Can Universities Survive the Digital Revolution?

Recently we saw the loss of 1900 jobs from Fairfax Media Limited’s operations with the promise of more redundancies in the future. Simultaneously, we heard of the foreshadowed closure of its print manufacturing businesses, and the decline of the print-based versions of the flagship publications, the Melbourne Age, and the Sydney Morning Herald. Both papers will change from broadsheet to tabloid format from 2013, and come out less regularly. The other major media player in Australia, Rupert Murdoch’s News Corporation, owner of the national paper The Australian, is expected to follow suit.

The reason for this change in fortune is, of course, the impact of the digital revolution, and the capacity of emerging technologies to “disrupt” traditional industries. Increasingly, consumers of news wish to read media content on the internet on tablet devices, and less so in the traditional format of newspapers. When Fairfax Media announced on June 18th that they would be shedding jobs over three years, chief executive Greg Haywood said in a statement “Readers’ behaviors have changed and will not change back. As a result, we are taking decisive actions to fundamentally change the way we do business” [1].

The internet and computer technology have already changed many things, from music sales and distribution, books and photography, to medical interventions in hospitals. Few of us now use film; and music CDs are also becoming a thing of the past. Key-hole surgery operated from a distance via the internet is now more commonplace in hospitals. Recently, digital book sales surpassed the sales of printed books for the first time. In regard to traditional print-based newspapers, the digital revolution represents the most dramatic change seen in the media landscape since the invention of the printing press. Some project it to be the beginning of the end for newspapers, an inevitable terminal decline for which there will be no reprieve.

Print media and universities might seem to be odd bedfellows. Yet they have a common ancestry, and in some ways, a common purpose. Both began centuries ago, and both deal in the distribution of information. The print media industry distributes news to readers in the form of newspapers and magazines. Universities distribute knowledge to students in the form of teaching and learning, and distribute research to anyone who wants it in the form of journal articles, books and conference papers. Moreover, print media and universities represent very traditional industries that have resisted change by a unique combination of tradition, established attitudes, and insularity from technological developments.

What lessons can the tertiary sector learn from the decline of the print media industry? Does the same fate await the higher education sector? If so, can it be averted? We claim there are new business models emerging on the periphery of the higher education sector that universities would be wise to heed if they are to maintain their relevance in the digital economy.

Print Media and Higher Education

Let’s set the context a little more before we answer these questions.

The Age has been in continuous operation since 1854, only a year later than the establishment of the University of Melbourne in 1853. The Sydney Morning Herald, our oldest newspaper, was established in 1831, two decades earlier than the University of Sydney, the nation’s oldest university. Until recently, these institutions have been largely insulated from technological developments that the internet has brought to other industries. Newspapers had plenty of readers and universities had plenty of students. However, now both industries are very much under threat; and it is a threat of the same kind: the digital revolution. This threat is clear in light of recent developments in the newspaper industry; in the case of the tertiary sector it is less clear, but no less important.

Print media in the form of newspapers are no Johnny-come-latelys. Distribution of information, in the form of news reporting, has been around since 59 BC with the publication of government notices in Acta Diurna on stone tablets in Rome. The printed newspaper has been around since at least the 1400s, with the first recognizable newspaper, the London Gazette, appearing in 1666. The Age and Sydney Morning Herald were naturally late comers to the scene, but even so have dominated the news landscape in this country for more than a century. This makes recent announcements about the decline of the newspaper business particularly significant.

Similarly, universities—in the form of a community of teachers and scholars—have been around for centuries, with the oldest appearing in medieval Italy in 1088 (University of Bologna), and universities in western Europe appearing from 1150 (University of Paris) and in England from 1167 (University of Oxford). The proliferation of tertiary institutions in Australia and elsewhere to cater for the massification of higher education has only been a recent development.

Unlike the print media industry, the tertiary sector has never suffered from a significant, and potentially terminal, decline in its operations. However, this may be about to change.

