Monday, 3 September 2012

Online courses: It’s not about value, it’s about revenue

Thanks to Valerie Summer for pointing me to this article! I found the argument insightful. Blogs didn't reduce the value of journalism — they eliminated the revenue streams (which is part of what John Mitchell and Dave Patterson were saying). People still value professional journalism more than citizen journalists, but it’s not still not clear how to pay for it. In higher education, we have a revenue stream problem. Online education doesn't fix that.

Let’s take the newspapers as an example. Blogs haven’t undermined the newspapers. Anytime.com and CNN.com get more traffic than any single blog. More people are reading the Times than ever before, in fact. Direct competition from citizen journalists hasn’t been a problem for the news industry. It turns out that most of us prefer our news from journalists. Newspapers don’t have a readership problem, they have a revenue problem. The plague on the newspaper business has come from Craigslist and Google Ad Words. Craigslist fundamentally changed the classified advertising business, while Google revolutionized the rest of the advertising market. And once revenues collapsed, news conglomerates could no longer pay off the debts they accrued through a decade of leveraged buyouts and consolidations. Hence, we’re left with newspaper disruption. The same is true with books and even (as my own research shows) with political advocacy organizations. It isn’t direct competition that undermines market leaders. It’s the decline of revenue streams, making it impossible to pay for your old infrastructure.

Revenue problems for public universities are not originating in competition from online learning programs. They’re coming through systematic defending by state legislatures. Higher education in America faces its share of problems, to be sure. Tuition soars and students are racking up mountains of debt. But the underlying revenue model faces no direct threat. A modern-day Good Will Hunting might gain his education through MIT’s online lectures rather than a Boston public library card, but the great mass of privileged 18-year-olds will keep heading off to college. Neither the University of Phoenix nor MIT’s online courses offer a replacement for the college experience that students are currently paying for. And competition does not equal disruption.

Deepa Singh
Business Developer
Email Id:-deepa.singh@soarlogic.com
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