Posted by: crudbasher | September 9, 2011

The Subscription Model of Higher Education

(cc) Dom Dada

For the last 15 years there have been two groups of people dealing with the repercussions of the Internet. First have been the users. Overall it has been an amazing experience. The peak of human intellectual endeavor (and the depths of it too) has been digitized and placed online, much of it for free. You can sit at your computer, visit one site a minute and never see the same thing twice. It is overwhelming but when you tame it, the Internet is amazing.

The other group is the content producers. These are the people who formerly worked in the music business, the film business, the TV business, the publishing business, and the journalism business. This group isn’t having as much fun. In the old days the rules were simple: make a piece of content, then get paid. You sometimes got paid for just the first copy in a fixed contract, but most of the time you got paid based on sales of the copies. See that’s the key equation here:

Physical sales = money.

The more you sell, the more money you get. This model only works when the product is scarce. Because there is a physical product, each one has value. In other areas of society, you aren’t dealing with discrete units though. Garbage collection for example. You don’t pay per bag they collect, instead you are paying (via taxes) for a service. They will take as much or little as you put out.

The users of the Internet are having a mind blowing blast, but the content makers aren’t. That’s because the old equation isn’t working. Once things are digitized and distributed via the net, there is no scarcity. What everyone is struggling with is how do you make money?

The trend in the last few years has been for more of a subscription model. The content itself is free, but you pay a monthly access charge to access it. Netflix is a great example. For a low monthly fee, you can access as many streaming movies and tv shows as you want. It has been very successful so that model is working. iTunes doesn’t work like that though. You still buy music one song at a time but I think that model will replaced soon. New services such as Spotify allow you to subscribe per month and then listen to any song you want as much as you want. You don’t actually get the song on your device mind you so if you cancel the subscription you lose all the music. Even so, I think people have never assigned a value to digital data. It’s access that seems to sell.

Even so, in certain industries the subscription model isn’t working very well. Newspapers for example have had a difficult time with this. I think largely this is because news isn’t scarce. If you can’t read about a story in the New York Times, then you can go to a dozen other sources and get the same info. That doesn’t get you access to the columnists but many people don’t care about that. In fact it’s self defeating because a columnist derives influence based on readership so placing them behind a paywall isn’t a great idea.

Ok so how does all this apply to higher education?

Higher education, like all of the businesses I have discussed previously, base their model on scarcity. Since students had to be physically present in the classroom, a teacher could only teach a finite number of students. Now however, there are online schools that can teach a whole lot more people. If you are looking for the knowledge there are lots of sources now. If you want a credential from a particular school, you still have to go there.

I think in the future, two trend will emerge regarding education.

1. Education plans will be more customized. Each student has unique needs. Technology is making it possible to customize the experience for each person. That is the essence of Web 2.0. It’s sort of a mass-customization approach.

2. Education will be life long. Our world is moving too quickly for a college education to be sufficient for your whole life.  If you aren’t constantly learning new things, your skills are becoming obsolete.

If you take all this together, I think what you arrive at is the Netflix model for higher education. Imagine then, a university where you pay to become a member but can take as many classes as you want. People will most likely have several such memberships. Universities will constantly be creating new courses as things change in the world. This will be a selling point. Being a member will also get you access to the university’s social network. That initial introduction will be critical in getting ahead in new fields and has value (thus you can charge for it).

The concept of a degree goes away though. If you can customize your learning experience, you can’t put an accredited name on it. Instead, each course you do will get you a badge or certification. Employers will then create job notices with a whole bunch of desired certifications on them. As a bonus it will be possible to tailor the job notice to the exact type of person you are looking for including traits such as personality.

This new education realm will be constantly changing and morphing into new things. It will be exciting and terrifying at the same time for existing universities. They have to be able to find a way to take information that everyone has access to, and add something of value to it that people will pay for. The ones who figure this out will survive the coming stormfront of change. Just because your university has been around for 100s of years doesn’t mean it will survive the next 20.

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