Is That All There Is? Higher Education’s Struggle to Leverage Digital Teaching and Learning

“What would become of such a child of the 17th and 18th centuries, when he should wake up to find himself required to play the game of the 20th century?”
Henry Adams, The Education of Henry Adams

In the late 1990s and early 2000s, what we might now call “the early days” of online higher education, advocates of technology-mediated learning imagined themselves as outsiders, rebels working on the margins of higher education. Their goal, broadly, was to bring the transformative power of Internet technology to a change-adverse, centuries-old institution. Keenly aware of the presence of naysayers among them in the institution who believed that technology was an anathema to “real education”, our rebels adopted an us-against-them stance, the technology evangelists against the Luddites; the cutting edge against those that simply “didn’t get it.”


It would be difficult for these rebels to maintain the posture of an outsider in 2017. During the last two decades, and particularly the last few years, instructional technology has become thoroughly mainstream across much of education, a major influence on corporate, K12, and higher education. In higher education, online learning has become synonymous with all that is thought to be forward-thinking and innovative in the sector, fairly or not. Digital learning has shifted from a little understood, and marginal activity carried out by a handful of restless academics and dishevelled tech staff working out of the university’s basement, to the single greatest hope for an institution facing unsustainable increases in operating costs, shifting student demographics, and increasingly strident calls for improved and demonstrable learning outcomes.

Even major news sources began to pay attention. The Atlantic, New York Times, Huffington Post and others have helped promote the idea that higher education is being transformed by technology. One after another, university Presidents, not typically revolutionaries, proudly proclaimed that their universities and colleges were part of this transformation. Others in and outside of the academy were less enthusiastic – envisioning Internet technology and its demands would serve as the trojan horse to upset all that was good and holy about this centuries-old institution. Public intellectuals argued that technology would disrupt higher education, just as it did the music recording industry, newspapers, and bookstores. We’re next, they warned.

The Potential . . .

I’ve been working in the digital higher education space since the late-1990s, first as a member of a university faculty, followed by an eight-year stint as the Director of a large online learning unit. I now serve as an analyst and consultant. Over the years, my views on digital higher education have evolved. But through it all, I count myself among the growing number of the allegiant. I’m convinced that thoughtfully designed instructional technology and media can play an important, even transformative role, in teaching and learning in higher education. I’ve seen enough evidence to state confidently that it has the potential to dramatically reduce the cost of learning, meet the needs of a wider range of people, and improve the overall quality of learning. In short, I’m a believer.

The potential is truly extraordinary. Given the unique economics of the Internet, it’s possible to produce and share instructional media with production value that rivals the best of Madison Avenue advertising. Storytelling and other creative arts can engage students in new ways. The rapidly expanding field of data analytics can help us understand how well students are learning and, when done properly, be used to modify curriculum in real-time to meet the unique needs of each learner. Dashboards can help students understand how they learn most effectively and where and when they need help. Simulations can be built that allow students to “learn-by-doing” in a realistic, risk-free environment. Games can increase the time students spend on tasks, thereby increasing their chances at mastery.

. . . And the Reality

I’m confident then about the potential of technology-enabled learning. However, I’ve grown increasingly less confident that the institution of higher education can play a major role in realising this potential. Evidence is mounting that the institution of higher education, as it is currently designed, is largely ill-suited to developing and leveraging more advanced uses of technology for teaching and learning. And given the institution’s near monopoly on widely recognised adult education in much of the West – higher education is likely inhibiting the development of more advanced forms of instructional technology and media, as well as new ways to bring these new forms to people at lower costs.

Since the spread of Internet access in the latter half of the 1990s, colleges and universities have demonstrated a remarkable inability to leverage these networks and related technologies to improve the quality and cost-efficiency of learning. This is the state of affairs despite the fact that universities were quick to turn to the Internet – and before that, various other technologies (e.g. CDs) – for teaching purposes. The situation exists despite the level of attention and investment directed at online learning during the past two decades, and despite the extraordinary advancements in technology that we have witnessed in other sectors over the same period of time.

