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Thought Leaders in Online Education: Katya Andresen, CEO of Cricket Media (Part 3)

Posted on Friday, Jul 25th 2014

Sramana Mitra: I’m very interested in the business model. That’s one of the issues that we’re seeing in the Edtech industry. The business models are weak.

Katya Andresen: I agree with you. It can be really hard to monetize a social network. That is not our model. Our model is that we have consumers – parents, grandparents, uncles, and aunts. They want to pay for their kids to have access to content and to be able to safely connect around that. That’s a proven revenue stream for us. The other side of our model’s emphasis is not that we have this relationship with Smithsonian. It’s just a nice thing that allows us to develop things and offer them for free in some cases.

Our main model though is to license the ability to collaborate our content to other corporations because they need it as part of their product offering. That’s a much more solid revenue stream for us because we know that publishing companies need high-quality digital content. We know publishing companies want things that help them offer project-based learning to educators because they have a lot of growing demand for that. That is something that we can provide to those companies that makes their product offerings stronger. That’s how we chose to pursue our business model that makes it easier for a relatively small company to scale. We have B2B and B2C models.

We are not reaching out to our global community and asking people to pay to belong to it. We don’t have that model. It is something that we’ve offered as part of our mission. It enables us to build a community that can then participate in some of the projects and apps and other products that we develop over time. That’s why we have taken this path as we build our business and look at monetization.

Sramana Mitra: Those partners who are the bulk of your revenue are the Pearsons and McGraw-Hills?

Katya Andresen: The bulk of our revenue right now is on the consumer side. The bulk of our licensing revenue is publishing companies, testing companies, and supplemental curriculum companies.

Sramana Mitra: Your primary business model, in that case, is B2C?

Katya Andresen: In terms of the revenue, the fastest-growing part of our business happens to be the licensing business, but the consumer business is still the largest part but is not growing as fast as the licensing business.

Sramana Mitra: How big is the company?

Katya Andresen: Last year, we were just shy of $17 million in revenue.

Sramana Mitra: You’re a public company though, right?

Katya Andresen: Yes, we are.

Sramana Mitra:  Is it an over-the-counter exchange public company?

Katya Andresen: Yes, we are a CS Sec B. It’s a venture exchange in Toronto.

Sramana Mitra: You’re based in Toronto?

Katya Andresen: We have a corporate entity that is Canadian. My office is based in Washington DC area.

Sramana Mitra: Let’s look at the trends in your industry. Tell me what you see. As I’ve mentioned, I’m deeply concerned with the monetization models in the industry.

Katya Andresen: When you say everyone wants everything for free, who are you talking about?

Sramana Mitra: The Internet has become this massive concentration of freeloaders in every aspect and every form you can imagine. Especially in education, it’s particularly true. The schools don’t really have a lot of budget. The public funds are challenged. Investors who are investing in the education sector have come to the conclusion that the only way to build reasonable sized businesses in educational technology is essentially to do B2C businesses where, if it’s K-12, parents are buying and you don’t have to go through schools. As a result, the preferred segment of the Edutech sector has been more the professional education or adult education where people can buy for themselves. Essentially, the customer acquisition is B2C.

Katya Andresen: I think you’re right. If you’re a startup, you have to identify the right tiers or be able to develop a huge audience that is eventually going to be a value to someone else’s business model. That’s why we’ve gone the route of private pay largely.

Sramana Mitra: You’re right. There are some companies in the educational technology sector who have gone the route of building huge audiences and figure out monetization somewhere in the future. I don’t believe in that model.

Katya Andresen: You have to have a really big engaged audience for that.

Sramana Mitra: It’s like a lottery.

Katya Andresen: I agree, it’s a challenge.

Sramana Mitra: How long has Cricket Media been around?

Katya Andresen: We’ve been around for about seven years.

This segment is part 3 in the series : Thought Leaders in Online Education: Katya Andresen, CEO of Cricket Media
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