Over the past four articles, I have taken you on a personal journey through the evolution of revenue sharing in higher education, from satellite campuses and adult degree-completion programs to the rise of Online Program Management and, eventually, the globalization of the model.
I have also been personally invested in every phase of that journey. So, in this final article, I want to offer an honest reflection.
What did the revenue-share model get right? Where did it fail? Why did it become so controversial? And is there a place for a Revenue Share 3.0?
The Promise of Revenue Sharing
At its best, the promise of revenue sharing was multifaceted.
It enabled higher education institutions to do things they otherwise could not, or were unwilling, to do on their own. It encouraged institutions to be entrepreneurial and innovative. It helped them pursue new student populations and expand their addressable markets. It provided learners with access to education they might otherwise have been unable to obtain—first through satellite campuses, nontraditional schedules, and compressed formats, and eventually through online and blended learning.
And it became a pathway to “yes” for private and public-sector organizations seeking to partner with higher education. Most importantly, it was truly a form of risk sharing.
In the early days, roughly 30 percent of tuition revenue might go to the corporate partner. As the model evolved and the services became more complex, that percentage grew—sometimes to 70 percent or more. The more responsibility the corporate partner assumed, and the greater the financial risk it carried, the larger its share of revenue generally became.
That was the essential premise of the model.
Why It Worked
Revenue sharing was particularly impactful in its early years. The market was ready. In the United States, there was significant unmet demand for higher education among working adults.
Initially, the solution might have been a degree-completion program where students met one evening each week for four hours. Later, online learning created an even more flexible model for much the same population. These were learners with complicated lives. They were building careers. They were raising children. They were caring for aging parents. And many wanted access to higher education without having to step away from everything else in their lives.
The mission behind expanding access was, in many respects, noble. Revenue-sharing agreements also gave universities something extremely valuable: speed.
A university could say “yes” without waiting for the next budget and planning cycle. The investment did not have to compete immediately for resources within what was often a closed system of institutional funding.
When the OPM model emerged, the partner brought capital to the table. A lot of capital. That allowed a university to move from an idea to being in the market in less than a year. And timing mattered.
Speed to market could determine whether an institution became an early leader in a category or simply entered an already crowded market. Innovation mattered as well. The work was not simply about putting existing courses online. It required translating effective on-ground practices into a new modality, leveraging technology, and helping create the emerging discipline of online pedagogy.
Early in my time at 2U, we were hitting—or exceeding—our enrollment and financial targets for many partners. That created happy university partners. Programs grew and financial surpluses were real. And 2U grew as well, particularly while the company had access to capital through the public markets. Cash was king, and we had it. We could bring that capital to bear to help universities become successful.
For a time, the model was working. Innovation was happening. Thousands of learners were being supported. Students were earning degrees they might not otherwise have been able to pursue.
It was, at times, magical.
The Cracks in the Model
But the cracks were inevitable.
As competition increased in the OPM market, the economics of student acquisition became far more complex and far more expensive. Marketing became more competitive. Lead generation became more difficult. The cost of reaching prospective students continued to rise.
This was not a problem unique to OPMs. It affected higher education more broadly, including institutions that chose to operate their own online programs without an external partner. But it hit the economics of revenue sharing particularly hard. The model depended upon long-term enrollment growth. When enrollment became more expensive and less predictable, the underlying financial assumptions began to weaken. There was also a second challenge: the two sides of the partnership experienced the economics very differently.
As I mentioned earlier in this series, it could take 2U three to five years simply to break even on a new program, let alone generate a profit. The university partner, however, might see a positive financial contribution in year one. From the university’s perspective, the program was generating students and revenue. From the OPM’s perspective, the program was still deeply underwater. That economic difference drove the length of many contracts. Terms of seven to ten years—or sometimes longer—were not accidental. The OPM needed sufficient time to recover its upfront investment and eventually earn a return.
But this created another problem.
The institutional leaders who negotiated and signed the agreement were often no longer at the university when those later years arrived. Memory is short. A new leadership team could look at the relationship and see a large payment going to an external partner. They might not remember or fully understand the investment required to launch the program years earlier. And if enrollments were declining, those payments became even harder to defend.
