Now, this doesn’t mean this price pressure will effect every individual. Premium products are resistant to pricing pressures. The question is however, what will a premium product look like on-line? How will a teacher or company signal to his/her customers that they are providing a premium product?

The benefit for the students is that they can opt for less than my standard 90 minute session, and some initially think 45 or 60 is right for them. After a couple of weeks they settle on my recommended 75 minutes, for which of course they pay more.

It may be that there are “free” lessons available online (and I’ve been known to offer them myself), but surely every student appreciates that these free lessons can hardly be compared to the tailor-made, customised lessons they get for money…

Not only does on-line go with lower prices but in some instances with free. This is the result of better market clearing power and the benefits of scale.

Clayton Christensen, who I mentioned above, says, with a confidence backed by calculations,that by 2020 50% of all American high school classes will be taken on-line. The disruptions are coming if he is to be believed.

And the only reason I can see why it seems to be a bit odd to take lessons online like we now do offline is that is something new for us. In 10 to 15 years it will be normal, I think even for classic schools or universities. Offline will simply be “old school”.

Schools who are wedded to an off-line approach may not be able to justify moving on-line to a less profitable model which could negatively impact their off-line brand name and profits.

Interesting thought about e-textbooks. I don’t see e-books alone having a big impact. The real impact will be when someone gets blended learning right from the start with all the necessary inputs in coordination with perhaps e-books.

My guess is that these schools are sticking to this like dogs with a bone in the hopes that they can get the content delivery systems and marketing systems “right” and in “balance”. IMHO the endgame for these companies is not creating vast marketplaces for teachers. The endgame is developing excellent content that can be delivered with care and consistency by trained people at a great price.

It may not be wrong to become a school but only if you have the knowledge and the manpower to do so. As I said Myngle has not one manager with a real background in the education industry. I don’t count “worked for Berlitz”, I mean a manager who designed courses, worked for years as a teacher or something like this.

And then there is the question of how long these old product lines will still work. There must be a reason why Pearson teamed up with Livemocha. According to a post I read it was Pearson that did the first step after they observed Livemocha for a year.

With the new e-readers and ebooks there will be a huge shift in this classic market. Combining those devices with online content like tutoring is only the next logic move, I think. Good post on edupirate.com about this: http://www.edupirate.com/2009/03/the-future-of-textbooks-is-online-e-textbooks/

The reason that that entrenched players in some markets don’t try something new is the threat to their existing (profitable) product lines. Clayton Christensen makes references to this interesting effect in his books about disruptive innovation. Established players don’t introduce cheaper innovations out of a desire to protect existing profits.

I’m not so sure that Myngle is making a mistake moving in the direction of a school. I think perhaps they have decided that is the materials (and quality) that will allow them to distinguish themselves from others not an eBay like business model or a new way to connect teachers and students.

My feeling is that having iTalki clearly throw their hat into the low-end of the market will speed up this process of conversion to becoming an on-line school.

Another thing is that as soon as the big players in the offline market like Berlitz, Alliance Francaise or Wallstreet Institute will see the potential in online classes and decide to take their courses and teachers online, platforms that “pretend” to be a school don’t have a chance. Especially when there is not one education expert in the management team.
The strength of these new platforms is the innovation of its teachers. If you press them in a school frame you will lose this part. Which does not necessarily mean that Myngle won’t make profit. I think they will to a certain point.

If it is a strategic decission to focus on these low cost markets I can only see a perspective for chinese or indian teachers offering their services to european / american students. The question is how big the interest is in learning Hindi, Chinese etc. If there are enough students for 10.000 full- and parttime jobs, I don’t know. Maybe. The quote talks about “additional income in these tough economic times.”

I wonder if they will be tempted to take the school route at some point in the future like Myngle. Did you find out where they were incorporated?

The fact that they are advertising such low priced classes might be a real issue in the future. If they advertise this enough they might not be able to attract higher priced instructors. Generally speaking higher priced instructors mean teachers who can sustain a lengthly series of classes. Anyone can teach one class, experience teaches one to string many purpose-filled classes together.

They say they will create 10,000 jobs. This statement is hard to believe and it greatly depends on what they mean by creating a job. I am surprised no one has called them on this. I would really love to hear how they calculate this figure. It sounds like more advertising bull**** than anything grounded in reality.

If anyone really wants to understand italki get the book The China Price. This kind of thinking drives a great deal of strategy in China.