February 13, 2000
Boola, Boola: E-Commerce Comes to the Quad
By JACQUES STEINBERG with EDWARD WYATT
e always thought our new competition was going to be
'Microsoft University,"' the president of an elite Eastern
university ruefully remarked to a visitor over dinner recently.
"We were wrong. Our competition is our own faculty."
Welcome to the ivory tower in the dot.com age, where commerce
and competition have set up shop.
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Professors imagine a million students paying $10 each to hear their lectures. | |
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Several years ago, educators and entrepreneurs began to see that
millions of students and potential students might be reached, and
tens of millions of dollars earned, using the Internet to provide a
higher education. More than one-third of all colleges and
universities in the United States already offer distance learning,
as it is called; by 2002, four of every five are expected to do so.
Everyone, it seems, now recognizes that the 14 million or so
students engaged in some form of higher education make up only a
small part of a much larger market.
What if part-time students working toward a degree after work,
Chinese executives interested in Western management techniques,
European farmers studying advanced agronomy and American retirees
with the time to retake a favorite but forgotten Shakespeare course
-- paying customers all -- were just a modem away from class?
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Alex Brandon for The New York Times
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The classroom, basis of higher education and soon-to-be quaint relic.
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It was and is an alluring prospect, but one thing the
universities didn't envision was how their professors would react
to it. Distance learning sells the knowledge inside a professor's
head directly to a global online audience. That means that, just by
doing what he does every day, a teacher potentially could grow rich
instructing a class consisting of a million students signed up by
the Internet-based educational firm that marketed the course and
handles the payments.
"Faculty are dreaming of returns that are probably multiples of
their lifetime net worth," said Kim Clark, dean of the Harvard
Business School. "They are doing things like saying, 'This
technology allows someone who is used to teaching 100 students to
teach a million students.' And they are running numbers and
imagining, 'Gee, what if everyone paid $10 to listen to my
lecture?"'
Academics and their academies are already squaring off over who
owns the electronic rights to a professor's lectures and research.
The most notable collision so far, as chronicled in The Wall
Street Journal in November, involved Arthur Miller, a celebrated
Harvard Law School professor and a pioneer legal analyst on
television. Miller says Harvard never objected to his work on
"Good Morning America" or elsewhere, but he was rebuked by his
deans for videotaping a 10-hour lecture series last summer for
Concord, an online law school founded by Kaplan, the well-known
student preparatory company. Why the sudden change of heart? "I
don't think it's undue cynicism to recognize that many of the
old-format educational productions -- books, monographs, articles --
produce no or very little revenue," Miller said in an interview.
"They were of no concern to the university."
Today they are of great concern, and Harvard is rewriting its
policies on how professors may use course materials. So are a great
many other schools, large and small. But in doing so they are
exploring relatively uncharted legal waters.
Previously, the general rule was that a professor was free to
write textbooks, even if based on his course work, and to keep all
royalties. Patented research conducted on campus was a different
matter, subject to various restrictions to which professors
typically had to agree as a condition of employment.
The old contract no longer applies partly because of the number
of new outlets for academic expertise created by the Internet --
which can distribute material as text, sound, moving image or a
combination of the three. But powering the commercial growth of
this new technology are the huge sums of money the Internet has
attracted to distance education.
Andrew Rosenfield, for example, is the chief executive of
Unext.com, a startup that plans to offer a full range of college
courses over the Internet. Rosenfield estimates his company will
spend nearly $100 million developing courses before it receives $1
of tuition. Unext is backed by Michael Milken, the former junk-bond
king, who was convicted of securities law violations in 1990. The
company has signed deals with Columbia, Stanford, Carnegie Mellon
University, and the University of Chicago, promising them revenue
from the course materials they develop, and granting them Unext
shares.
Unext envisions a world where anyone can begin a course in, say,
basic finance, at any time of the year, from any location. Indeed,
to make a profit, the company will need to have thousands of people
engaged in a particular course at a time, Rosenfield said. But he
believes that the opportunity to take courses designed by elite
schools will attract such numbers. Company projections suggest
that, if he is correct, the University of Chicago could earn $20
million in royalties alone from the venture over the next five
years. (Payment to participating professors has not yet been set.)
No wonder, then, that Chicago's scholars must now seek the
university's permission before they engage in similar efforts on
their own.
Williams College, the prestigious liberal arts college in
western Massachusetts, is reviewing another corporate offer. Global
Education Network, a company founded partly by Herb Allen, the
president of the venture-capital firm Allen & Co., has approached
Williams and Brown University, among others, with an invitation to
contribute course material to a proposed for-profit Web site
providing on line liberal arts education for adults.
Officials at Williams have said that the venture could earn the
institution upwards of $250,000 per year, per course, for up to 10
courses.
Harcourt General, which owns Harcourt Brace, a major textbook
publishing company, is yet another firm entering the field.
Harcourt announced last summer that it would create an independent,
full-range, distance learning "university," offering college
degrees in a variety of disciplines. And this spring, Kaplan will
introduce KaplanCollege.com, which will offer degree and
certificate programs in a number of fields including education,
real estate, financial services, paralegal studies and nursing, in
addition to law.
Obscured by all this entrepreneurial activity lies a still more
fundamental issue: As distance learning enterprises start competing
with colleges and universities for students, tuition and faculty,
will they not also progressively marginalize "brick and mortar"
institutions, perhaps even rendering them obsolete?
Elite institutions like Williams are the ones least likely to be
displaced by technological innovation. But there are some 3,500
colleges and universities in the United States alone, and distance
education will certainly make a portion of them redundant.
"The ones that really are going to get hurt by distance
learning are the smaller, independent institutions located in rural
areas," said James V. Koch, president of Old Dominion University,
in Virginia. Those schools generally charge high tuition, and
students will find it cheaper to take distance learning courses for
at least part of their degree program.
Distance learning will also provide a simple credentialing
function -- certifying that someone has acquired a certain skill,
say, in computer programming or accounting, entirely bypassing
traditional institutions of higher learning and trade schools.
"There still are going to be loads and loads of students who
want the traditional experience -- the football team and the junior
year abroad," Koch said. But will that traditional experience be
recognizable if colleges and universities begin behaving like
corporate profit centers?
The advent of distance learning has turned everyone, from
trumpet teachers to professors of Japanese and statistics, into
potential entrepreneurs. And like relatives sharing a winning
lottery ticket, professors and their schools are elbowing each
other in pursuit of the same pot of gold. "This set of
technologies, and the opportunities it presents, create potential
conflicts of commitment -- of the faculty's commitment to the
university, and of the university's commitment to the faculty and
to its core mission," said Clark of Harvard.
"If the institutions and the faculty don't reaffirm those
commitments," he added, "the forces will actually tear places
apart."
