acquired two official Moodle partners Moodlerooms and Netspot and started to enter the open source learning management system market. I’m not quite surprised upon hearing this news as I can’t see how the founder of and his firm profit from leading the development of this open source software. On moodle.com, it stated that “Moodle HQ is funded by a global network of certified Moodle Partners who provide Moodle services.” The major source of income that Moodle Pty Ltd. gets is licensing its partners for the use of the trademark Moodle when supplying training and support services to organisations who use Moodle as their learning management systems.announced that they have
Unlike other open source software, Moodle HQ does not supply commercial training and support to its users; it does not charge for premium features that are not freely available; it does not host Moodle instances thus can not charge users for using the hosting service; it does not supply consultation service; it does not do custom development to meet clients’ specific needs… Instead, Moodle HQ license Moodle partners to do so. Unlike a franchising system, Moodle HQ does not supply anything to Moodle partners that they must pay for and rely on. For example, Moodle HQ does not supply something like franchising manuals which will train Moodle partners to deliver their services. Moodle partners only use information in the Moodle community and their own skills to deliver training and support service to their clients. Moodle HQ does not market the commercial service and refer clients to Moodle partners. Clients who are interested in the commercial services should contact Moodle partners in the first place. Moodle HQ does not have a service standard (e.g., pricing structure, service items, procedures, etc.) for Moodle partners to follow so they have to set up their own business model. This also means that the clients would have different experience from one Moodle partner to another. Therefore, the value that Moodle HQ passes to its partners is really just the value of the trademark and the advertisement on Moodle.com. The term “Certified Service Provider” does not imply value from Moodle HQ that is not publicly available and that is useful for the clients. It only means the service providers are allowed to use the trademark of Moodle for commercial purposes and they will contribute 10% of their Moodle-related earnings to the Moodle HQ. The above features of the relationship between Moodle HQ and Moodle Partners will have led to:
- Moodle HQ has minimum negotiation power to ask for more funding from Moodle Partner
- Moodle HQ’s earnings are not guaranteed due to the passive income model (i.e., it relies on the honesty of Moodle Partners should an auditing system is not in place)
- Moodle HQ has given up the user market to profit from despite the demand within it
- Moodle HQ’s developers are not motivated enough to push the product and the service to the highest possible standard
The above features also imply that:
- Users have limited choices for outsourcing their Moodle hosting and development as Moodle Partners’ number is so limited.
- Even though users manage to contract with one of the Moodle Partners, they do not benefit too much from being served by a so-called Moodle Partner because the Moodle Partner is not much different from other IT firms who supply open source software technical support, managed hosting service, and software training except for their “Moodle Partner” tag. Moodle Partners rely on publicly available information and documentation in the Moodle community to form and support their services. Such resources can also be accessed by non-Moodle-Partner IT firms.
- Users have limited exposure to IT firms that may supply similar and better service that Moodle Partners supply. This is the Moodle trademark rules restrict those non-Moodle-Partners IT firms from advertising Moodle-related service. One of the rules states that “You can’t use ‘Moodle’ to describe services around Moodle (such as hosting, training, support, consulting, course creation services, theme development, customisation, installation, integration and certification). This applies even if you do not charge for the services. Note that usually only Moodle Partners have this permission.“
- There is no easy way for entry-level users to quickly sign up for a free Moodle site directly from Moodle.com, unlike the free service that WordPress.com offers
- There is no way for advanced users to access to VIP features and resources even though they are willing to pay Moodle HQ for what they want, unlike the WordPress premium features that you can get if you are willing to pay.
Therefore, based on the recent acquisition move of Blackboard and the surprise Moodle founder had, I predict that Blackboard’s intention and next move would be trying to acquire Moodle completely. What Blackboard has been doing in this acquisition exercise may be an example one of the Thirty-Six Strategiums – “defeat the enemy by capturing their chief”. Is Moodle HQ the chief of Moodle Partners? No! The other way! Firstly, it is Moodle Partners who fund Moodle HQ; secondly, Moodle Partners can leave Moodle HQ once they have grown their client base to a certain extent. For example, NetSpot can easily stop being an Moodle Partners now, but people in the Australian e-learning industry have already known NetSpot does Moodle support and training. Even though NetSpot does not expressively advertise their service as Moodle-related (i.e., “open source software” instead), they can still attract Moodle-related clients. Therefore, what Blackboard has been doing is to capture the real chief of Moodle HQ: its most profitable partners. After this move, Blackboard has gained a huge negotiation power for the complete acquisition of Moodle. People may think it could be to expensive for Blackboard to acquire Moodle completely because “the copyrights belong to hundreds of authors and they would ALL need to agree to any change in the license“. This may not be true anymore when two major Moodle Partners are owned by Blackboard and when other Moodle Partners start trying to seek business opportunities from Blackboard’s new open source service sector.
My prediction can also be extended to the future commercial operations with Moodle should it be acquired by Blackboard:
- Moodle would stay open source and free, but there would be locked premium features that users need to pay to unlock.
- Moodle would provide basic hosting like what WordPress.com has been doing, and have commercial adds built into the free hosted version.
- Moodle would provide premium hosting features like what WordPress.com has been doing.
- Moodle would accept orders for custom development for special features.
- Moodle would develop a standard for Moodle-related IT services such as hosting, technical support, and training, and all the Moodle Partners need to comply with.
- Moodle would provide Moodle Partners with a set of “how-to” materials to provide Moodle-related IT services and Moodle would charge its partners every time when Moodle releases a new version of such set of knowledge.
- Moodle would set out a price discrimination, i.e. set a higher price for the same service item that its partners would supply. As a result, clients would have choices as whether to obtain the service directly from Moodle HQ or from Moodle Partners according to their affordability and the geographical locations. However, the quality of the services supplied by Moodle HQ and Moodle Partners should be kept similar.
- Moodle would modify their Moodle Partners program and make it more transparent and more standardised. Moodle would encourage more IT firms to apply for becoming a Moodle Partners. This business model should imply that the more Moodle Partners the more revenue Moodle HQ can generate. This would be similar to a franchising system.
- Moodle would open up the use of trademark “Moodle” for advertising Moodle-related service for non-Moodle-Partner firms and freelance developers, so that the demand from lower end of the market can be met.
- Moodle would improve its third party plugin development platform to encourage developers to supply free light version and paid version of Moodle plugins and the plugins would be sold only via a dedicated platform where Moodle can take commissions from the transactions.
- To support the above, Moodle would have a dedicated global marketing team to promote both Moodle HQ and its partners’ products and services.
Let’s come back to this blog post 3 years later and compare it with what Blackboard and Moodle will actually be doing!