A high-risk gamble on highbrow consumers

December 21, 2001

Even though the market for e-learning is flagging, Columbia University and its partners believe that their Fathom online courses will pull in paying individuals. Stephen Phillips reports.

While many academics are given to Marshall McLuhan-style exclamations about the internet's power to democratise educational access, Columbia University is putting its money where its mouth is - $28 million (£19.3 million) to be precise.

That's the sum the New York Ivy League institution is pumping into an ambitious start-up it hopes will corner the nascent consumer e-learning market. Billing itself as the "premier destination for authenticated knowledge and online learning," Fathom.com carries the hopes of a Columbia-led consortium of 13 Anglo-American academic and cultural institutions, including the London School of Economics and the universities of Chicago and Michigan.

The start-up, based in New York with offices in London, offers an online Aladdin's cave for autodidacts. Logging onto Fathom's website, armchair students can enrol in courses, many specially written by academics at member institutions, spanning the history of New York to the origins of the universe. The site's eclectic online curriculum straddles more than 1,000 "educational products" ranging from free two-hour seminars to semester-length courses for academic credit.

Students navigate a mixture of text, and audio and visual clips. Seminars, expected to take three to five hours to complete, cost less than $50, while eight-weeklong courses from $450 to $600.

Participating faculty members seem fired up. Janelle Mueller, dean of the humanities at Chicago, has contributed three articles on Queen Elizabeth I. "One of the most attractive things about Fathom is catering to intellectually serious people and nourishing intellectual life."

Fathom also serves as a clearing-house for online courses from non-affiliated universities. External courses are vetted by a Columbia panel to ensure they meet strict standards. The website charges institutions a listing fee and takes a cut of students' enrollment fees. Branching beyond academic courses, Fathom has recently struck deals with professional education providers to add vocational courses such as accountancy.

For the partners - which also include Cambridge University Press, the New York Public Library, the United Kingdom's Victoria and Albert Museum, Natural History Museum and Science Museum - Fathom offers a "strategic foothold in the higher education world of tomorrow," says chief executive Ann Kirschner. The consortium model allows members to pool resources, tap economies of scale and reduce risk, she adds.

A former Princeton Victorian literature lecturer turned serial media and communications entrepreneur, Kirschner sounds more than qualified for her role. The overall attempt to create a one-stop shop for online education positions Fathom to tap a "fundamental 21st-century trend" towards continuing education, she predicts.

"The only capital that can't be inherited and has to be earned by each generation is intellectual knowledge," she says. "Every demographic trend tells us that keeping one's skills in line with changing times is (considered) most important."

Kirschner expects up to one-quarter of continuing education students to learn online within the next decade. Fathom, she says, is a "strategic beachhead I holding a position while the market matures."

The University of Phoenix Online has already scored considerable success with internet-based courses. The private Arizona-based university began offering degrees and diplomas over the web in 1989 and now counts 32,000 online students.

But Fathom is a different creature from mass-market Phoenix Online, which targets vocational courses at workers aged over 25 years. In fact, many observers fear that Fathom's highbrow focus is too rarefied to sustain a business beyond mid-2003, when Columbia's funding runs out.

"The lifelong learning concept doesn't seem to workI people need pressure from companies to force them to take courses," says Conny Weggen, e-learning financial analyst at San Francisco investment bank W. R. Hambrecht & Co. The consumer market is tough to crack, she notes. "It's difficult to target individuals - marketing costs are tremendous and they may only pay $200 a course. It's easier to tap corporations with 30,000 seats."

The fate of some of Fathom's peers does not augur well either. Temple University folded a Fathom-style venture in July, while Hungry Minds, which offered courses through the University of California, Berkeley, and the University of Maryland, ran out of money and was sold in August.

Moreover, Fathom has hardly set the internet firmament alight since it was founded 20 months ago. Officials will not divulge how many students have enrolled in courses beyond revealing that 90,000 have signed up for free newsletters. But it's one thing to sign up for a free newsletter and another to put money down for a course.

Nevertheless, the past should not be too much of a guide to Fathom's future fortunes. The start-up spent its first year or so in what it calls "product development" - shorthand for the trial-and-error process many pioneering businesses face. In this time, it learnt that consumers are wary of committing to long, expensive online courses. Accordingly, it substituted shorter, cheaper ones.

With a revamped website and new marketing machine in place, the real test of the venture's commercial appeal begins in earnest with the brisk Christmas retail season.

To prime demand, Fathom launched its first marketing campaign last month, advertising in The New Yorker and The New York Times . It also recently struck deals with the American Association for Retired People and over-55 scholastic tour operator Elderhostel to promote courses to a key demographic market.

The firm believes it has finally assembled a winning content formula, majoring on courses with popular appeal or that capture the zeitgeist . It has particularly high hopes for Simon Schama's seminar on liberty and slavery in the early British Empire, specially written by the Columbia history professor to tie in with his popular History of Britain BBC television series.

But Fathom's ultimate success hinges on its ability to convert freeloading browsers into paying customers. To woo wary consumers, unaccustomed to thinking of higher education as something downloadable from the internet, it uses free tasters. The hope is that once students feel comfortable in an online classroom, they will sign up for fee-based courses.

Mike Brennan of computer market analyst group IDC is pessimistic. "Over the past two years, providers have tarnished the value of content online by offering it for free. Consumers still expect stuff for free."

Nevertheless, Fathom believes its intellectual credentials can attract customers and convince them to cough up for premium content. "We represent some of the leading educational and cultural brands I we are standing on the shoulders of giants," Kirschner says.

"Our typical user is educated, and (what) drives them mad (about the internet) is the soup of uncertain information - they are discerning."

It remains to be seen how much of a draw the intellectual cachet of Fathom's backers will be, however. After all, UNext, an online MBA venture backed by Columbia with the University of Chicago, Stanford, the LSE and Carnegie Mellon, has not had conspicuous success with signing up students, even though it has struck deals with AOL Time Warner and General Motors to provide corporate training.

Brand name counts for little in e-learning unless institutions are prepared to endorse qualifications offered online, says Bryan Mueller, chief operating officer of the University of Phoenix Online. According to Weggen, "Universities are worried about devaluing their name."

UNext, for its part, grants diplomas through its own virtual institution, Cardean University.

The only e-learning financial success story to date, Phoenix Online, has shunned the glitzy interface of its higher-powered academic rivals. Instead it relies on no-frills presentation and an emphasis on online interaction between tutors and students and among students themselves.

Traditional universities, precluded from making faculty members extensively available online by their offline commitments, tend to resort to the "large-group e-correspondence model," Mueller says. This "does not translate into effective education", he adds.

Phoenix Online, which counts 72,000 students at its trans-US network of sites, also relies heavily on its physical infrastructure for internet recruits - leverage virtual outfits like Fathom lack.

Meanwhile, comparisons with similar internet content vehicles hardly encourage optimism about the mileage in peddling online liberal arts courses. Despite critical acclaim, highbrow online magazines Salon.com and Slate have struggled - and Fathom is even further upmarket.

However, drawing on her experiences during the early days of satellite TV, Kirschner is unfazed. "No scepticism I've experienced about e-learning has come close to that which greeted satellite dishes, pay-per-view and cable TV," she says, noting the ubiquity of such items today.

Only time will tell whether Fathom's vision of a booming e-learning community is viable or just another well-intentioned but half-baked business idea from the fevered dotcom era.

Details: www.fathom.com

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