Daniel S. Christian is a blogger and education thinker on my list of great people to listen to. He recently wrote a short post where he wondered if the freemium business model will come to higher education.
A Freemium business model works like this. You can sign up for free to use a web service, but there are certain “premium” features you can only access if you pay a subscription fee. This model works and is used all over the web.
So will this come to higher ed? It’s already there.
When all education took place in the classroom, you obviously couldn’t let people from off the street just sit in on a lecture to see if they like it. Now that more and more education content is going online, you can try it out without disruption.
The freemium model is already being tried out. Stanford let Sebastian Thrun teach his massive online courses. However, there was a limit. You can’t get credit for it. As Kevin Carey noted on Quick and Ed:
So there you have it. Teaching students is what Stanford does. But Stanford is in the business of selling academic credentials. That’s why they were perfectly willing to let Thrun give the teaching away for free, but adamant about the credits and degrees.
As more and more content goes online it’s only natural to give people a taste of it. As long as you don’t get credit for it the traditional business model of higher ed is safe. Even so, it’s fragile thread that maintains the status quo. Make no mistake, people are working on ways to disrupt this. When your business depends on a single thing to continue, you are vulnerable. I wrote about this in The Weak Point Of Higher Education.
One of the reasons why spacecraft are so expensive is they are built to tolerate failures. For example, the Space Shuttle had five computers. Four of them were identical, and one was designed with completely different software as a further backup. The shuttle only needed one computer to function so it was very resistant to failure.
Some businesses are diversified and so can tolerate failure better than others. Some however are vulnerable to single failures. For example, look at Netflix. They grew rapidly in the last few years but they have been hurting lately. They are vulnerable because their whole business model depends on cheap content. Well, the content creators aren’t selling their content cheaply anymore. In fact, many are leaving Netflix altogether. They have a single point of failure.
Credentialing is universities’ single point of failure. A universities’ whole business model is based on the fact that most people value a degree more than the information they learn while getting it. If you think about it, this is completely unnatural, and I think will be reversed soon. A Freemium model won’t disrupt higher education because they can still make money on it. I think what will disrupt higher education is the disaggregation of teaching from credentialing.
If you want to read more on this I suggest this post: The Subscription Model of Higher Education