MIT Strategy professor Michael Cusumano published a lengthy opinion piece where he argued that free online courses may have much higher costs and consequences than the socially minded people promoting them intended.
I worry, however, based on the history of free products and services available on the Internet and their impact on the software products business as well as on the music, video, book publishing, and newspaper and magazine businesses. We have learned that there can also be “negative” network effects. In education, this would occur if increasing numbers of universities and colleges joined the free online education movement and set a new threshold price for the industry—zero—which becomes commonly accepted and difficult to undo. Of course, it is impossible to foresee the future. But we can think about different scenarios, and not all of them are good.
The piece is a bit frustrating with some internal inconsistencies that would take too long to go through. But, by way of example, as I’ll get to in a moment, Cusumano’s concern is that free online courses by elite institutions may wipe out the non-elite ones but at the same time suggests that a free price sends a signal that those courses are of low value. So, on the one hand, their free price combined with high value will wipe out the non-elite courses while their free price sends a signal of low value compared to non-free courses offered by non-elite institutions. You can’t have it both ways.
Now I don’t believe in the dire scenario of doom caused by free. I am also far from convinced that ‘free’ sets an equilibrium that can’t be changed. I see this as an experiment and it is often the case that giving away something for free while you settle on new educational and other methods is a great idea. There may be some delusion as to what these might achieve but I think it is a laudable role of elite institutions to experiment. But Cusumano is precisely upset that the costs of running experiments are too high.
So let me evaluate that normative notion: that if free actually works to displace old ways of delivering higher education and, moreover, when combined with the ‘massive’ and ‘open’ leads to incredible scale, will it be bad for society or for the missions of MIT, Harvard etc?
To disentangle this, I need to consider two alternative assumptions. The first is that having a “one course delivered to all” model is actually the right way to deliver education. The second is that it is not but that there will be a ‘trickle up’ effect of destruction and unravelling as we find that out.
One course for all: the notion here is that, say, Econ 101, can be taught online by, say, Greg Mankiw, and no other Econ 101 teachers are required anywhere. In this situation, you can learn economics from Mankiw and don’t need to attend another University. Assuming you can be accredited here, it is true that there will be a decrease in demand for education from non-Harvard institutions.
Cusumano seems to indicate that that will somehow be a bad thing for society. But in this world, what was a bad thing for society was locking all of that talent teaching thousands of Econ 101 classes when one person could do it all. To be sure, in the short-run, Econ 101 lectures will be displaced and not too happy about it. But consumers — in this case, students — by exercising their choice to take the free Harvard course than pay for a course in another institution are overwhelmingly better off. Cusumano seems to argue that the displacement of “lesser institutions” will be a bad thing. It is bad for them but it is hard to believe it is bad for society.
Trickle up and unravelling: that said, someone has to pay Harvard. Online courses will have costs and so these costs will have to be covered. If Harvard has a free course, destroys all competition and then cannot find a revenue source to pay for that course in the long-run, then it too will be doomed. So the Cusumano-style argument appears to be that “elite institutions have, in their folly with free courses, destroyed their own market.” Now apparently, the example here is Wikipedia or Web Browsers. And Cusumano says that in each case the situation is not too rosy. But if Harvard shuts down because of free online courses itself and other elites are providing, then the market will be left unserved. Someone else will come in.
Perhaps, however, there could be period of disruption as we move from A back to A. Cusumano doesn’t really address this except to say that free is ultimately unsustainable. To me, it seems that other adventures in digital adoption have caused disruption but in no case have they really left us with permanent damage wondering what it was all about. To be sure, some people have lost lots of money. But it is far from clear that these have happened without some lasting legacy of change and moving on.
In the end, concerns like this with free experiments seem to place far greater weight on the notion that “once you go free you can never go back.” But if it is the case that free can’t be supported by other revenues to cover the costs of provision, the market does work it out and back we go. This is just another way of innovating and leveraging potential scale as well as learning about what the market might bear. I, personally, am happy elite institutions have been willing to consider offering up their capital for this.