Higher Education is Not a Newspaper, Except When It Is (2014)

It has often been suggested that higher education is undergoing the changes we've seen unfold in other sectors - notably music recording and journalism. The Internet will do to us what it did to them. Apparently, we won’t like it.

"Look at the music industry. It's been completely overturned by the Internet. My vision of the world is that everywhere will be like the music industry, but we've only seen it in a few places so far. Journalism is in the midst of the battle. And higher education is probably next." Tyler Cowen

The nature of these changes is described using one or both of these related concepts: disintermediation and unbundling.

 Photo by  Flipboard  on  Unsplash

Photo by Flipboard on Unsplash

Disintermediation: The Internet makes it easier for people to bypass certain types of gatekeepers and mediating organizations to get products and services directly from the source. (Investing directly in the securities market, rather than through a bank, is a well-known example.) What constitutes the “source” differs by sector, but in most cases disintermediation tends to increase the intensity of competition between providers, improve choice for consumers, and drive down prices. In higher education, the vision is that students will be able to find learning experiences beyond what's available from accredited institutions.

Unbundling: The concept of unbundling is applied in very different ways, depending on the industry. For education, I think the most relevant variety of unbundling is that which involves marketing goods and services separately, rather than as part of a package. A music album, for example, is a bundle of songs; iTunes makes it easy to unbundle albums. A university degree, similarly, can be understood as a bundle of courses. Making it possible for students to enrol in a single course is a form of unbundling. This is a long-standing practice of continuing / extension education units in North American colleges and universities.

The value of this sort of unbundling increases greatly when the education provider (or employer - but that’s a topic for another time) apply some sort of formal validation for the student’s successful completion of that one course (enter “digital badges”) or these discrete courses can be combined with credentials earned in other settings, such as through volunteer work or, of course, both.

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There's no question that higher education is subject to these forces: more learning will occur outside of accredited institutions (disintermediation) and more institutions will make it easier for learners to pick and choose courses from multiple colleges (unbundling). But in their zeal to shake us from our complacency, writers that use these comparisons to the music and newspaper industries often understate important differences between higher education and these other, information-intensive industries.

"Substitute goods are two goods that could be used for the same purpose"

The key difference that warrants more attention is in the degree to which "substitute goods" are available. Consumers of music and journalism are relatively free to select new providers and to use them in new ways without the value of the goods declining appreciably.

Music recording industry (global) has seen its revenue flatline from 38 billion in 1999 to 16.5 billion in 2013. Music fans are purchasing single songs, rather than albums, p2p remains a factor, new platforms allow people to listen songs without paying (e.g. 8track.com), and while revenue from streaming services (e.g. Spotify) is increasing quickly, its yet to make a sufficient dent in earnings.

Consumers of news have access to a wider range of sources, many of which are free - some of them by professionals, most new sources are simply other news consumers, passing on information via social media.

When consumers seek out and consume news or music from new types of providers or use them in new ways, there's no penalty or disadvantage. New distribution models for music offer far greater value.

Not so in higher education and the difference, of course, is accreditation - the ability of the provider to offer recognized credit courses and bestow degrees and diplomas. In higher education, accreditation remains a key source of value. A student needs assurance that the education in which they invest their time and money will be widely recognized by other institutions and, in particular, future employers. In an increasingly mobile and mass society, the universality of credits earned becomes only more important. Learning is important, but no more than the ability of the degree to function as a signalling device in a world where CVs are read by computers (seeking keywords), and we apply for work at organizations we'd not heard of until we read the "help-wanted" ad. The importance of formal, widely recognized credentials won't fade quickly, and as a result, disintermediation and unbundling will unfold far more slowly in higher education than elsewhere.