In the late 90s and early 00’s, a handful of pundits concluded that higher education would have no choice but to be reconfigured by the extraordinary capacity of the Internet. They put two and two together and predicted that students all over the world – once connected – would have access to the very best educators, practitioners, intellectuals. Economies of scale would drive down costs dramatically, ensuring access to high-quality learning opportunities for even under-represented student populations. A new crop of talented professionals from education, design, and software would quickly start building digital-born instructional models that would stimulate learning in ways simply not possible in classrooms, lecture halls, and labs. Education is too important, demand growing too quickly, and costs declining too rapidly for us not to take full advantage of the opportunities the technology could obviously enable.

But for the past two decades, the institution of higher education has made few substantive changes to how it operates. While virtually every institution across the OECD has invested in digital learning, and university presidents now routinely pepper their speeches with the appropriate keywords signalling their commitment to digital education, the actual steps made to leverage the dramatic changes in technology in higher education have remained tentative, unimaginative, marred by self-interest, and ultimately lacking in ambition. Despite endless talk of “transformation”, “revolution”, and, of course, “disruption”, initiatives with the potential to improve learning and reduce costs through technology have either failed to gain sufficient traction, or were rejected out-of-hand because they challenged the culture, interests, and processes of the institution and its’ deeply ingrained conventions.

Tuition for online students has not dropped; indeed, online programs frequently have higher fees than on-campus versions. Students are regularly presented with digital course materials that are nothing more than repurposed classroom materials, reflecting the fact that the bulk of the responsibility for the design and development of course content falls largely on the shoulders of individual academics without the incentives, time, or skills required to do more ambitious work. The dominant technology in online education – the learning management system – serves primarily as a course management tool; an expensive and over-complicated filing cabinet for repurposed classroom materials. The LMS was quickly adopted across higher education not because of its capacity to transform learning, but because the technology fit so easily into the traditional practices, roles, and responsibilities of classroom education.

More troubling still is the mounting evidence that a common understanding has already begun to solidify in higher education about “how we do online learning”. For a surprisingly large number of professionals in higher education, simply “putting courses online” – shorthand for uploading static classroom instructional content into an LMS – is taken as evidence that an institution is a bonafide member of the digital age. After twenty years of online learning, the use of high-quality educational media, simulations, adaptivity, game-based learning, and other experiences made possible by advances in technology and the economics of the Internet constitute a mere fraction of the total higher education experience in North America. Can it be that the value higher education is able to extract from the Internet already reaching its peak? Has the proverbial S-curve of innovation already flat-lined? Is that all there is? (In the immortal words of Peggy Lee. Here’s a much darker version of the song from the post-punk era: Christina: Is That All There Is?)

By no means am I tech evangelist. I don’t believe that digital learning is the silver bullet for all that ails higher education. Despite the great attention it currently receives, digital learning is just one piece of the very large and very complex puzzle of how we improve student learning outcomes. And learning takes many forms. Conversation, reading, writing, travel; all are important. I certainly don’t want my daughters to learn online exclusively. But if we’re going to make digital learning part of the education mix, and I think we should, we need to take it seriously; we need to actually to begin to leverage the possibilities it affords us, which we are currently failing to do.

In a series of upcoming posts, I set out to decipher what stands in the way of significant improvements for the use of instructional technologies and digital media to improve the quality and cost-effectiveness of learning in traditional colleges and universities. This effort takes the form of a series of essays (see “Notes” below); each a vehicle for the author – and hopefully the reader – to understand why higher education has yet to take substantial steps toward leveraging the new possibilities and why, in certain cases, it may not.


I like the logic of the “essay”. Wikipedia provides a good definition: From late 15th century (as a verb in the sense ‘test the quality of’): alteration of assay, by association with Old French essayer, based on late Latin exagium ‘weighing,’ from the base of exigere ‘ascertain, weigh’; the noun (late 16th century) is from Old French essai ‘trial.’ Source: Wikipedia.

The Importance of Granular Learning Analytics to Micro-Learning Providers

The growth of alternative education and training providers continues. Companies like Udemy, Udacity, Codecademy, Fulbridge and General Assembly appear to be settling in for the long run and are expected to be a significant component of the expanding learning ecosystem for adults. (See my post on the subject from January 2014, here.)

Critics are beginning to ask how these alternative providers should fit into the regulatory and loan systems – questions raised by Andrew Kelly and Michael Horn in a very useful report, “Moving Beyond College: Rethinking Higher Education Regulation for an Unbundled World“.

