Online education and the economics of the web

Recently, we’ve been grappling with the problem of how to keep bums-on-seats long enough to recoup the investment made in getting them there in the first place.  As far as we can tell, from all the literature (example of which is here) we’re doing all the right things.

– we try to build community within the classroom

– we return feedback extremely quickly

– grades are posted within a wekk

– student questions are responded to within a day.

And yet, the attrition rate remains high. Typically, an online class (at any institution) can see a rate anywhere from 10-50%.

Then there is also the human cost imposed on faculty of this ‘always-on’ mentality. Losing faculty, training new ones, identifying existing training that need refreshers… nothing is sadder than seeing great faculty get burned out by the demands of online education – dealing with the sheer mass of students who are not prepared (in one way or another) to deal with what a university education actually means (especially at schools that accept all comers). A report on these costs is here.

Which got me to thinking about the economics of working on the web, and an article by Chris Anderson in Wired some time ago:

[…]until recently, practically everything “free” was really just the result of what economists would call a cross-subsidy: You’d get one thing free if you bought another, or you’d get a product free only if you paid for a service. Over the past decade, however, a different sort of free has emerged. The new model is based not on cross-subsidies — the shifting of costs from one product to another — but on the fact that the cost of products themselves is falling fast. It’s as if the price of steel had dropped so close to zero that King Gillette could give away both razor and blade, and make his money on something else entirely.


The rise of “freeconomics” is being driven by the underlying technologies that power the Web. Just as Moore’s law dictates that a unit of processing power halves in price every 18 months, the price of bandwidth and storage is dropping even faster. Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero.

Maybe, we’re doing it all wrong in online education. Maybe the key to keeping bums-on-seats, and students perservering until they succeed, is to give it away. What after all are we selling? A reputable online school is selling accessibility and the guarantee that its courses have reputation – they are taught by reputable instructors (“now with even more PhDs!”) and that the credits awarded will be recognized towards a degree, or by another institution.

So maybe we need to redesign all of our courses to take advantage of the best wisdom-of-crowds phenomena.  Keep the instructors, but redefine their role. Look at the best academic blogs. Those writers are certainly instructing; look at the best games forums (like – look how authority, feedback, and peer evaluation naturally emerge. But where will we make the money? Where will we generate income to pay for all this? Perhaps by selling the right to be formally evaluated: when you’re ready, you pay to take the exam. You pay for the right to fail: you’re not buying the result, just the kick at the can.

Maybe we only do this for the first few introductory courses. The students learn, without financial penalty, what it takes to be a university student; the instructors teach without the added pressure of keeping bums on seats; we get more potential learners; and when they’re ready, they take the plunge by paying to be formally examined.

Open course ware continues to grow, and interesting experiments are beginning to emerge. We need to rethink what it is we’re doing with online/distance education, to fit the realities & potential of the medium.

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