I recently had lunch with a former student who works for one of the nation’s largest banks. I told her I was considering creating and launching a MOOC, one of those Massive Open (i.e., free) Online Courses. 

“Why would a university want to offer free classes and how do you get paid?” the banker, not surprisingly, wanted to know. 

MOOCs are proliferating like mushrooms in a damp spring. Some of them have tens of thousands of students from around the world. Many are taught by premier professors from elite universities such as Harvard, Stanford, Yale and Columbia. 

I am not supposed to use the word “elite” anymore because it is, well, elitist, but I disregard that because it makes no sense. Some universities are MUCH better than others and produce more exciting, accomplished and successful graduates. 

But I digress. I’ve been seriously exploring the ins and outs of MOOCs and had several answers on how to develop a business model around this exciting new concept.

First of all, MOOCs are terrific magnets to attract attention and students to an organization or institution. If the Business Record, were to offer a MOOC on, say, the insurance industry, featuring some of Des Moines’ most prominent executives, it’s likely that thousands of people around the world would take this free course. It would pump up and expand the Business Record’s visibility, maximize advertiser hits, create more buzz for Des Moines as an insurance capital and give the city of Des Moines additional visibility. 

For universities, the principal hosts of MOOCs, the same principle applies. Visibility and buzz for the institution and also for the department or program that is sponsoring the course.

Second, I recently examined numerous MOOCs, including those offered by the Australian Open University, a pioneer in Internet-based courses. 

(See the classes at www.open2study.com.)

The easy enrollment in courses and attractive, clean design, price point (they are free!) and usability are the key factors that encourage students to try out a wide range of introductory classes. 

Then, and here is the magic, there is a link to programs at the university that offer certificates or undergraduate degrees and another link that directs students to graduate programs in the same area as the free MOOC. These, of course, are NOT free, and that’s where the revenue for this business model kicks in. 

In an innovative twist, Australia’s Open2Study classes also add information on careers and job opportunities that are connected to the topic of the class. This is brilliant because in my experience, both traditional and nontraditional students in 2013 are VERY concerned with and interested in how they can translate courses to a job. 

My student and I further brainstormed over a cold beer about the potential for tasteful product placement in the MOOC or sponsorships of MOOCs a la public radio. That would be more discreet for universities, which tend to be somewhat sensitive about “commercialization.” For products like the Business Record, attractive and “grabby” advertising related to the content of the MOOC would be appropriate. 

Are MOOCs here to stay? 

I would say that they are a new and innovative breakthrough to education and will eventually be integrated totally into both higher education but also into enterprise marketing and strategies for building new customer networks. I imagine someone at Nokia and BlackBerry asked, “Are smartphones and touch pads here to stay?” Enough said. 

Imagine someone taking a short, free, objective, informative course on health insurance and then going to the website of the sponsoring company where she can explore insurance options. That’s “wicking” from one experience (the free course) to another (buying a health insurance policy). Des Moines is the perfect venue to experiment with this. 

Universities can also benefit greatly from carefully launched MOOC packages that have an ROI business model built into them.

Steffen Schmidt is professor of political science and public policy at Iowa State University and CEO of SEAS LLC consulting.