Horn and Kelly define these providers as evidence of the unbundling of higher education. Colleges and universities bring together a wide range of services under one roof: learning, research, housing, career services, social networking, credentialing and more. In contrast, the alternative providers offer a relatively specific value set – courses on Ruby on Rails, or digital marketing techniques, or verification of skills, for example.

The authors stress the importance of measuring and reporting on the quality and costs of these new providers as a key step in securing federal aid for students. Reporting on value has been difficult and often political in higher education, though most now recognize the importance of improved information in the hands of prospective learners.

” . . . the logic of the market discipline – where consumers “vote with their feet” by rewarding quality providers with their business – depends on consumers having sufficient information on providers’ cost and quality to make these decisions. The truth, though, is that not all colleges serve students equally well, and it is difficult for students to distinguish the worthwhile investments from the bad ones.” 4

Assessment of Learning Gains

The reporting on value in higher education tends to focus on institutional performance as it relates to the student’s successful progression through an institution’s program of study: did the student graduate, how quickly, and did it ultimately lead to related and gainful employment.

These new providers, though, should (and likely will) place greater emphasis on learning gains, rather than progress through a program. Students enrolled in narrowly defined educational experiences bring a different set of needs and expectations to the investment; they are more interested in how quickly and effectively they acquire specific skills and knowledge. Are they able, upon completion, to write code at the level promised by the educational organization? Systems that measure institutional performance are of less relevance.

This requires a different set of metrics and analytics to measure outcomes. Learning analytics, such as that provided by Acrobatiq, focus on how well students have acquired specific skills and knowledge. This is a different, altogether far more ambitious objective, as it calls for careful and rigorous course design, as well as a deep integration of curriculum and software.

Providers like General Assembly or Codecademy would be wise to seek out analytics software and services that can help them demonstrate the actual learning gains that take place over the relatively short duration of their courses and programs, in order to generate the kinds of evidence demanded by students, regulators and other stakeholders.


Keith Hampson, PhD is the founder of digital / edu / strategy, a research and consulting service that helps colleges, universities and education businesses develop better strategies for maximising value. 

Production Value in Online Higher Education

In 2012, during a rare moment of clarity, I wondered aloud about the possible impact on the institutional reputation of academics choosing to post their instructional materials online, including lecture videos, for all the world to see. While the efforts by MIT (starting in 2001) and others in the “Open Movement” served as strong social statements about the importance of access to education – if not education, then educational content –  they also put the university on display to an unprecedented degree. University brass was not typically aware of these OER practices, despite its potential significance.

Soon after, MOOCs (a la Coursera and Udacity) arrived and took the potential impact of freely distributed instructional content on reputation to a whole new level, quickly establishing these online courses as a very public platform for inter-institutional competition. As anticipated, the investment in MOOCs by universities climbed quickly, some reaching the $400,000 mark – roughly 2000 percent more than your typical online course. Production value leapt; lighting and sound quality improved, and lectures were no longer freestyle.

Taking Course Design Seriously

We can interpret the rise in production value of MOOCs as a sign of what’s to come for all of online higher education, or as merely an aberration – a by-product of the one-upmanship that characterised the response by elite institutions to the onset of MOOC-mania. I would argue that it’s the former – for two reasons.

First, higher production value and, more generally, a thoughtful, deliberate, and rigorous approach to course design, remains an untapped opportunity in higher education. Most institutions continue to approach online course design as they have classroom education: the responsibility for course design and development falls largely on the shoulders of lone instructors with limited time, insufficient resources and incentives. Budgets are painfully small. Consequently, most institutions have been unable to truly leverage the possibilities of the medium. Too many courses still rely on repurposed static classroom materials and an incoherent pastiche of free content pulled from a variety of sources.

But this won’t last. Enough institutions are beginning to recognise the limitations of what now constitutes the “traditional online course” and are beginning to take course design more seriously – improved production value is part and parcel of this change. Better course designs that incorporate real-time feedback, learning analytics, instructional games and other techniques will generate better outcomes, improve retention and from a purely market perspective, enable the to create a meaningful difference in increasingly competitive, but homogeneous market of learning opportunities.

