American Colleges' Tenuous Business Model

Matthew Yglesias:

Kevin Carey's Washington Monthly feature on online higher education startups is a great read, but, fortunately for those of us looking to add value with a blog post, I think he buries the lead. The key thing you have to understand about the threat that Massive Open Online Courses pose to the business model of traditional colleges is that traditional colleges have a business model. It's a bit of a strange business model because the colleges aren't organized as businesses, but it's a business model all the same.

The way it works is that you charge the same price for all the courses. When I took Patrice Higonnet's five-person seminar on Vichy France, I didn't need to pay a premium tuition over what I paid to take his 150-person lecture survey course on the French Revolution. Part of the way the college works is that the large courses generate profits that subsidize other activities, including the small seminars. The seminars themselves happen in part because some of the faculty wants to do them, and in part as an investment in the value of the brand. But while it would be very difficult to replicate the value of the small Vichy seminar, it's pretty easy to imagine a French Revolution MOOC that's both higher quality than your average French Revolution lecture-format survey course and radically cheaper:

Posted by Jim Zellmer at August 29, 2012 1:36 AM
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