As of March 2012, the newspaper industry in Australia is worth around $7 billion in revenue; the higher education industry, with its large number of international students, is worth around $18 billion, the third largest export industry after coal and iron ore. Revenue is now falling in the newspaper industry [2], forcing large companies to change their business model and embrace new technology. At the moment, the tertiary sector seems secure. Can we expect a similar crisis in Higher Education? The internet continues to disrupt entire industries. We will argue that traditional higher education’s time has come, whether we like it or not.

The Digital Revolution in Education

Online learning is not evolving organically. Instead, online learning is being driven by multi-national, billion-dollar technology companies who stand to make immense profit should there be a global move from traditional methods of teaching and learning to online learning. Lobbying, by people such as Bill Gates, has already started. Governments, in the US in particular, are now being pressured to ”decouple” the learning experience from the certification awarded by tertiary institutions under the altruistic guise of “democratising” higher education [3].

No doubt many people will benefit from this shift, especially for those who have the will to gain a higher education but not the means. This change, in the process, will generate billions of dollars for Silicon Valley companies (i.e., Microsoft, Google, and Apple, to name a few). The major players in this online learning domain include Khan Academy, Coursera, Udacity, edX (a joint venture between MIT and Harvard). There are other emerging players such as The Minvera Project and 2Tor. It is still early days for online learning. More and more players will enter the field. These players will no doubt be hoping to gain a foothold in the online learning industry as the world transitions from traditional campus-based learning to wholly online or partially online courses. The catalyst for this change will be the decoupling of credentialing from the learning experience (see [9] below).

It Started with the Khan Academy

The Khan Academy is a not-for-profit educational organisation started by Salman Khan in 2006 [4]. It started innocuously enough. Khan began tutoring his cousins long distance in mathematics in 2004 using short 10-15 minute videos, one per concept. At the time he was working as an Analyst at a hedge fund. On one occasion he was in Boston while tutoring his cousins in New Orleans. For convenience, he started posting his videos on YouTube as a way of tutoring them remotely.

His cousins commented that they preferred him as a tutor on YouTube than as a tutor in person. They could replay the videos at their leisure, or they could go back to review a concept they didn’t understand. They could review a topic they should have learnt a couple of weeks before, or even a couple of years ago, without feeling embarrassed about asking their cousin to explain a concept again. They could watch and learn in their own time and at their own pace.

Perhaps unknowingly, Khan had implemented a form of “mastery learning” [5] with his short pre-recorded videos. Khan Academy style videos have since been copied by Coursera, Udacity, and others. This kind of learning allows a student to learn at his/her own pace, repeating a concept until they have mastered it (hence, “mastery learning”). If the technology exists to make it possible (and increasingly it does), students can also select content explaining a particular concept that suits his/her learning style. Once the concept has been mastered, they move on to the next concept. This contrasts with traditional lecture-based learning where, if a student has not mastered the required topics before the next round of assessment, they simply score poorly in the related assessment and this, in turn, provides the student with a poor foundation for the next topic.

When Khan posted his videos on YouTube he saw no reason to make them private, and soon other people left positive feedback about his videos. In one comment, someone wrote “first time I smiled doing a derivative”. Someone else responded to that comment saying “same thing here”. As viewership grew, he started receiving emails from people who had watched his videos. One person wrote:

My twelve year old son has Autism and has had a terrible time with math. We have tried everything, viewed everything, bought everything. We stumbled on your video on decimals and it got through. Then we went onto the dreaded fractions, again he got it. We could not believe it. He is so excited.

Khan realised that not only would this content help his cousins, but also, it would never become out-dated. It could help their children, or their grandchildren. Khan made the point that “If Isaac Newton had done YouTube videos on Calculus, I wouldn’t have to— assuming he was [a] good [presenter]” [6]. There is, in fact, no need for thousands of lecturers to all teach the same content around the world. There only needs to be one, excellent, presentation on most topic areas.

Initially, Khan thought he had created a good supplement for home schoolers and self-motivated learners. He then started getting emails from teachers saying that they had used his videos to “flip the classroom”. One teacher wrote:

You’ve given the lectures… so now what I do is assign the lectures as homework, and now what used to be homework I now have the students doing in the classroom.