From Providing Access to Knowledge to Designing Learning

The inevitability of higher production value also stems from long-term changes in access to instructional materials.

The ability of individuals to learn when and how they want independently of educational institutions continues to grow. Resources for learning outside of universities are increasingly easy to find, curate, and of better quality. In light of this broad trend, the institution of higher education will necessarily need to place greater emphasis on its capacity to design and deliver high-quality learning experiences. The historical emphasis on serving as knowledge creators will need to be complemented by an equal commitment toward providing the highest and most productive form of learning, as well.

Changes to access to instructional experiences and materials have been migrating away from single institutions since the first printing press, of course, but the growth of the Internet has sent it into overdrive. The trend is not restricted to education. Family physicians, for instance, have had to become accustomed during the past decade to patients arriving for their appointments with medical information in-hand, detailing possible medical interventions – pulled free from the Internet. Growing consciousness of these changes is one of the factors behind the now common “is college worth it” debate currently making the rounds in North America.

Son of MOOC. Or Meets People Magazine

Masterclass is a VC-backed start-up in (surprise) San Francisco that offers short online courses on popular topics like acting, photography, and creative writing. (Apparently, there’s a shortage of qualified actors, photographers and creative writers.) Each course costs $90 USD and includes video, interactive assignments and social learning opportunities – both online and face-to-face.

While Masterclass seems far removed from the concerns of higher education, its’ similarities to MOOCs offers us a unique vantage point for thinking through changes in production value as well as how instructional resources are typically evaluated.

Production Value +

The first and most obvious similarity is the emphasis on production value, which Masterclass takes to a whole new level. The current crop of Masterclass courses are directed by professional film-makers: Jay Roach (“Austin Powers” and “Meet the Parents”) and two-time Academy Award-winning documentarian, Bill Guttentag. The course materials are predictably beautiful.

Screenshot 2015-07-29 18.11.18

Privileging the Source in Lieu of Evidence of Learning

The second and less obvious similarity is the way in which both MOOCs and Masterclass rely on the status of the source of instruction to define the perception of instructional value.

The affiliation with elite institutions is fundamental to the appeal and newsworthiness of MOOCs, as was the choice to present these courses as more or less equivalent to the “real courses” taught within the institution (minus tuition). News services and pundits took notice because MOOCs appeared to offer a desirable, expensive, and scarce resource for free – “Elite Education for the Masses“, Washington Post, 2012. Had these MOOCs come from, for example, a consortium of community colleges in South Dakota, or not been understood as consistent with the actual courses taught at these institutions, they would have generated far less attention.

Likewise, Masterclass leverages the brand names of its instructors – in this case, celebrities from the world of film, sports, and the arts. The first crop of Masterclass courses is taught by Dustin Hoffman (actor), Serena Williams (tennis pro), James Patterson (author), and Annie Liebowitz (photographer).  (While it’s highly unlikely that the celebrities had anything to do with the design of the instruction, this is how the courses are marketed.)

In both MOOCs and Masterclass, then, the value of the courses is based to a considerable degree on the source of the instruction. And in presenting themselves in this fashion, these two examples inadvertently underline the unsophisticated way in which instructional quality is commonly evaluated in and outside of higher education. MOOCs were received well because of the status of the institutions with which they were affiliated. But this status is not typically the result of instructional quality, but exclusivity (admissions and tuition levels) and the research productivity of the faculty. These institutions enrol the most academically gifted students and, as Harvard Professor Clayton Christensen has noted, his home institution spends far less on improving instruction each year than does the University of Phoenix. Similarly, the status of celebrities leading the Masterclass courses is not the result of their success as educators or coaches. They are practitioners and each one studies under leading coaches, trainers and educators.

In each of these two examples, consumers are making evaluations of instructional quality on the basis of factors only indirectly related to instructional quality. This isn’t because consumers of education are daft, rather, it’s because, in the absence of easy access to relevant information about instructional value, we tend to turn to proxies of quality to guide our decisions, what Lloyd Armstrong, Provost Emeritus at USC described as “surrogates of quality“.

Consumers need to become more adept at identifying instructional value. But this will require institutions to learn how to measure the impact of different instructional strategies on learning outcomes and to use this information to guide the development of better strategies. Yes, educational quality is harder to measure than most, but not impossible, particularly in the online environment. Intelligently designed learning analytics, for example, can now provide us with accurate and relevant information to enable better assessments of true quality in learning.


