I can think of three reasons universities would do this.
First: Universities do not generally take pride in having a commercial "business model" approach. They almost all say education, rather than profit, is their aim. They say they don't charge $x because they want to extract the maximum rent from the market, they charge $x because that's what it costs to provide the course.
What better way to prove this commitment to education than to charge much less for a course that costs much less to run?
Second: Sony chariman Akito Morito reportedly once said "My job is to make our products obsolete before our competitors do."
If online learning is the next big thing, you want to be at the cutting edge of it. You don't want to end up a local bookstore in the age of Amazon, you want to be Amazon.
Third: 120,000 people signed up for the first MITx course (only 7,000 people went on to get a passing grade) and the system handled them OK. You can accept much less profit per student when you've got a thousand times as many students. Of course, there are more experiments needed to determine whether they can provide useful credentials people will get their wallets out to pay for - but people are used to paying a lot for university courses. If they made just $10 to $100 per student per course they could be looking at some serious money.
First: Universities do not generally take pride in having a commercial "business model" approach. They almost all say education, rather than profit, is their aim. They say they don't charge $x because they want to extract the maximum rent from the market, they charge $x because that's what it costs to provide the course.
What better way to prove this commitment to education than to charge much less for a course that costs much less to run?
Second: Sony chariman Akito Morito reportedly once said "My job is to make our products obsolete before our competitors do."
If online learning is the next big thing, you want to be at the cutting edge of it. You don't want to end up a local bookstore in the age of Amazon, you want to be Amazon.
Third: 120,000 people signed up for the first MITx course (only 7,000 people went on to get a passing grade) and the system handled them OK. You can accept much less profit per student when you've got a thousand times as many students. Of course, there are more experiments needed to determine whether they can provide useful credentials people will get their wallets out to pay for - but people are used to paying a lot for university courses. If they made just $10 to $100 per student per course they could be looking at some serious money.