In less than five years, Khan Academy has developed a resource library of 3500 videos, ‘on everything from arithmetic to physics, finance and history’ [4]. This has been so successful they have now partnered with MIT. It involves MIT students producing videos and using the “outreach” provided by Khan Academy to deliver videos to the world. The collaboration is called MIT+K12. This initiative started producing videos in July 2011. Even though the videos are intended for K12 students (years kindergarten/prep through to Year 12), the partnership provides an important link that Khan Academy has with higher education.

Although a significant number of Khan Academy’s videos focus on K12 maths topics, the collection of videos and subjects is continually expanding. Khan Academy recently added 300 Art History videos, hiring two Art History professors to help create the content.

Khan also added game mechanics to the site so that students can earn “energy points” and merit badges. They also plan to add leader-boards. This kind of functionality promotes user engagement. The Teacher Toolkit section of Khan Academy allows teachers to track classroom performance, showing the areas where students are struggling, which videos they completed, and where they paused the videos [7]. Teachers can view statistics (called “learning analytics”), to see where students spend their time, and view every answer students give. The performance of the whole classroom can be assessed, as well as the work of individual students. Students can also view their own progress through the system. This makes the educational experience useful for both students and teachers.

As of June, 2012, Khan Academy had delivered around 160 million lessons. Now, at the beginning of November, it had delivered over 200 million lessons.

Bill Gates has frequently spoken at conferences, in the media, and via the Bill and Melinda Gates Foundation website about the Khan Academy, problems with higher education, and his vision for higher education. An article published on a website linked to the Bill and Melinda Gates Foundation makes reference to an “iron triangle” of higher education, comprising access, cost, and quality [8]. Any change to one factor affects the other two, so to deliver quality education to more people at a lower cost is almost impossible — “at least as conceived within the confines of today’s post-secondary institutions”. The Bill and Melinda Gates Foundation is one of the two biggest donors to Khan Academy to further its aim of “democratising education” by providing free educational content to the world. Google’s Project 10¹⁰⁰awarded $2 million to Khan Academy to support the creation of new courses, and for the translation of courses. Late in 2011, Khan Academy received a $5 million grant from the O’Sullivan Foundation. In a speech on June 2nd, 2011, Gates revealed that Khan Academy had received donations of $50 million to date.

Udacity

In early 2012, Sebastian Thrun co-founded the private educational organisation Udacity [9] after Thrun watched Khan present at a 2011 TED talk [6]. At Stanford, Thrun taught a class of 200 students for his subject “Introduction to Artificial Intelligence”. Thrun unfavourably compared his own efforts of teaching a class size of 200, to Khan who teaches millions via the Khan Academy, and decided to take his subject online.

Thrun explained the experience of taking his subject online at a presentation on January 23rd, 2012 at the Digital Life Design (DLD) conference. He initially thought the online course would attract 500 students. Norvig, his teaching colleague, was more optimistic, and thought they would attract up to 1,000 enrolments. When they woke up the next day, they had 5,000 enrolments. Within days, they had 160,000 students.

We scrambled, we put together a small technology team, we built an ugly website, and we started recording ourselves day-and-night. Just to show you how primitive our technology was, it was literally a camera, a pen, and a napkin.

By contrast, on the first day of his face-to-face lecture at Stanford, Thrun and Norvig had an attendance of 200 students. In three weeks there were only 30 students. Thrun asked the students about the drop-out rate and they all said they preferred him on video.

They could rewind me on video. They can quietly see me when they are in transit. You got to think about this — these are students who pay $30,000 per year to Stanford University, to see the best and most famous of our professors, and they prefer us on video. That was a big shock to us.

That was January 2012. As of November 2012, Udacity had expanded to 18 subjects. The subjects currently offered mostly focus on science (computer programming, mathematics, and physics).

The Udacity.com home page gives the four elements of Udacity. They are:

1.       Take any of our classes. 100% free.
2.       Join a community of active students and instructors. 100% free.
3.       Optionally certify your skills online or in one of our 4,500 testing centres, for a fee.
4.       Optionally let us hand your resume to one of our 20 partner companies. 100% free for students [10].

