing of eLearning Courseware 22   Consolidation in the eLearning-Content Industry 23   Outlook 23   Tables Pricing by Individual Course Use: Pros and Cons 15 Volume-Prepurchase Pricing: Pros and Cons 16 Curriculum-Subscription Pricing: Pros and Cons 17 Full-Library–Subscription Pricing: Pros and Cons 18   Figures Cost versus Flexibility of eLearning Content 4 Factors Influencing eLearning-Course Quality 11 Course Inputs and Overall Course Costs 13   Boxes About Lguide 24

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