Notes on Internet Economics and Online Higher Ed

The second piece of the series, “Internet Economics” can be found here: Scale, Economies of Scale and Online Higher Education. 
The third piece of the series, “Internet Economics”, can be found here: The Network Effect and Online Higher Education. 
It’s not often you hear a reference to the “economics of the internet” at conferences held on digital teaching and learning, or at one of the workshops offered on campus about “how to teach online”. That’s a shame. Although the effects of internet economics have yet to be fully realised in higher education, there are very few factors that will have a greater impact on the institution in the coming years. Figuring out how to best navigate these influences is a core challenge of our time.
In other sectors, the internet’s impact on costs is familiar terrain. Jonathan Levin of Stanford summed up this influence succinctly:
” . . . the internet has lowered a range of economic costs: the cost of creating and distributing certain types of products and services, the cost of acquiring information about these goods, the cost of collecting and using data on consumer preferences and behaviour.” Jonathan Levin
But the influence of economics goes well beyond costs, distribution, and the processes of acquiring information. Economic factors ultimately influence what gets produced, how it’s produced, where, and by whom. Evidence of the huge impact of internet economics are clear in a handful of new, internet-native organisations:
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” Tom Goodwin. 
Few organisations seem more removed from the above examples of location-neutral, born-to-be-flipped, consumer-facing enterprises than the institution of higher education. While there are a few institutions and organizations in higher education that are clearly Internet-enabled – I’m thinking here of Minerva, WGU, and Coursera – the vast majority of institutions have had their organizational structures and practices held in place by several especially resilient forces: regulatory systems (accreditation, student loans), tradition, social conventions, and the effects of decentralized management.
But there are signs that the internet economy is beginning to more broadly infiltrate higher education. New learning providers are taking advantage of the economics of content creation and distribution to offer inexpensive alternatives to higher ed – some of these are being integrated into traditional institutions. MOOCs have provided a concrete example of what a widely distributed, rational content model might look like – providing scale on a level not seen since the heydeys of textbook publishers. Learners are gaining access to more information about institutions to help them measure the value of different institutions; and more.
It’s important we develop a more in-depth and nuanced understanding of the unique properties of internet economics. This will help us leverage its unique properties to meet our goals and, when needed, avoid its influences for the same reason.
In the next few posts, we’re going to address a series of concepts that are intertwined with the Internet economics, including:
– scale and economies of scale
– network effect
– mass customization
– freemium
– unbundling
– disintermediation
Each of these concepts was in use prior to the Internet, but the economics of the internet have made them more common and/or important. We’ll address each in terms of how they relate to aspects of higher education – starting with scale and scalability in our next post.
Keith Hampson, PhD is the founder of digital / edu / strategy, a research and consulting service that helps colleges, universities and education businesses develop better strategies for maximising value. 

Notes: The Network Effect and Online Higher Education


Most people are familiar with economies of scale, which we discussed in a recent post. The Network Effect sometimes called “Metcalfe’s Law”, is less well-known, but equally relevant if we want to understand how the unique economics of the Internet are influencing higher education.

The concept of economies of scale is concerned with the impact of increases in volume on cost – specifically, cost per unit. Network Effects, on the other hand, concerns the impact of volume on the perceived value of the good or product. When the Network Effect is present and positive, the value of the good or product increases as more people use it. Social media is the clearest example: the value of Instagram, Twitter, Facebook and other peer-to-peer technologies increases as more people participate. As participation rises, the volume of interactions, possibilities for new connections, and the range of available content increases – in turn, so does the value to each participant.

The Network Effect and Online Higher Education

At first glance, the Network Effect seems to have little relevance to higher education. The value of higher education is conventionally thought to correspond to low volume: smaller classes and more exclusive institutions, for instance. But the continued migration to Internet-based learning and services in higher education has the potential to change the dynamics between volume and value. Consider, for example, MOOCs. Critics argue that students won’t learn or persist with an educator-to-student ratio of 50,000 to one. But advocates point out that by using peer-to-peer learning in this context, we may be able to actually complement the traditional educator-student model. If properly designed, an increase in the number of students participating in the MOOC will actually increase its value to each student.