Udacity recently announced a partnership with the Pearson testing company VUE to provide exams at one of 4,500 testing centres in over 165 counties [11]. The aim is to translate success in an Udacity course into an employer-recognised qualification. Students will need to take this additional step if they want their studies to count towards an official accreditation at Stanford. Taking a test at a testing centre solves an inherent problem with online testing. It establishes that the person who enrolled in the subject is the person actually sitting the test. Udacity has also partnered with companies for the purpose of recruiting Udacity students. These companies include: Twitter, Google, QualComm, Bank of America, Facebook, Amazon, BUMP, Mozilla, BMW, Bosch, and SpaceX [12].

By partnering with companies, Udacity is now not only an online learning company, but also, simultaneously, a recruitment agency. The Udacity website includes a profile section that allows students to provide basic personal and professional information and to upload their resume. By ticking a box, a student can agree to let Udacity share their information with partner companies.

From the employers’ perspective, they have access to a database of hundreds of thousands of potential applicants. It should be noted that many of the current partner companies are large IT companies (Google, Facebook), and manufacturers (BMW, Bosch). The courses currently offered by Udacity are programming and maths-focused, so there is a natural synergy between the courses and the interested employers. Once mainstream media starts reporting that Udacity students are gaining employment in large multinational companies, then it is likely other companies will approach Udacity of their own accord. And, like other employment agencies, Udacity will charge finder’s fees.

Thrun has progressed from offering one online course at Stanford in October 2011 to offering 18 online courses in 2012 via Udacity. In one year, they’ve gone from a single, free Stanford course to Udacity, a revenue-generating organisation with credentialing and recruitment services, and thousands of students.

For the time being at least, Udacity is focusing primarily on the sciences; in particular, maths and computing. It may be that Udacity wishes to focus on this area and act as a recruitment agency for Silicon Valley: The next Bill Gates may be located in Calcutta, or Nairobi, and may not even be aware of his or her potential. With millions of students, there may be a large number of gifted people who, without the opportunities provided by Udacity, would be destined for factory work earning a few dollars a day.

Harvard and MIT–edX

The online learning joint venture edX has been described, in an article published on May 14, 2012, as an “Avengers-like uniting of superhero forces … a juggernaut of free online education” [13]. edX will offer free university-level courses in a range of disciplines. Announced on 2^nd May 2012, edX is a non-profit organisation with Harvard and MIT each donating $30 million to the venture, with additional funding from grants and donations.

Initially offering only subjects from MIT and Harvard, edX has just recently added two subjects from the University of California (Berkeley), who have added four courses, to create a total of nine courses. A prototype subject, “6.002x: Circuits and Electronics”, started in February 2012 initially attracting 160,000 student enrolments. Students who successfully completed the subject received a certificate of completion, including a final grade. On October 15, University of Texas (UT) Systems, one of the largest public universities in the US, joined edX, and plan to offer four courses within the next year, in addition to courses that will allow students to earn college credits toward a degree.

MIT Provost Rafael Reif stated that the primary purpose was not to make money but to improve education but, “clearly, we want to make sure that this isn’t a drain on the budgets of Harvard and MIT". Harvard and MIT can take "several approaches" to monetising edX, but sharing those options now is "a little premature". Anant Agarwal, Director of the MIT Computer Science and Artificial Intelligence Laboratory, also spoke about monetisation in an interview, explaining that subjects will continue to be free and open, but “we’ll need to figure out a sustaining model”. Harvard and MIT haven’t yet released their certification options, but Agarwal suggested that pricing will be “a modest charge for certificates” [14].

Coursera

Coursera is shaping up to be the leader in the online learning sector. Initially offering free university-level classes in partnership with Princeton University, Stanford University, the University of Michigan, it has since partnered with 33 universities. Recent partners include the Universities of California, Washington, and Michigan, and locally, the University of Melbourne. As of November 2012, Coursera offer 200 free taster and full length courses.

The contract between Coursera and the University of Michigan was recently made available online through an FOIA request by the Chronicle of Higher Education [15]. It was revealed that Coursera will pay between 6 and 15 percent of any gross revenue from courses offered. In addition, Coursera will pay 20% in total, after accounting for costs and previous revenue paid. Effectively, Coursera keeps the vast majority of profit made from each course.

