Monetizing The Intellectual Property Embedded In Online Courses

on December 26 | in Administrator's Perspective, Course Creation, E-Learning, Instructor's Perspective | by | with No Comments

Could the intellectual property embedded in online courses which is owned by a school be monetized directly — that is, could it be sold in the course?   Possibly, if the course is sold to students either at the school or at others schools which might offer the course.   In either case, the school effectively becomes a publisher and retailer of online courses.   In effect, the school becomes a professional preparer of online courses competing with other schools and with for-profit and not-for-profit corporations which do the same.   The school, therefore, enters the electronic publishing business.

To do so successfully it will have to invest in its efforts, hire managerial and sales staff, and conduct marketing programs.   Some schools do this already.  Harvard Business School Publishing, for example, is a long-established purveyor of print and electronic educational materials.  HBSP generates a substantial surplus (like a profit) which is used to support the educational programs of the Harvard Business School.

An HBSP solution might work for some schools.  Much must be done well – intellectual property creation, marketing, sales, fulfillment of orders, customer relations, financial and operational management, etc.   These are substantial requirements which many schools will not be able to meet successfully.

If a school is successful in doing all this, and creates a surplus from the sale of courses embodying its intellectual property, it has one final hurdle to clear – this hurdle involving the Internal Revenue Service and state tax authorities.   Publishing is not education; publishing is ordinarily a for-profit business activity, not a not-for-profit activity as is most higher education.   Tax authorities are used to taxing profits earned by publishing.   Hence, a school which generates a financial surplus by selling its intellectual property embedded in online courses will have to convince tax authorities that the surplus should not be taxed as a business profit.   There are two possible avenues for achieving this result. First, the school may try to convince IRS and state tax authorities that the publishing activity is itself an educational activity akin to classroom teaching.  This is likely to be difficult.  Second, the school may try to show IRS and state tax authorities that the surplus gained from sales of online courses is directed solely to the support of the educational programs of the school and therefore should not be taxed.  This approach might be successful with IRS and state tax authorities.

Finally, if a school owns the intellectual property embedded in its online courses, and if the courses are marketed and sold successfully – perhaps not only to other schools but to business and government organizations as well — and if the publishing and selling process generates a financial surplus, and if that surplus is protected from the grasp of IRS dand state tax authorities, will there be enough surplus to make the whole effort worth the time and expense of the college?   The answer is that for a great many schools probably not.   There will not be enough courses and sufficient sales to generate enough financial surplus to make the whole effort worthwhile.   Any school contemplating the marketing of its intellectual property embedded in online courses should make a very careful and realistic computation of costs and receipts.  For example, some schools have resolved conflicts with faculty members over the ownership of intellectual property by guaranteeing faculty members who author online courses a portion of the revenue earned by the school in selling the course to students or to other schools or organizations.   Where this is the case, potential surplus from sale of online courses is further reduced to the school.

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