Ironically, the application of social media to higher education often fails to leverage the Network Effect, highlighting the importance of context on the value of technologies.  Social media thrives when there are thousands, if not millions, of users within a single, overarching community. The high volume of users provides online communities with enough activity and content to ensure that each user finds what and who they want with sufficient frequency to make participation worthwhile. Twitter and Linked In now have over 300 million active users. Higher education instruction, by design, typically restricts participation to a single class (e.g. 40–100 students per course). As mentioned, exclusivity and small class sizes are equated with quality.

When More is Better

Not surprisingly, the concept of Network Effects is most often associated with products and services that involve networks in which people or objects are connected in some fashion, such as telephone systems and, as mentioned, social media. But many writers expand the concept to include other types of product or services in which the value for each user increases as the number of users climbs – regardless of whether the people or objects are connected. As the number of people and organisations that use Microsoft Excel increases, for example, the application becomes more valuable for job-seekers.

Learning analytics is an example of this expanded use of the Network Effect. Learning analytics concerns the granular, real-time measurement and estimation of student learning. When guided by a deep understanding of learning theory, this use of technology generates new insights into what leads to better learning outcomes. The data our clients capture concern a single student. And this is the core of its value:  it provides the necessary insights needed for accurate customization and evidence-backed continuous improvement. But new kinds of insights can also be generated by aggregating data across a larger number of learners. By reviewing student performance data across a number of institutions we can identify patterns based, for example, on socio-economic status or high school GPA. This kind of information is an important aid to institutional strategy (e.g. recruiting tactics, financial support, student services), and better government policy and funding.


Keith Hampson, PhD is the founder of digital / edu / strategy, a research and consulting service that helps colleges, universities and education businesses develop better strategies for maximising value. 

Photograph by Samuel Zeller of a train on a snowy train

Scale, Economies of Scale and Online Higher Education


The first piece from the series, Internet Economics”, can be found here: Internet Economics and Online Higher Education. 
The third piece from the series, Internet Economics”, can be found here: The Network Effect and Online Higher Education. 


The “iron triangle” of cost, quality and access in higher education has seemed, at times, unbreakable. The sector has frequently operated under the assumption that improving one of the three objectives – access, quality or price  – is necessarily at the expense of one or both of the others. Like health care,  costs in higher education rise faster than in other industries where technology can be more easily deployed to increase productivity.

Breaking the iron triangle has become a more pressing issue for higher education’s stakeholders as student debt hits record highs, institutional costs rise faster than inflation, and access to higher education becomes a social and economic imperative for nations struggling with challenges of global competition.

“We can’t allow higher education to be a luxury in this country. It’s an economic imperative that every family in America has to to be able to afford.”

President Barack Obama, February 27, 2012.

In this context, the task of finding smart ways to “scale-up” and improve economies of scale is generating more attention. Historically, institutions of higher education have used a number of tactics to increase scale, including:

  • Large, lower-level courses that enrol hundreds of students at a time. While much maligned, the “lecture” course is very economical;
  • Greater reliance on adjunct/sessional instructors, which allows institutions to adjust supply quickly as demand rises and falls, at a far lower cost that full-time faculty;
  • Mega-universities. While not common in Western nations (save for Open University UK), these institutions, according to an analysis by Sir John Daniel, have a lower per-student cost;
  • By simply creating more universities: many Western nations funded a new crop of all-purpose universities in the mid-twentieth centuries to serve the first of the baby boomers and feed an increasingly post-industrial workforce.
  • Participation in consortia with the hope that sharing resources, rather than going it alone, reduces costs. (My own analysis of online consortia found that this objective often remains elusive.)


The impact of technology-mediated learning in higher education on costs, quality and access have been, to date, moderate. While the online format has added significant value, particularly through convenience for adult and working learners, it has not led to downward pressure on tuition or significantly increased participation rates. Certainly, online education’s scalability pales in comparison to the new breed of Internet-born companies we hear about so often these days. (Instagram was sold for 1 billion dollars when it had only 13 employees.)  For our purposes here, let’s set aside the terrifying labour implications of this particular example.