The contract also revealed that Coursera may be looking beyond entirely free courses. It appears that Coursera is looking at providing access to tutors and manual grading as well. These services involve human time rather than machine time, so payment will be required to access these services. The wording of the contract seems to indicate that such services will be provided through the company. It seems that Coursera will follow the freemium internet business model: i.e., some content for free; more content if the customer is willing to pay. Coursera reserves the right to allow paid third-party sponsorship. This requires university approval. However, the contract also states that “such approval will not be unreasonably withheld without cause”. In other words, the ability for Coursera to earn revenue from advertisements targeting students is an expectation, not an option.

The contract also implies that Coursera may charge tuition fees for certain courses (after a short viewing period where content is free). There may also be an expectation that students undertaking graduate courses are professionally employed and can afford course fees. These fees, in turn, subsidise those students who cannot afford to pay.

Another interesting development, which breaks away from the so-called MOOC model (‘Massively Open Online Courses’), is that Coursera also allows universities to offer Coursera courses on-campus, for credit. The University of Washington is the only university to date to employ that model. Coursera charge US$25 for each student who enrols in on-campus Coursera courses. This model effectively blurs the lines between traditional higher education and online education.

The Benefits of Online Higher Education

1. Democratising Higher Education

In developing countries people may have access to the Internet but often no access to education. These may be people living in remote communities, and have few financial resources. Africa, in particular, currently has relatively poor access to the internet, however there are plans to address this by programs such as “Connect the World”, which hopes to “connect the unconnected by 2015” [16]. Khan Academy has received most of the media attention to date for its potential to “democratise education”, as technology becomes more pervasive and internet accessibility more widespread in developing nations.

Democratising higher education involves “flipping the classroom”, whereby students view lectures as homework—watching videos and performing interactive exercises—allowing classroom activities to focus on peer review, group discussions and small group activities. As noted earlier, Khan Academy has made available the Khan Academy Toolkit, allowing teachers to measure student performance outside and inside the classroom in real-time.

Democratising higher education will give those who have the will but not the means access to higher education. The concept of democratising higher education is increasingly relevant in developed nations such as Australia too, where the cost of higher education is prohibitive. In Australia, when a student applies for an undergraduate course, it is assumed they support themselves through a combination of parental support, government support, and part-time work. In contrast, the promise of online learning is that anyone can educate themselves, and—for negligible cost—potentially receive a qualification.

Bill Gates made reference to this possibility at his presentation at Techonomy 2010. He said: “we’re trying to take a $200,000 education that is increasingly hard to get—because there’s less money for it, the capacity is not there—and we’re trying to provide it to every kid who wants it, and only technology can bring that down, to not only $20,000 but to $2,000.” In a TED talk in 2009, he said that “if you’re on a low income in the US, you’re more likely to go to gaol than get a four-year degree, which doesn’t seem fair” [17].

2. Allowing Demand to Equal Supply

In Australia, according to research performed by Australian Policy Online, the demand for university places increased by 17.8%, or just short of 37,000 places, over the period from 2001-2011. In 2001, just over 40,000 applicants (19.3%) failed to get an offer compared to 43,000 applicants (17.4%) in 2011. Demand for tertiary places in Australia outweighs supply by approximately 20%.

The higher education sector worldwide has constructed a tiered pyramid system of offering university places. In Australia, at the top of that tier are the G08 or Australian “Ivy League” universities. A student’s enter score or ATAR must be high to be accepted for undergraduate study. The tier system is necessary in the traditional higher education environment where demand has always exceeded supply.

In the online education sector, supply is not an issue. Thrun expected up to 1000 enrolments, but instead received 160,000. They were able to scale up in a way that is simply not possible in a traditional university. A bricks-and-mortar university does not have the physical capacity to teach 160,000 in one place. There are no MCG-sized lecture halls.

