KookyPlan

(How Technology will shape the future of higher education)

The education marketplace may radically change over the next 5-10 years.  With falling costs of producing and delivering digital content, the education market could face radical disruption to the traditional business model.  Think about the following…

1. Falling cost to create content
   • any professor with a video camera can upload his / her lesson to Youtube (or similar sites).  With the drastic fall in cost to create content online, professors all over the globe are uploading lesson plans online for free viewing. (see my list of online distribution sites here)
   • economics of “scarcity” no longer applies to basic undergrad content in courses such as economics, marketing, finance, etc.
2. Falling Distribution cost
   • internet communication technology drives the cost of distribution of content to free
   • monopoly of “physical space” no longer applies since the number of “seats” at the lecture is now infinite.
3. Lessons from history:
   • every industry that faced both falling production & falling distribution costs….underwent fundamental radical change (disruptive).  In no industry that faced both of these factors did the landscape turn out the same as it began…
   • Parallels with other industries - newspaper, music, computer (Dell)
   • the education industry will soon face major disruption to their business model…much as other industries have in the face of falling costs of creation & distribution of content.  Think about the transformation we have witnessed in:
     • music industry:  record labels lost the monopoly of creation & distribution when costs fell and the internet grew
     • reporting / journalism industry: the newspaper lost its monopoly over creation & distribution when costs fell.
     • computer distribution: companies such as HP were challenged by Dell who dis intermediated the wholesaler, and went direct from manufacturer to customer…using the tools of communication to reach people directly.
4. Credit Crisis - driving force for innovations (as students save)
   • with student loan industry in free-fall, and with unemployment rising…parents of students may question spending $40,000+ for a four year degree.
   • the economic crisis may be just the factor that spurs potential students to seek cheaper alternatives
5. Potential “Dis-intermediation” of universities in the education supply chain
   • If content is free, and distribution is free, why congregate in physical space?
   • In the education of supply chain, we could see a radical transformation whereby the universities monopoly of physical space will give way to a direct model of education between teachers and students
   • Will this happen?  Maybe…because there has yet been no industry that has NOT radically changed in the face of dramatically falling costs of production & distribution of content.
6. Teacher to student
   • teachers role can not be disintermediated!
7. Examples of innovative education - Thunderbird’s Global MBA by satellite
8. Opportunities in Emerging markets
   • if the cost of producing content is falling, and the cost of distributing content is falling, then the potential of selling education could also be set to fall substantially.  If this were to happen, then the cost of selling education to countries like Brazil could fall significantly.  This could lead to much higher demand, and much greater education.
9. Teacher as “destination”: travel learning market
10. Book reader: falling cost of textbooks in digital format (Amazon Kindle)
11. Role of Universities as “gathering places” - research, equipment, presentations.

Add your comments here, or in our wiki:  http://kookyplan.pbwiki.com/Education-business-models

Brian D. Butler Innovation, idea for others, internet dis intermediation, education, Innovation, learn, MBA, teach, technology, trend