The Problem With Projections
Higher education institutions typically build budgets a year or more in advance. For OPM-powered programs, those budgets were often built around enrollment projections. When the projections were met, the relationship was usually strong. When they were missed, the relationship suffered. That may seem obvious, but it highlights one of the inherent tensions in revenue sharing.
A university was making strategic and financial decisions based, at least in part, on the projected performance of a partner. When that performance did not materialize, the relationship could deteriorate quickly. The longer the contract, the greater the potential consequences.
The Black Box
There was also a darker side to revenue sharing.
A lack of full transparency. These partnerships were often described as “joint ventures.” I know because I described them that way myself. But in many cases, the financial relationship did not operate with the transparency one might expect from a true joint venture.
Many people referred to the OPM’s financial model as a “black box.” When times were good, few people seemed to care. When times became more difficult, they cared immensely. And too often, the black box never became fully transparent or even translucent. The university could see what it was paying. But it could not always clearly see what the OPM was spending, how costs were allocated, or what return the OPM was actually receiving.
That became a serious source of tension.
Were Incentives Actually Aligned?
One of the central pitches for revenue sharing was aligned incentives. I believe that, at its core, this was true.
Revenue sharing created an unusual level of alignment between the university and the OPM. The OPM needed students to enroll. But it also needed students to persist. A student who withdrew did not generate the same lifetime revenue as a student who remained enrolled and ultimately graduated. The university shared that incentive. For the institution, persistence and completion mattered financially. They also mattered for accreditation, institutional reputation, student outcomes, and the mission of the Academy itself. Completion was critical to both partners.
That alignment was one of the genuine strengths of the model.
The Critics Were Not Always Wrong
Criticism of the OPM model intensified significantly during the late 2010s and early 2020s.
One criticism focused on the long tail of revenue-sharing agreements. The argument was that providers continued to receive large payments long after their initial investments had been recovered. There is some truth in that criticism. However, in my experience, as contracts came up for renewal, the market increasingly began to rebalance those relationships.
A second criticism was that revenue sharing encouraged higher tuition prices. There is some truth there as well. OPMs often presented institutions with market-based pricing recommendations. Some institutions chose to follow those recommendations. Others did not.
But one point is important: The university retained sole authority over tuition pricing.
The OPM could recommend. The university decided.
The Question of Institutional Control
Institutional control became another major criticism.
My experience was different from much of the rhetoric surrounding the issue. The university retained ultimate control. The institution made admissions decisions. It could reject applicants. It could change academic requirements. And ultimately, it could decide to discontinue a program by refusing to admit. That was, in effect, the nuclear option. I doubt any institution would want to exercise it if a program were successful and serving students well. But the authority was there.
At 2U, we made recommendations. We recommended new pedagogical approaches. We recommended marketing strategies. We recommended new geographic markets. But the institution ultimately had to approve the actions.
A good partner influenced. The university governed.
That distinction matters.
Where the Criticism Landed Most Appropriately
Of all the criticisms directed at Revenue Share 2.0, there are two where I believe the critics were most justified:
Bundled services and transparency.
The Problem With Bundled Services
In many cases, institutions purchased the full OPM bundle whether they needed every component or not.
That bundle often went beyond the services required under federal guidance governing revenue-share arrangements. For example, during the first two-thirds of my time at 2U, a partner might be paying for access to clinical placement services even if it was offering an MBA program that required no clinical placement. The service was part of the bundle.
Eventually, we began addressing this through more flexible structures, including sliding revenue-share arrangements based upon the services required while remaining consistent with appropriate governance and regulatory expectations. That was a better approach. The market had matured.
Universities were no longer as passive as they had been during the early days of online education. They were building internal capabilities. The OPM model needed to evolve accordingly.
The Problem With Transparency
The second issue was transparency. Here, I think we failed.
In a true joint venture, transparency should be foundational. Yet OPMs, by and large, were not fully transparent about their business costs and cost allocations. To be fair, university partners were often not fully transparent either. And when pressed, many institutions could not clearly identify the true costs of operating their own programs. They often lacked a sophisticated methodology for allocating those costs. But the lion’s share of the responsibility still rested with the OPM.