In the traditional higher education system, the ATAR is a contrived system designed to limit the number of applications received so that only the “top” students apply at universities in the top tier, thus simplifying the processing of applications. For MOOCs, which tend to implement automated grading systems, the cost of conducting an online subject does not scale in proportion to the number of students enrolled in a subject. For these subjects, a subject designed for delivery to 2000 students can be scaled to 20,000 or 200,000 students, or even higher. In traditional universities, even a 10% increase in enrolments can place a significant strain on resources and the quality of the learning experience.

As a result of the online higher education sector’s flexibility in delivery, this generally means that all who apply will receive a place. The idea of “an offer” of placement is irrelevant. There will be online higher education institutions that will select students (The Minerva Project is one example), but this will not be the model for MOOCs such as Udacity and Coursera.

3. Try Before You Buy

Retention of university students and the drop-out rate has been an ongoing concern for traditional higher education. In online education, attrition is less of an issue. The very nature of online learning allows students in real subjects to “get a taste” of the subject or the field before committing time or financial resources. Allowing students to drop out of an online subject is not a bad thing. It allows students to experience a subject before committing to a long period of study. It should also be possible for secondary level students to enrol in some courses, to gauge their interest in a chosen field of study. Some students might even prefer to start working towards a degree during the latter years of their secondary education, to give them a head-start. This would effectively blur the lines between secondary and tertiary education.

Some students enrol in a degree program only to realise after a semester or a year, or sometimes longer, the field they have chosen is not really for them. These students are faced with the difficult decision to continue with their original choice or move into something else—which will usually mean changing degrees (and incurring extra fees)—or getting a job. In any case, the student has invested months or years and a significant amount of money in an endeavour that will likely provide little benefit if they are no longer engaged with it.

Using sites like Coursera, students may gain a better understanding of their strengths and weaknesses, and their interest in specific fields, well before they start post-secondary education. This type of feedback would be invaluable to students to help them gain an understanding of their aptitude in a particular field before enrolling in a tertiary course.

It may also be possible to embed Coursera into the secondary education curriculum. For example, Year 11 and/or 12 students could be required to undertake an introductory tertiary level subject as part of their higher school certificate, or perhaps substitute an existing subject for a Coursera subject. By the time students are ready to enrol in an undergraduate degree program, some may already have one or two online subjects behind them, adding to their general preparedness for further study. The distinction between secondary and tertiary studies has become blurred again.

It may be that Go8 universities would initially refuse to provide credit for such subjects. However, in an increasingly competitive market, some Go8 Universities might, at some point, agree to provide credits for online subjects in an attempt to attract students. Others would then be forced to provide the same capability, especially if there are large numbers of students undertaking online higher education subjects during their secondary education. It would become unclear whether university offers a competitive advantage over online education.

4. Pause, Repeat, Rewind

In his 2011 TED talk, Khan discussed the ability to pause, repeat, and rewind as an important aspect of the Khan Academy video style and its appeal [6]. Other online learning sites have adopted the same format, now commonly referred to as “Khan Style Videos” (or KSVs). The ability to pause, repeat and rewind a video is not new. However, because of the short nature of Khan’s videos (5-10 minutes per concept), it is quick and easy to rewind a video in order to reinforce something important. This promotes mastery learning, which has advantages over traditional lecture-based learning.

5. It’s Personal

Student feedback on KSVs indicates that it felt like Khan “was sitting next to them” and tutoring them. Khan sometimes rambles, makes mistakes, or gets sidetracked, but this all adds to the appeal of his videos, and students feel like they have a relationship with the teacher. There is a growing trend on social podcasting to present material as personal and conversational. This is apparent with many of the podcasts that appear on iTunes that target younger audiences.

6. Learn Where You Want, When You Want

The New Media Consortium (NMC) recently produced three relevant reports as part of the NMC Horizon Project [18]. Reports generated by the NMC project discuss the trends and challenges associated with emerging technologies in terms of teaching, learning, creative enquiry, and information management. One of the top three trends for all three reports—and the number one trend worldwide and in Australian reports—was that “people expect to be able to work, learn, and study whenever and wherever they want”.

Increasingly, the emergence of mobile computing, cloud computing, and high-speed broadband has changed expectations. People expect to be able to access content when and where they want, including educational content. This expectation will only grow as mobile computing technology continues to evolve.

