By Ravi Kumar

NEW YORK – New business models for academic tutors—from free services like Khan Academy to paid services like Tutor.com and Peer2Peer—are gaining steam and seem to be threatening the traditional neighborhood scholastic tutor.

Or are they?

“Most parents want in-person tutors,” said Steve Pines, executive director at the Virginia-based Education Industry Association, an advocacy group that promotes the interest of education business in the PreK-12 market. He estimated the size of the tutoring industry somewhere between $5 billion to $7 billion a year. Pines said that the tutoring industry is growing at 5% a year and changing simultaneously. The tutoring business was an old school, person-to-person kind of business only in the past. It did not provide services online.

Tutors perhaps used to be college graduates, graduate students or teachers who used to help neighborhood children go from D-students to B or A-students in high school subjects such as Algebra for $20 an hour, once a week. But now a tutor can be located in Ohio or Orissa, a state of India, helping students via video chat when needed. And, strangely, new technologies appear to be growing the tutoring business as a whole rather than rendering local tutors obsolete. Online tutoring is doing for what Starbucks did for Coffee. It’s creating further demand and lifting all boats.

While anti-globalism protestors smashed Starbucks windows and many decried the corporatized ubiquity of Starbucks that crushed mom and pop coffee shops, data showed a different story. Between 1996 and 2001, the number of US coffeehouses doubled to 13,000 including Starbucks according to Mintel Consumer Inteligence, a research firm in Chicago. At that time, independent and small chains had a 61% market share according to Mintel and a Wall Street Journal story.

Online tutoring services appear to be expanding the demand for tutoring in general. Some can pay at the high end, like people who buy Frappucinos at Starbucks. Meanwhile, others can watch free online tutorials, like those who make coffee at home or Dunkin Donuts, but pay lower prices for beans because of the Coffee boom.

Thanks to digital innovation, students have many more options of seeking help with their studies. The growing fleet of free or paid online tutoring services allows students to get help instantly on YouTube or other video platforms. Startups like Tutorcloud.com, based in Palo Alto, California, is an online tutoring service that lets student choose tutors online.  Based in Berkeley, California, Magoosh, a startup, challenges test prep giants like Kaplan and Princeton Review. Services like these are not only disrupting but also expanding the tutoring industry.

The development in the Internet technology, changes in students’ habits and expectations are changing the traditional tutoring model. But it’s hard to exactly determine the impact of disruption on the tutoring business because there is little official data available on the amorphous tutoring industry. Industry experts are also uncertain about what the industry will look like 5 or 10 years from now.

Conventionally, parents used to hire tutors to help their children overcome weaknesses in particular subjects. With increasing competition to get into top schools, parents who can afford it, spend more time and money on their children’s education in a hope to enroll their students into the best colleges. Another bastion of in-person tutoring comes at the college and graduate school level, where math departments at universities in states like Iowa hire graduate assistant or high-level undergraduates to tutor peers.

The Center of Academic Excellence (CAE) at Buena Vista University, a small private undergraduate institution in Iowa offers a free tutoring service to its students in almost every subject taught at the university. High-level students are hired by the CAE. Molly Urnes helps students with Chemistry, Biology and Writing at CAE. Urnes, 21, who work for four hours at CAE, said she got hired as a tutor because she did really well in one of her classes and the professor recommended that she become a tutor.

Even larger universities such as Columbia University in New York offer tutoring services to its students. Columbia Business School offers tutoring services by top students for laggard students in key subjects such as accounting and corporate finance. Similarly, Georgetown University in Washington D.C. offers free tutoring services to its students in range of subjects. Systems like these seem to work and will not abate soon.

However, the situation of tutoring outside of universities and colleges is different. Due to the recession, many parents and students are looking for cheaper and more convenient ways to spend their funds on tutors. The online tutoring industry seems to be catering to the needs of those parents as these services tend to be cheaper than traditional tutors, available 24/7 and 365 days a week. For instance, students can get six, 25-minute long tutoring sessions every month by paying $115 to tutor.com.

Experts say that the number of online tutoring services is exploding because of digitally savvy young generation that prefers to interact online and expects instant responses to their questions. “We learned that the minute they (students) are stuck, they want somebody they can trust, they want immediate connection,” said George Cigale, Founder and CEO of tutor.com from his office in New York, referring to students who grew up in digital age and expect help immediately.

He said that students could get instant help online from a professional tutor on any subject. Students can choose from different tutoring plans that allow them to opt for tutoring sessions according to their need. Jennifer Kohn, Vice President of Corporate Communications for tutor.com wrote in an email, that between 2007 and 2010 tutoring sessions provided tutor.comincreased by 36%.

Yet the preference of parents and students for an in-person tutor who could help students improves grades makes traditional tutors optimistic about the future of their business. Pines predicts that, after the full economic recovery, the industry would grow at least at 7%.

“The future is bright for the tutoring industry,” Pines said, when asked if platforms like the Khan Academy might pose a challenge to the tutoring industry. “I don’t think it will erode market share.” Like Pines, Caroline Romano, marketing manager of Vocab Video, a New York based educational service company focused on helping students getting admitted into top colleges said that she does not believe online tutoring industry will disrupt the traditional tutoring industry in near future. “Face to face interaction cannot be replaced by online technology,” Romano added.

“The interaction is more first-hand and it is a different experience,” said Nina Chung, 17 and a senior at the Bard High School in Long Island City, New York referring to preference for in-person tutor over online tutors. She added that most of her friends don’t even know about online tutoring services. Cigale said that convincing the public about online tutoring services has been one of the biggest challenges. But he hopes that in next 15 to 20 years, people will be more appreciative of online tutoring.

However, others predict the decline of tutoring industry. It is already happening in the music lessons industry as student can find myriad free lessons on YouTube and other services, where they can learn a musical instrument. So why should parents shell out $20 to $100 an hour for such a service. And now poor children have access to lessons they may not have had in the past on free services such as Khan Academy, which provides videos for key concepts in math, science and other topics.
“My parents could hardly afford to stock the pantry with food let alone hire a tutor,” said Michael Brophy, 24. He used to get poor grades in school but now he uses various free online tutorials to make himself marketable in the industry. “I have taught myself a variety of computer skills through YouTube and a site called Lynda.com,” said Brophy. He is a student at Simon Fraser University, British Columbia, Canada pursuing B.A. in economics. He said he has landed paid gigs because of the photo and video editing skills he had taught himself via online tutorials.

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If parents are aware of the many free services that can replace those offered by traditional tutoring companies it seems logical that they will try these before investing money in a tutoring service, said Eric Sheninger Principal at New Milford High School,Bergen County, NJ.“Quite honestly these solutions are negatively impacting the bottom line of the traditional tutoring industry,” said Sheninger.

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