This is now the sixth post in my extended reflection on how the free economy poses important challenges for American higher education. Thus far I’ve written a lot about the academic aspects of what free means for those of us in post-secondary education, so today I want to turn to the economic aspects of the argument.
How could it possibly work for an institution like George Mason University–a mass market university with almost no endowment–to give away as much as one-third of its undergraduate degree for free?
In his article (that is the precursor to a book), Chris Anderson of Wired offers a “taxonomy of free” that higher education needs to take very seriously. Among the examples he cites are: “freemium” where users of the basic version of a website or service get it free, but for a fee they get access to premium services; the advertising model where websites carry advertising, whether banners or Google search links; cross-subsidies, where the free stuff entices you to buy more expensive stuff; the zero marginal cost model, where inexpensively stored and delivered items (think music files) are given away as a vehicle for marketing other goods and services (like concerts in the case of music); labor exchange, where the web user does something online in order to help a company build something else entirely (directory assistance queries helping to build databases of consumer information); and the gift economy where web users share things with one another for free without any expectation of compensation (think Wikipedia).
Of these, the “freemium”, cross-subsidy, and zero marginal cost models seem the most relevant to higher education. In the scenario that I’ve laid out in previous postings on this topic, here is how I see these models working:
Freemium: A student enrolls, paying a one time enrollment fee to cover the cost of admitting, setting up an account in the registrar’s office, obtaining a campus email account and web access, etc. This fee would be pretty low relative to current educational costs–say $500. Then our student has the right to test out of as much of the general education curriculum (up to the maximum 40 credits) as he wishes. The university provides access to lots of free educational content (lectures, learning modules, podcasts, etc.) to help the student prepare for these exams. If, however, the student needs “live help” that’s not free. So, for instance, an appointment with the writing center costs $20, or an hour with a math tutor costs $50, and so on. Anderson cites Flickr.com as the best example of how the freemium model works, and since more than 2 billion photographs have been uploaded to Flickr since the site went live, I’d say their model seems to work fairly well.
One could argue that the way I’ve just laid out the freemium model will advantage students with more money–they’ll be able to pay for the premium services, while less prosperous students won’t. This assumes that financial aid is not available in such a model–and I think it would be–and it assumes that there are only a limited number of opportunities to test out of portions of the general education curriculum. With financial aid and with multiple opportunities to pass a qualifying exam, less prosperous students would have plenty of access to the upper levels of the university curriculum (which wouldn’t be free).
Cross-Subsidy: The cross-subsidy model is really essential to what I’m thinking about here. Being able to obtain one-third of your college degree for free seems like a real enticement to enroll at a mass market university like GMU. Students who take advantage of our free general education curriculum are, I submit, highly likely to stay with us for the last two-thirds of their degree. Thus, recruitment and retention costs, both of which are significant portions of our administrative overhead, go down.
Zero Marginal Cost: Delivery of learning content online (especially when a lot of that content has been aggregated from elsewhere) has a very low (but not zero) marginal cost for universities. Our bandwidth costs are low relative to the market and we’ve already built out pretty robust networks. Giving students access to this learning content for free just doesn’t cost us all that much. And where we do incur costs, that’s where the premium service model and cross-subsidy models kick in.
Why no advertising? I’m not opposed to the idea that my university will advertise on its websites–we already do, especially for events on campus that cost money to attend. For me it’s a purely aesthetic objection–I hate coming to websites with advertising. If we could do something much less intrusive (think the ads on Facebook), I’d be okay with that. But banner advertising (think Yahoo!) would just bother me too much. But that’s just me.
This post brings me to the end of what I wanted to say (for now) about the importance of the emerging free economy for higher education. I’d really like to hear from you on this. Am I crazy? Will this never work? Am I on to something here?