Mobile computing now includes Smart Phones, and Tablet devices such as the iPad. The most recent trend emerging in this field are wearable computing devices, such as Sony’s SmartWatch, and Google’s Wearable Glasses [19, 20]. Future technology will certainly be mobile, and more suited to online rather than traditional learning.

7. Learning Analytics

MOOCs generate huge amounts of data, including information about how many times each student watches a video, where they paused, for how long, which interactive exercises they performed, which questions were repeated, and so on.

An intern at Khan Academy recently blogged about how machine learning is used to assess student mastery. [21] Assessing student mastery will help Khan Academy to better adapt its content for cohorts and individual students. The ability of MOOCs to generate massive amounts of usage data is arguably one of their less apparent benefits. Yet, this provides opportunities to extract meaningful information and determine exactly how, and under what conditions, people learn.

Online learning permits assessment of student learning styles over an extended period of time. Do learning styles evolve over time, or from one age group to the next? What are the implications of a person’s learning style on their chosen career? By embedding online learning into primary and secondary schools, it will be possible to analyse how a person’s learning style has evolved over their lifetime. The benefits are immeasurable. The results will not just benefit students and learning institutions, but also provide broader applications outside of education. Employers will be able to profile job applicants in ways that have not been previously possible, and students will be better placed to assess their strengths and weaknesses beyond the learning environment.

In the future, students will be able to choose to receive educational content that suits their learning style. For kinaesthetic learners, or “doers”, this may involve interactive models; auditory and visual learners may prefer less interactive instruction. It will soon be possible, in real-time, for a learning system to accurately select content that suits the individual student’s learning style. Alternatively, the system might bring that content to the foreground and relegate to the background content that the student is less likely to engage with, while still making it available. Eventually, online learning will make it possible to tailor education to the student, and not the other way around. In historical terms, this is unique.

8. Decoupling

One of the problems of traditional higher education is that the organisation that provides the training also provides the accreditation. Separating the learning experience from the accreditation is referred to as “decoupling”. [22, 23] Traditionally, universities provide the training (over a three- or four-year period for an undergraduate degree) and they decide who is awarded a degree.

Gates and Khan have both suggested that this involves a conflict of interest, lacks transparency and lessens the value of credentials. An alternative business model for tertiary education is for private industries and government to decide what the standard is for a particular subject, perhaps governed by a central body that represents those areas of society (for example, the CPA, Society of Engineers, etc). Institutions (including online institutions) that can impart the desired level of knowledge will succeed. Those who can’t will fail. This would mean that, for the first time, universities will compete with private industry providers, both inside and outside the sector, to produce well-credentialed and work-ready graduates.

For the first time in the history of tertiary education, the technology exists for students to learn collectively and independently of traditional tertiary institutions [3]. Shortly it may be possible to be accredited independently too. This will mean that universities no longer have a monopoly over content or accreditation. In educational terms, what then will they do?

9. It’s Cheap (or Free )

Why would someone who is currently considering, for example, enrolling in a computer science degree pay approximately $3000 per subject at a traditional university when they can do it for free at Coursera, Udacity, or edX, all taught by world-class experts from universities such as Stanford, Harvard and MIT?

This is a question that all universities now have to answer.

That’s not to say that all online education will be free in perpetuity. A number of different business models will continue to evolve. MOOCs have been getting a lot of attention of late. Their business model is currently based on making money from certification testing, partnerships with industry as a recruitment agency, and advertising and commissions from textbook and eBook sales, donations, research grants. Many also benefit from tax-breaks obtained from their not-for-profit status.

Other business models are emerging, including freemium, where a basic service will be provided free, with a better (premium) service that students can opt to pay for, such as access to tutors, either physically or virtually. The freemium model is used by music streaming services such as Spotify. This is exactly what is happening in the newspaper industry. In the academic context, the information and subject content might be free, but students may be able to pay to access tutors, or to access forums moderated by academic staff. As we noted earlier, Coursera seems to be headed in this direction.

