From Albums to Singles: A Higher Education Analogy?

by Reihan Salam

Back in February, Gabriel Rossman referenced Barry Kernfeld’s Pop Song Piracy in this space:

As Kernfeld notes in Pop Music Piracy, this is a very old pattern. Basically, producers create some kind of format at a high price point and consumers buy it until a pirate comes along and both undercuts them on price and introduces format innovations. At this point the incumbents try for awhile to suppress it, before giving up by adopting the pirate’s format innovations and dropping their price point. That is, the incumbents ultimately realize that the only way to deal with piracy is a “convenient format at a reasonable price.” Kernfeld emphasizes mid-20th century pirated songbooks as competition for legitimate individual pieces of sheet music but he also applies it to the more familiar case that the music industry only gave in to low price (and eventually DRM free) digital singles to replace high price CDs as a desperate rearguard action against music file-sharing.

Recorded music revenues have dropped precipitously since the late 1990s but only a minority of this was the direct result of sales substituted by piracy. Rather the great bulk of the drop was from the shift from CD albums at a price point of $15 to digital singles at a price point of $1. We have in fact seen a large increase in units shipped, but mostly in digital singles at the low price point. You can see this clearly by looking at Census Statistical Abstract table 1140 and contrasting the unit sales in the top half with the dollar value in the bottom half. To fully make up retail sales we would’ve needed a 15-fold increase in volume and this has not happened. Even if we appreciate that digital implies lower costs (no inventory) and think about wholesale rather than retail, we’d still need something like a 5-fold increase in sales to make up for lower revenues. [Emphasis added]

Can we imagine something similar happening to education, if we understood the traditional degree as an album — that is, a bundle of the content we want (the courses that contribute most directly to our objectives) and content that we don’t want, or don’t want as much?

David Blake, founder of Degreed, argued that this will happen, and indeed that his start-up will lead the way. 

Clayton Christensen predicts, “I bet what happens as [higher education] becomes more modular is that accreditation occurs at the level of the course, not the university; so they can then offer degrees as collection of the best courses taught in the world. A barrier that historically kept people out of university [is] blown away by the modularization and the change in [course-by-course] accreditation.” …

Why buy a whole album when I only value a few songs enough to purchase? Why am I required to finance an entire degree only to be forced to take courses that I do not value? By bundling education into its most popular format, the four-year degree, we are inevitably adding low-utility courses that the consumer should be enabled to avoid.

Seth Godin writes, “Transparency in… school might destroy it. If we told the truth about the irrelevance of various courses, about the relative quality of some teachers, about the power of choice… could the school as we know it survive?”

To be explicit, in seeking to evolve beyond the four-year degree we need not be anti-college. iTunes didn’t render the musician irrelevant just the album. But just as Napster, YouTube, iTunes and Spotify evolved the paths, careers, and distribution of musicians and their music, the role that the university plays will evolve dramatically.

For obvious reasons, Blake isn’t being explicit enough: yes, we needn’t be anti-college as such. But we will be undermining the privileged position of incumbent institutions, just as the rise of the digital single undermined the privileged position of incumbent recording companies. So it is hardly surprising that incumbents will resist these trends, and that they will rally their allies to the extent possible. 

Kevin Carey, who I’m happy to see was cited (indirectly) in Blake’s essay, is one of the most important chroniclers and drivers of the effort to disrupt credentialing. In a March TNR essay, he wrote the following:

College credentials are a fantastic product to be selling in the twenty-first century. They’re pure intellectual property with a very low marginal cost of production and becoming more valuable all the time, as the economy continually reorganizes itself in a way that values the possession of deep knowledge and complex cognitive skills. They are universally recognized and never expire, golden keys to the parts of the labor market most worth entering.

Traditional colleges and universities exploit their monopoly over this market by overcharging students in order to generate revenue to support things that are important to them. Those things include producing academic scholarship, fielding cash-hemorrhaging professional sports teams, engaging in positional status competition with rival colleges, and avoiding the difficult work of overhauling inefficient administrative and organizational structures in which too many people get paid too much money. Online for-profit colleges haven’t disrupted the industry because while their business methods are different, their product—traditional credentials in the form of a degree—is not.

That’s why the recent emergence of new credentials is so significant. Companies like Udacity and Straighterline can operate without government subsidies and regulatory protections because their method of service delivery is phenomenally cheap at scale. The cost of serving 200 students isn’t that much less than serving 200,000. The predominant higher education business model of the future may be one where the education itself costs students nothing—the availability of free open educational resources is constantly growing—and students only pay small fees to cover the cost of assessing their learning.

The number of organizations offering outside-the-system credentials will only grow.

The higher education industry is responding very much as the recording companies did, yet it is arguably more politically powerful and entrenched. It’s influence derives from much more than campaign contributions, and it’s cultural capital is more potent, or at least more pervasive, than that of the entertainment industry in the corridors of power.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.