The OPM was asking the university to trust a complex financial model over many years. It therefore had a greater obligation to make that model understandable. The lack of transparency eventually created mistrust.
And mistrust can dissolve any partnership or joint venture.
Has Revenue Share 2.0 Run Its Course?
My honest assessment is that Revenue Share 2.0, at least in its classic form, has largely run its course.
That does not mean the model was wrong. It means the conditions that made it particularly effective have changed. In the beginning, it was the right tool for its time. But the times have changed. And they have changed dramatically.
Today, the ecosystem includes a range of other models, each with its own strengths and weaknesses:
- Fee-for-service
- Profit sharing
- Hybrid models
- DIY approaches
- Revenue Sharing
None is perfect.
Each simply allocates risk, capital, responsibility, and reward differently.
So What Might Revenue Share 3.0 Look Like?
Let’s return to the basics.
The fundamental premise of a public-private partnership is that together, the partners can accomplish more than either could accomplish alone. And to sustain that work, you need margin.
Mission and margin are not opposites.
In fact, they are often interconnected. Higher education’s mission and participation remain critical. Innovation remains critical. Capital remains critical. Speed to market remains critical.
The question is not whether universities will continue to need partners. They will. The question is what kind of partnership they need. I believe there is a model in which transparency becomes the foundation of the relationship. It is complex, but it could still allow substantial capital to be brought to bear on higher education’s most significant challenges. I have yet to see it executed consistently and effectively at scale. But I believe the elements of a Revenue Share 3.0 model might include the following:
1. A True Joint-Venture Mindset
Both parties would agree in advance on the economics of the partnership. Costs would be transparent. Risks would be transparent. Each party’s contributions would be defined. That would include the carrying cost of capital provided by the corporate partner.
2. A Defined Path to “Whole”
The agreement would clearly establish when each partner had recovered its agreed-upon investments. The university would become whole. The corporate partner would become whole. Only then would the partnership move fully into a shared-surplus model.
That would create a much clearer alignment of risk and reward.
3. Services Based on Actual Need
The model would not require institutions to purchase an entire bundle of services simply because that was how the original OPM model was constructed.
Instead, the partnership would fill the gaps – and enough gaps to satisfy the “Dear Colleague Letter.”
Universities would bring the capabilities they had developed internally. The partner would bring capabilities the university needed. And together they would decide where outside capital and expertise could truly supercharge performance.
4. A Sustainable Model for Both Sides
This is not a simple model. It is not for the faint of heart. And versions of it have been attempted before.
But I believe a more transparent, needs-based, risk-sharing approach could be sustainable. And I believe it could become part of what Revenue Share 3.0 eventually looks like.
My Final Reflection
Revenue sharing was not a bad model. There were bad actors, of course. But there are bad actors in every industry and every business model.
Revenue sharing helped drive some of the most successful education technology companies in history. 2U was one of them. It helped universities innovate. It expanded access. It created new pathways for adult learners. It accelerated the adoption of online education. And at its best, it brought together institutions and companies with different but complementary strengths.
I’m proud to have been part of that journey. More importantly, I’m grateful for the lessons it taught me along the way. The future of higher education partnerships will not be built by pretending the past did not happen. It will be built by learning from it.
The good. The bad. The success. And the failures.
If there is a Revenue Share 3.0, it should preserve what worked: shared ambition, capital, innovation, speed, and a genuine commitment to student success. But it should also fix what didn’t: unnecessary bundling, misaligned economics, and above all, a lack of transparency.
Because the best partnerships are not simply built on aligned incentives. They are built on shared understanding and mutual trust.
The Lesson
Mission and margin are interconnected.
Corporate and higher education partnerships can drive both. A sustainable partnership should not force one side to choose between fulfilling its mission and generating the margin necessary to continue the work. The right partnership can accomplish both.
And perhaps that is the most important lesson I have taken from nearly three decades of working in revenue-share relationships in higher education.