Now imagine if Coursera starts opening mini-campuses in major cities around the world. These would be places where students can meet up, study in groups, and work on collaborative projects. Tutors would be on-hand to answer questions, and provide one-on-one tuition to those willing to pay for the extra attention. This would effectively take the place of traditional universities, and their on-campus experience. If Coursera does not go in this direction, someone else will. When this eventuates, what role will universities play? Will they be necessary at all? [24-33]

Conclusion

The question for traditional higher education is this: Is the behaviour of its student consumers changing, or does the threat from online learning merely represent an emerging market, suited to students limited by financial and geographical constraints? A few traditional universities (Stanford, Harvard, MIT) have seen the warning signs and have taken action. Others will react much later, and will play catch-up. For some of these institutions, it will be too late. They might find they have to make dramatic changes to their business model, in the hope that they are not too late to arrest a terminal decline in their customer base.

We began this paper with a discussion of the recent changes in the print media industry, comparing this with the higher education sector. We will end with the same comparison, and offer a few more as well.

Fairfax Media and News Limited thought they were in the newspaper business because they had been printing newspapers for over 150 years. We are now seeing what is happening to this traditional business. Similarly, Eastman Kodak thought they were in the film business, effectively, defining their business too narrowly. In fact, this myopic perception was critical in their loss of market share. In the case of Eastman Kodak, they were actually in the capturing moments business. By the time they realised that, it was too late and digital photography had taken hold. (Ironically, engineers within Kodak invented the digital camera.) Similarly, according to a recent article in the New York Times, Sony should have realised it was in the connecting fans with music business, as opposed to the music publishing business. Sony should have invented a version of the iPod, and could have achieved it long before Apple introduced theirs in 2001. However, Sony’s music publication division felt it would encourage people to download or copy unauthorised music. By the time Sony had all of their various divisions cooperating, it was too late. Sony expects to lose 6.4 billion dollars this year alone.

Are there lessons here for traditional higher education?

News reporting in the form of print media publications, and higher education are very traditional businesses. Liberally interpreted, both are in the information distribution business. The former distributes news, amongst other things, for public consumption; the latter distributes knowledge in the form of research and education. In the former case, until recently, product in the form of circulation of newspapers went to the consumer by means of complex distribution channels. In the case of universities, until recently, consumers came to the institutions in the form of students willing to cross borders, and even oceans, to study within their walls (the international student phenomenon). However, despite these differences, both distribute content to eager consumers. Their mechanism of delivery, and the type of content delivered might be different, but their objectives are the same.

The traditional news business is changing dramatically. As we have seen with the recent announcement from Fairfax Media, this is having an impact on people, with hundreds of Fairfax’s journalists out of work, and predictions of the loss of newspapers altogether. It is no exaggeration to say that we might be witnessing the death of print media. We may also be witnessing the beginning of the end of the universities as we know them. International student numbers are now falling across the sector. This has a number of universities worried. This is a result of a growth in domestic tertiary institutions overseas, pressures from online providers, and a number of other factors.

Coursera, Udacity, edX, Khan Academy, and others will be very different in five years’ time. In their current state, they are not an imminent threat to the tertiary sector, but what about in the future? We’re already seeing a rapid change in their business model in just the last three months—for example, Udacity’s partnership with Pearson for credentialing of their subjects. In five, ten, or fifteen years, where will these organisations be? What role will technology play? The use of tablets is now mainstream. Cloud computing and high-speed Internet is already here. Advancements in technology will allow online learning organisations to evolve their businesses in new and exciting ways.

In the short term, online learning websites, or MOOCs, will be aimed at students who, without free online content, would not have the opportunity to undertake a tertiary education. However, there is no reason to think online education will stop there. With the opportunities afforded by hundreds of thousands of willing students, industry backing, links with employers, and a stated mission to “democratise” and “revolutionise” higher education, it will not be long before traditional universities feel the competitive pressure, just as the newspaper industry did before them.

The digital revolution has hit print media, and it will never be the same again. Higher Education will be next.

Martin Davies is an Associate Professor of Higher Education in the Centre for Excellence in Learning and Teaching, Faculty of Business and Economics at the University of Melbourne. Email: wmdavies@unimelb.edu.au

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