Kevin Guthrie’s column in the new edition of Educause Review summarizes a number of findings from the Ithaka S+R report “Barriers to Adoption of Online Learning Systems in U.S. Higher Education.” He writes, “Digital and network technologies are commoditizing some basic aspects of teaching while they are simultaneously unbundling various aspects of a faculty member’s role.” It strikes me that the underlying drivers here have important implications for institutions as well as for faculty. This “commoditizing” and “unbundling” could play out in number of ways, both within individual universities and colleges and at the system level.

As a thought experiment, I’d like to set out one possible scenario, a version of which we have seen play out in many other industries as a result of web-based information technologies.

What if…

  • The provision of large introductory courses (Calculus 101, Macroeconomics 101, Biology 101, etc.) becomes increasingly competitive. Already, many for-profit and nonprofit ventures are investing in online versions of these courses because of the relatively large market size and potential for economies of scale. This includes online courses provided by traditional institutions through what are now frequently called “distance learning” programs (but which in the future will likely become standard options for all students). We hear of a surge in requests for state regulatory approval for online courses provided by out-of-state public universities. Institutions that historically were near-monopolies in their geographic regions will find themselves in direct competition with peer institutions from other states, as well as with for-profits.
  • Students start to shop around–beyond the walls of their own campuses–for options that fit their needs. Again, we are already seeing evidence of this kind of “consumer” behavior, for example growing transfer rates as increasing numbers of students–including those from higher income families–start out in community colleges and transfer after two years. (Already roughly one third of undergraduate students transfer at some point in their college careers.) In this scenario, traditional undergraduate students will balk at paying current tuition levels for introductory courses. A growing share of students will recognize that they can get comparable instruction (or at least course credits) for considerably less cost, and will choose from a variety of online and face-to-face options to obtain these credits.
  • A robust market emerges for introductory courses, as universities and colleges are increasingly compelled to accept transfer credits from other sources. Universities respond to pressure to accept credits from different sources, in a somewhat similar vein as other enterprises that have opened their platforms to content or services from multiple providers, including those provided for free. In this new market, students can pay premium prices for a differentiated experience (e.g., more human interaction, whether face-to-face or online, and access to senior faculty) or pay lower prices for a basic service that delivers the necessary credits towards a degree. The profit margins for most providers of these introductory courses will erode under such competitive conditions as tuition fees approach marginal cost – benefitting large providers with economies of scale.

What would this scenario mean for traditional universities and colleges? Many depend on the surplus profits from introductory courses to cross-subsidize specialized high level courses and/or faculty research. But the scenario I have described would unbundle the provision of these courses from other services provided by universities and colleges, and weaken one of the many complex economic webs that bind these institutions together.

It is not clear how they might respond to such pressures: perhaps through variable tuition rates for different types of courses, or by seeking new ways to differentiate first year instruction. One point is clear: If such a scenario does unfold, colleges and universities will need to rethink the business models that have supported some disciplinary departments for generations.

Thoughts and comments are welcome!