I Don't Buy It

A contrary take on the 'fee-for-service is taking over the OPM market' narrative

Phil Hill
February 19, 2025

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In today’s IHE article “Fewer Colleges Sharing Profits With OPMs,” I was quoted as not agreeing with the Online Program Management (OPM) market analysis conclusions from a new Validated Insights report. That report looks at OPM programs - including new partnership activity and program ends - by both the number of institutional partners and the number of academic programs supported (many universities support multiple online programs with an OPM partner). The summary from Validated Insights was very targeted at the tuition revenue-sharing vs. fee-for-service business models.

Fee-for-Service is now the norm in the OPM market.

Read the article, and you’ll see that this message is not just from one slide - it comes through loud and clear in the interview.

“For the past 10 years, there’s been a lot of momentum building for the fee-for-service model,” said Brady Colby, Validated Insights’ head of market research. “There was a lot of conversation about how it had a lot of potential for growth, but it was just recently that we saw that come to fruition.”

A Contrary Take

I’ll get straight to the point - I don’t buy it. That is a flawed understanding of the market that likely confuses what people want to believe with what is actually happening. And it is flawed in drawing a single conclusion from poorly-segmented market definitions. My quotes in the article made me sound much nicer than I am, however.

Regardless of what the future holds for OPM regulations, Hill said he’s somewhat skeptical of Validated Insights’ conclusion that fee-for-service models are now dominating the OPM market.

“It doesn’t mean it’s wrong, but it doesn’t match what we’re seeing,” he told Inside Higher Ed. “It’s possible they’re digging up something we’re not seeing in the market, and if so, that’s really valuable.” Hill said that some of the OPMs he’s in regular contact with, including Risepoint and 2U, are “unable to get people to choose fee-for-service.”

Part of the discrepancy, he said, could derive from inconsistent definitions of OPMs. For example, while the report lists ASU Ed Plus (Arizona State University’s in-house digital learning enterprise initiative), Hill said he wouldn’t consider it a traditional OPM.

“Personally, I’d describe an OPM as the primary partner a university is using for an online program,” Hill said. “But that doesn’t mean other people have the same definition.” And without a clear-cut definition or more nuanced analysis, it’s “harder to discern what’s really happening in the market.”

I did spend a bit of time trying to call out that I wasn’t trashing the entire effort, I wanted to give them credit for the research, and I appreciate Kathryn Palmer capturing this sentiment. But since I was critical about the report, I thought I should explain in a little more detail why I don’t buy the conclusions.

What Is An OPM?

The data underlying the report combines many categories of products that are quite dissimilar. The ASU EdPlus example makes no sense, as that is a case of insourcing, where ASU owns and controls its own destiny with hundreds of programs. That is not an OPM, which fundamentally is based on working with an outside partner.

But there are multiple other problems as seen by the market map.

As a graphic, this is useful by showing multiple categories of vendors in an easy-to-ready format. The problem is that Validated Insights clearly combines data that should be reported separately. Yellowbrick provides online courses consisting of six modules of 3-5 hours of effort each, for no academic credit. That is fundamentally different than Risepoint supporting a two-year master’s degree accredited program. Insendi provides a platform and services to better design online courses. That is not an OPM. EAB and The Babb Group? Again, not OPMs. And in all of these cases, you are mixing in companies and categories that are naturally fee-for-service, which confuses the results on actual OPMs.

Combining these very different categories and making simple conclusions is a problem.

Extrapolation

There’s a big difference between the overall norm of a market and a percentage measure of one year’s new partnership activity. Even if we took the data at face value, look at the market share.

Risepoint, Coursera, 2U/edX, Kaplan, Grand Canyon / Orbis, AllCampus, and Keypath are all OPM vendors that primarily or even exclusively rely on tuition revenue-sharing arrangements. That’s the majority of the market that is not moving away from rev share, and if we limited this data to just degree-granting online program support (the core of the OPM market), it would be the vast majority of the market.

What Validated Insights bases the headline conclusion on is new partnership activity by year, with the report conclusions based on 2024 in particular.

As the report noted, 2024 was a very light year in terms of new market activity (81 implementations), meaning that 2024 represents a very small share of the overall market. Not only was it a slow year for OPM deals, this is coming with the last year of a major regulatory push by the Biden Administration against rev share OPMs, and many schools were waiting it out to see what would happen. This also skews away from rev share.

That “drastic change” to 58% of new partnership activity going to fee-for-service was just a 2.2% increase in absolute terms for fee-for-service contracts. This hardly represents the “new norm” of the market, as you cannot (or rather, should not) extrapolate new partnership activity in a down year as indicative of the overall market.

Conflating Desired Narratives with Market Realities

None of this is to say that we should not look at what’s happening in the market or that there is not a big change in what the market wants. But if you want to understand market realities, you have to take care to describe data accurately.

That is why I don’t buy it.

What I would prefer to see is for Validated Insights to share data on the core OPM market (which they partially segmented in the October report but not this one), showing both new partnership activity by year as well as overall market by business model. That would make the report much more useful.

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