Compensating for asynchronous online development

A colleague recently asked for my input on compensating instructors/SMEs for helping to develop asynchronous online content or transitioning traditional content into an online format. Since this area is still somewhat new, there aren’t a lot of good standard financial models out there and many people struggle with the mechanics of crafting these types of agreements. Here are some of my thoughts on the matter: First, I’m assuming the developers in question are either instructors or subject matter experts (SMEs). They are typically supported by graphic designers and experts in the online delivery tool you’ll be using. For this post, I’ll just be addressing compensation for the content expert. The challenge is to determine fair compensation that acknowledges the work they put into developing their expertise, the specific content, and putting it into an online format. On the other side, you have to balance that against the fact that once the programming is built, they won’t need to do much ongoing work. In crafting the agreement, you’ll want to keep in mind that the instructor/SME generally retains the copyright on their materials, unless a contract specifically says otherwise. You’ll own the delivery mechanism, but they will still own the content and may deserve royalties for the ongoing use of that content.

I’ve seen several models used (and there may be others):

1) Paying an ongoing per-student fee (i.e. $50 per enrolled student) or per-time-period fee (i.e. $500 per quarter) basis

2) Paying a lump sum fee to transition their content online AND for an unlimited ongoing license to use their content

3) A hybrid model in which you pay a lump sum upfront for the development of the online programming and then a smaller ongoing per-student or per-time-period fee

Option number 2 is the simplest and probably the most attractive way to structure the agreement if the content won’t change often. If you expect the materials to need updating fairly often, then I’d lean toward option 1 or 3. The ongoing payments give you better leverage to ask for ongoing updates. In fact, I’d go so far as to include the expectation of those updates into the agreement. This also keeps the instructor/SME linked to the program and the ongoing compensation lessens some of their understandable concerns around being “replaced” by the online content.

As for the amount of compensation, it seems to vary greatly depending on the subject matter, level of expertise required, and the amount of support that your staff can provide to the instructor/SME. The more guidance and support you provide (for example, if you develop graphics and charts for the content or help format the content for online delivery), then that should affect the compensation.

Compensation should also depend on the medium being used in online delivery. For example, creating PowerPoint slides and written content requires far less effort than producing interactive online simulations, Flash animations, or video recordings of mini-lectures. I can imagine lump sum payments ranging from 1-2 days worth of classroom delivery to 10+ days worth depending on the complexity of what they are creating.

Obviously, you’ll have to determine the value of the final product in order to make it a good business decision. One approach is to estimate the expected number of attendees per year and then calculate the total revenue. Determine a percentage amount that you’d be comfortable paying to an instructor for classroom delivery and use that as an upper limit during your negotiations around paying your instructor for developing the asynchronous content. If a program will bring in $20K in annual revenue and you’re business model would allow you to pay 25% to an instructor, you could pay up to $5K for the online development through a combination lump sum and ongoing payments. (Since the lump sum will only happen once, you’ll come out further ahead during subsequent years)

I hope this helps your thinking around developing asyhcnronous content. I also invite you to share your own thoughts and experiences below!