Newspapers were struck a death blow by Craigslist - We all know that story. But what was it like when Craisglist just got started and we did not know that was going to happen? What will it be like when a new "Craigslist" enters a new sector with all the potential to disrupt?
Well today I read 4 articles that lead me to believe that Universities - as we know them - are DEAD! The Death Star has arrived and in the end - there can be no defence.
Article 1 - The NYT - 25% of kids are unemployed - this includes most graduates who also have large student loans. If they get jobs it is in the McJob world. It will take years for this to change - see my post below - meanwhile the debt has to be paid and the summer jobs are not there. But if you don't have a degree - there is no employment that will pay enough to raise a middle class family - so there is a paradox
Article 2 - Why University costs are so high and so impossible to cut - basically the President has no power over the faculty - like the print union at the paper - the faculty have a lock on how work is done and how they are paid and will not give this up.
Article 3 (Via John Robb) A story on a new way of getting a degree on your own at your own pace for $99 a course at Straightline. A real degree using all the same material with better access to teaching - all at your onw pace and time - all at home.
Article 4 the link (John Robb) to Straighterline - a very neat idea
Here why I say DEATH. If universities cannot change their costs. If unemployment for the young lasts a decade and the only way of paying is debt - then the "smart" kids and parents will find "smart" alternatives. Straighterline is maybe the Craigslist challenge.
It's all about the economics - isn't it?
What do you think? More after the Jump from the article by Kevin Carey
What happens when the number of students making that choice reaches a critical mass?
Consider the fateof the newspaper industry over the last five years. Like universities, newspapers relied on financial cross-subsidization to stay afloat, using fat profits from local advertising and classifieds to prop up money-losing news bureaus. This worked perfectly well until two things happened: the Internet made opinion and news content from around the world available for nothing, and the free online classified clearinghouse Craigslist obliterated newspapers’ bedrock revenue source, the want ads. Suddenly, people didn’t need to buy a newspaper to read news, and the papers’ ability to subsidize expensive reporting with ad revenue was crippled. The result: plummeting newspaper profits leading to a tidal wave of layoffs and bankruptcies, and the shuttering of bureaus in Washington and abroad.
Like Craigslist, StraighterLine threatens the most profitable piece of a conglomerate business: freshman lectures, higher education’s equivalent of the classified section. If enough students defect to companies like StraighterLine, the higher education industry faces the unbundling of the business model on which the current system is built. The consequences will be profound.
Ivy League and other elite institutions will be relatively unaffected, because they’re selling a product that’s always scarce and never cheap: prestige. Small liberal arts colleges will also endure, because the traditional model—teachers and students learning together in a four-year idyll—is still the best, and some people will always be willing and able to pay for it.
But that terrifically expensive model is not what most of today’s college students are getting. Instead, they tend to enroll in relatively anonymous two- or four-year public institutions and major in a job-oriented field like business, teaching, nursing, or engineering. They all take the same introductory courses: statistics, accounting, Econ 101. Teaching in those courses is often poor—adjunct-staffed lecture halls can be educational dead zones—but until recently students didn’t have any other choice. Regional public universities and nonelite private colleges are most at risk from the likes of StraighterLine. They could go the way of the local newspaper, fatally shackled to geography, conglomeration, and an expensive labor structure, too dependent on revenues that vanish and never return.
By itself, the loss of profitable freshman courses would be devastating. And in the long run, Web-based higher education may not stop there. Companies like StraighterLine have the hallmarks of what Harvard Business School Professor Clayton Christensen and entrepreneur Michael Horn describe as “disruptive innovation.” Such services tend to start small and cheap, targeting a sector of the market that established players don’t care much about—like tutoring in introductory courses. “This allows them to take root in simple undemanding applications,” Christensen and Horn write. “Little by little, the disruption predictably improves… And at some point, disruptive innovations become good enough to handle more complicated problems and take over, and the once-leading companies with old-line products go out of business.”
