Are $50k Degrees Finished? Opinion
Author: Martin Betts | As seen in Campus Review
Right now, public policy and university innovation appear focused on micro-credentials.
Micro-credentials bring an ability to deliver smaller collections of rapidly changing and emerging new knowledge to a growing learning community, whose commitment to formal qualifications, as a sole education goal, is in decline.
The postgraduate, lifelong learning and professional development world, in particular, sees less value in inflexible, packaged, long university degree programs. It is a market that prefers flexible, mobile, digitally delivered, globally sourced content to build skills.
This is where the strategic dynamic of sector disruption and transformation, is currently playing out. This is where Google and Microsoft are offering learning services. They do so as global technology companies, with a scale that could outmuscle any global university, any time they choose.
This is where LinkedIn and Seek are exploring new service offerings to exploit global networks of professionals and those looking for work. And this is where EdTech start-ups challenge slow and inflexible current providers. These new entrants are moving fast to assemble content. They are doing this without the legacies of infrastructure, staffing profiles, and culture, that make current universities so difficult to manoeuvre.
And they don’t have cost structures based upon revenue models based on $50k degrees.
This was very much the theme in last week’s HEDx podcast interview with Chris Eigeland, the Chief Revenue officer of GO1. At the age of 30, he and his colleagues gained $40m of investor funding from Microsoft, Salesforce and others. In three years, they assembled the largest curated eLearning library in the world, as content for a global B2B lifelong learning platform.
Chris is driven by a purpose of democratising access to education for all. As a former student member of an Australian university council, he sees this as an opportunity that universities are slow to take advantage of. His view is that the days of $50k degrees are over.
When Joe Hockey launched the 2014 budget, and education minister Christopher Pyne proposed a radical change in funding arrangements for Australian higher education, the scare campaign was “beware of $100k degrees”. The proposals were supported by leaders in the sector. The legislation failed through a lack of support from the cross-benchers. The impact this would have had on university finances, and access to education for all, soon dissipated.
It was a time of real dilemma for leaders, almost all of whom personally commit to equitable educational access. But when you lead a $1bn-plus enterprise, and funds still largely come through either the public purse, or fees directly influenced by public policy, your responsibility to governing bodies, staff and your strategic aspirations make it difficult to look a gift horse in the mouth. Six years later and the days of $100k degrees are gone. But is there now a new dilemma facing university leaders, in holding on to the $50k degrees they now have?
Retaining comfortable subscription prices, and losing guaranteed revenue by giving away content were dominant issues when Disney Plus launched in 2019. Disney sought to rapidly gain market share in the fast-growing entertainment streaming world. Their strategy was to rapidly gain market share from dominant players of the time, particularly Netflix.
They discounted ticket prices for new movie releases, in cinemas and on iTunes, in a short-term loss-making move. They also withdrew content from Netflix, losing revenue of $300m per annum. By doing so, and assembling content libraries for the future, they were positioning themselves for increased market share of streaming services, and the potential to upsell future film releases. They deliberately incurred short-term losses to raise long-term demand for other products, that an increased subscriber market share, and a larger content library, left them advantageously placed for.
Every university in the world is unavoidably taking a significant revenue hit right now. Short-term losses might be unavoidable. There are two ways of responding for the long-term. One is tightening belts, scaling back capital plans and staffing levels, reducing product and service breadth in teaching and research, and hoping the good times of $50k degrees will come back and endure. And pushing all 40:40:20 academics to do more with less. This appears to be the dominant route, with added ingredients of increased community and industry engagement here, and a sprinkling of digital and blended learning innovation there.
But what of another way? What about doing a Disney Plus in higher education? Revenue is being hit anyway. So why not take this as the time to completely revamp the business model? A university could divest of campuses and other teaching infrastructure. It could be a first mover in abandoning a dying $50k ticket price model, and the cost structures that go with it, before everyone else is forced to. This could be a long-term strategy, with a planned migration route, to cushion impacts, and manage transitions.
It could rebuild and reskill the university, to build a subscription-based, micro-credential focused operating model for its teaching programs, and a route to upselling high-value research. It could assemble world-class content, and develop an outstanding customer interface and student experience to stand out from the pack. And it could transition to a specialised asset portfolio and staff complement, in research and learning, with facilities, skills and aspirations to suit.
What happens if Harvard or Stanford or Cambridge or Melbourne do that with their own Disney-like brand reputation? And if they don’t, does it leave the way open for a Swinburne or CalPoly or TU Delft to do it instead? But not for markets in Melbourne, Northern California or the Netherlands. But for a global market.
And if none of them are going to attempt it, will a global tech giant or a start-up just step in? They might do so anyway. I am enjoying exploring many of these ideas in a forthcoming book on the new learning economy being written with Michael Rosemann of QUT. And I am pleased to be offering advisory services on these dilemmas and transitions through HEDx.