The challenge of scale in higher education is not merely technological – it’s organisational and social, as well. While achieving scale is fundamental to most enterprises, it can be deleterious in higher education. Increasing access and reducing price can actually hamper an institution’s value in the marketplace.  Value is based, in part, on maximizing exclusivity: an institution’s reputation typically increases when it admits fewer applicants than competing institutions. When we tell friends that our daughter “got into a good school” we mean, in effect, a school that is relatively difficult to get in to. The recent statements by Peter Thiel about the unique economics of higher ed, who made his fortune through highly scalable Internet-based businesses, are amusing in this context:

“[Higher education admissions is] a crazy tournament. It’s a zero-sum tournament. If you were the president of Harvard or Stanford and you wanted to get a lynch mob of students, alumni, and faculty to come after you, what you should say is something like this: We live in this much larger, more global world. We offer this great education to everybody. So we’re going to double or triple our enrollment over the next 15 to 20 years. And people would all be furious because the value of the degree comes from massive exclusion. And what you’re really running is something like a Studio 54 nightclub that’s got an incredibly long line outside and a very small number of people let inside. It’s branded as positive sum, everybody can learn, but the reality is that it is deeply zero sum.”

Photograph by Samuel Zeller of a train on a snowy train
Photograph by Samuel Zeller

The same claim can be made about price: Increasing tuition levels can increase exclusivity, which in turn, increases perceptions of value. New York University and George Washington University have used this tactic according to Daniel Luzer (see The Prestige Racket).


The good news is that educational technology has matured to the extent that it can now have a major impact on costs, access, and quality.  It scales. Some of the most promising applications of technology include:

  • Software that generates automated, real-time feedback to students on their performance. This instructional technique frequently increases student retention of the curriculum and ensures that the student doesn’t proceed to the next unit of curriculum with misconceptions about the curriculum;
  • Sharing common instructional content across as many courses and programs as is suitable in order to ensure (a) the lowest possible cost per student and (b) access to the highest possible quality (at a given price);
  • Adaptive, personalised learning that identifies and responds to student differences – an instructional tactic that’s not feasible in most mid to large size courses due to the demands it places on instructional staff;
  • Course authoring applications with instructional intelligence embedded within the software. LMS typically don’t seek to guide instructors/authors toward best (better practices). But new, more sophisticated applications have been developed that make it possible to generate learning activities that are beyond the capacity of what most instructors can achieve independently. (In this respect, educational technology will become more similar to other, time and labour saving technologies, such as desktop accounting software that, for example, directs the user toward adhering to accounting standards and rules, or blogging software like WordPress that makes it possible for content creators with stunted design sensibilities to create beautiful, easy-to-navigate sites.)

Most importantly, each of these applications of technology captures what educators have told us is valuable to students. The technology isn’t dictating the instructional method; rather, it reflects our best thinking and practices while allowing us to scale education, one of our most important and precious resources.


The first piece from the series, Internet Economics”, can be found here: Internet Economics and Online Higher Education. 
The third piece from the series, Internet Economics”, can be found here: The Network Effect and Online Higher Education. 
Keith Hampson, PhD is the founder of digital / edu / strategy, a research and consulting service that helps colleges, universities and education businesses develop better strategies for maximizing value. 

Higher Education is Not a Newspaper (Except when it is)

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.

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. Essentially, though, it refers to the practice of marketing goods and services separately rather than as part of a package. A university degree, for example, can be understood as a bundle of courses. A music album is a bundle of songs; iTunes makes it easy to unbundle albums. Traditionally, institutions have required students commit to the degree/bundle. Public (state/provincial) funds are geared to serve these bundled programs. Unbundling in higher education would allow students to create a personalized compilation of courses from a variety of providers, in the same way that music fans create their own “playlists”.


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., and while revenue from streaming services (e.g. Spotify) is increasing quickly, its yet to make a sufficient dent in earnings.

(insert graph of music industry earnings)


For its part, news has seen its revenues drop during the past decade and a half.

Screenshot 2015-06-01 16.54.01


Screenshot 2015-06-01 22.06.56


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. The quality may be lower, in the case of news sources, but rarely. 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.

There is, however, a very strong parallel between higher education and news that, to my knowledge, has been totally ignored. I think it can help us understand how the Internet will impact higher education in the short-term, say the next five to ten years. We’ll examine this in our next post – coming June 9.