Michael Poliakoff of Forbes wants universities to cut “the fluff” like excessive gened offerings, “to stare down intransigent faculty and the empire builders in student services,” and to “cut massive athletic subsidies, halt the facilities arms race, close centers that are not directly related to the teaching and research mission of the academy, and take a chainsaw to bureaucratic bloat.” He may be right in the short run, although his own job as a VP for University of Colorado system was eliminated, and he does not have a track record of doing any of these things. However, Poliakoff and other corporate would-be reformers of higher ed do not seem to be aware of such a fundamental fact of the higher education economy as the Baumol effect. Baumol predicted the ever-rising costs in 1960s, and to my knowledge, no one since has seriously disputed his account. Universities cannot get significantly more efficient without diluting the value of what they actually sell: quality experience and human relationships. Kids flock to campuses not for information (there is plenty of it for free), but to experience college, to get to know peers and professors, to fall in love, to get interested in something, to build their life stories. The generic advice to become more efficient applies to higher ed only to a degree. In the longer run, universities have to diversify and increase their revenue streams. The way out of the crisis is not in shrinking, but in expanding, so that there is enough additional revenue to subsidize the core mission.
To compete with each other, colleges may work on providing more distinct experiences to students, alumni and parents. That depends on understanding of uniqueness of each campus. However, to survive as an industry, it needs to expand, which means either providing existing services to more people, or providing other services.
Among other things, universities are not very good at expanding into adjacent markets. The classic example of such an expansion is Netflix that moved from DVD rentals to streaming, and then to original content production. Universities do sell some merchandize, offer some entertainment through athletics (while only few actually make any money on it), rent event space, and do some consulting. They feed and house their own students at a modest profit, but rarely anyone else. In other words, they do very little.
One obvious adjacent industry to expand to is tourism. A college town vacation is already a thing, only universities capture very little of income from them. Why not sell packages with on-campus dining, student performance and visual art productions, engineering school demos а cool gadgets. If a campus happens to be located in a history or natural beauty-rich towns, these are also assets that could be added to the value of the package. Many people, including alums just want to visit campus, remember their college years, and are willing to pay. Parents may enjoy visiting their kid’s campus without being annoying, on their own vacation trip. Check on the kid, enjoy a lecture, go to restaurant, buy some swag.
The other adjacent industry to penetrate is video. There have been attempts to turn a real class into a reality TV show. The College Hill TV Series has been a hit on BET network. Those are perhaps more resource-intensive value products. However, think about it this way – every day in every class, some more or less interesting but always original original content is produced —and immediately forgotten. Lectures, questions and answers, exercises, demonstrations, games, exercises, etc. – all of it has both educational and entertainment value. It may not be very high value to the outsiders, but it is produced anyway and so cheap to capture. Only recently has it become feasible to capture classes without major expense, and distribute efficiently throughout the world. Iа you teach a class of 30, there may be another 30 students anywhere in the world who learn vicariously, either synchronously, or with a short delay (see on split classroom model). Of course, it takes a little more effort and content providers should be compensated and their privacy protected. However, the cloud cohorts can generate additional tuition dollars without major investments. Others can watch it for no credit, as entertainment. You would be surprised what people watch on YouTube. If your potential audience is 2 billion, there is a hundred people for almost anything.
Universities are trusted brands, but they stop selling anything to their alums right after graduation. One notable exception is college-branded credit cards (and I don’t believe they have been a hit). Universities are pretty good at soliciting donations, but are terrible at their student and alumni connections to offer products and services: mortgages, insurance, further education, professional development, networking, consulting services, etc. While academic records are off limits because of the FERPA, colleges enter into many other kinds of relationships with their students and alums, and have a lot of data.
There may be other adjacent industries to invade, and many have been happening, just not very vigorously: K-12 education, staffing, corporate training, hospitality, leisure, IT, media. Of course, it is very tempting to focus on our core mission, teach and do research, serve the public good, and hope that revenues will come. Well, if you have been in this game for a while, you must be tired of waiting. It is not happening. We must maintain our critical public mission, but also learn to subsidize it, because the public won’t. If you are a great film director, your money actually come mostly from overpriced popcorn and soda sales. (Well, not anymore, it is the streaming services, but you get the point, right?) Does popcorn cheapen the quality of your art? I don’t think so; it makes your art possible to practice.
To compete with each other, colleges may work on providing more distinct experiences to students, alumni and parents. That depends on understanding of uniqueness of each campus. However, to survive as an industry, it needs to expand, which means either providing existing services to more people, or providing other services.
Among other things, universities are not very good at expanding into adjacent markets. The classic example of such an expansion is Netflix that moved from DVD rentals to streaming, and then to original content production. Universities do sell some merchandize, offer some entertainment through athletics (while only few actually make any money on it), rent event space, and do some consulting. They feed and house their own students at a modest profit, but rarely anyone else. In other words, they do very little.
One obvious adjacent industry to expand to is tourism. A college town vacation is already a thing, only universities capture very little of income from them. Why not sell packages with on-campus dining, student performance and visual art productions, engineering school demos а cool gadgets. If a campus happens to be located in a history or natural beauty-rich towns, these are also assets that could be added to the value of the package. Many people, including alums just want to visit campus, remember their college years, and are willing to pay. Parents may enjoy visiting their kid’s campus without being annoying, on their own vacation trip. Check on the kid, enjoy a lecture, go to restaurant, buy some swag.
The other adjacent industry to penetrate is video. There have been attempts to turn a real class into a reality TV show. The College Hill TV Series has been a hit on BET network. Those are perhaps more resource-intensive value products. However, think about it this way – every day in every class, some more or less interesting but always original original content is produced —and immediately forgotten. Lectures, questions and answers, exercises, demonstrations, games, exercises, etc. – all of it has both educational and entertainment value. It may not be very high value to the outsiders, but it is produced anyway and so cheap to capture. Only recently has it become feasible to capture classes without major expense, and distribute efficiently throughout the world. Iа you teach a class of 30, there may be another 30 students anywhere in the world who learn vicariously, either synchronously, or with a short delay (see on split classroom model). Of course, it takes a little more effort and content providers should be compensated and their privacy protected. However, the cloud cohorts can generate additional tuition dollars without major investments. Others can watch it for no credit, as entertainment. You would be surprised what people watch on YouTube. If your potential audience is 2 billion, there is a hundred people for almost anything.
Universities are trusted brands, but they stop selling anything to their alums right after graduation. One notable exception is college-branded credit cards (and I don’t believe they have been a hit). Universities are pretty good at soliciting donations, but are terrible at their student and alumni connections to offer products and services: mortgages, insurance, further education, professional development, networking, consulting services, etc. While academic records are off limits because of the FERPA, colleges enter into many other kinds of relationships with their students and alums, and have a lot of data.
There may be other adjacent industries to invade, and many have been happening, just not very vigorously: K-12 education, staffing, corporate training, hospitality, leisure, IT, media. Of course, it is very tempting to focus on our core mission, teach and do research, serve the public good, and hope that revenues will come. Well, if you have been in this game for a while, you must be tired of waiting. It is not happening. We must maintain our critical public mission, but also learn to subsidize it, because the public won’t. If you are a great film director, your money actually come mostly from overpriced popcorn and soda sales. (Well, not anymore, it is the streaming services, but you get the point, right?) Does popcorn cheapen the quality of your art? I don’t think so; it makes your art possible to practice.
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