A Subscription Model for Higher Education?
Remember the first time someone told you they were cutting the cord and giving up cable television for a subscription service? At the time, you may have thought they were crazy. The objections you thought of likely ranged from, “But you can’t get all the same channels,” and “My favorite show isn’t available,” to “How am I supposed to watch sports?”
To be fair, when Hulu launched its service in 2007, those objections were applicable for the average consumer. And yet, the flexibility and pricing model was still attractive enough to bring early adopters on board. Now, fast forward 12 years and a subscription service such as Sling or YouTube TV may be the easiest (most affordable and convenient) way to catch your favorite sports team. Oh, and you can also watch pretty much everything else you want to.
Just $40 per month. Cancel anytime.
You name it and there’s likely a company that has a subscription model for it (or at least one coming soon).
Subscription models are even beginning to disrupt the gaming industry, and I suspect Google’s new Stadia service (announced this week), may likely accelerate that disruption significantly.
And, thanks to Cengage, we also have a subscription model for textbooks. After filing for bankruptcy in 2013, the company emerged a leaner company willing to reinvent itself to remain relevant. One result was Cengage Unlimited, a true textbook subscription model designed to make learning materials more affordable to students.
To be clear, changing from a legacy ownership model to a subscription model can be daunting in some industries. Cengage and textbook publishing are a case in point.
Of the several risks that Cengage has taken [related to Cengage Unlimited, its new subscription service], two, in particular, are major. One has to do with the gargantuan task of clearing rights to material from thousands of authors over a long period of time. Cengage decided to launch the service with all of its content and not allow authors to opt out. Undoubtedly, much of the content was written under author contracts that did not envision this type of usage. Sure enough, authors have filed (and settled) purported class action lawsuits against the publisher, and it has started an effort to reach out to authors proactively to settle royalty claims.
All of this makes me wonder how long it will be before we begin seeing subscription models for higher education courses. Today, we have a variety of plans designed to lock in tuition pricing, such as guaranteed education tuition or flat-rate tuition plans. In many ways, however, these are like the discount plans offered by cable companies. You are still locked into the basic business model and cost structure of the traditional university.
Following the models from other industries, a university subscription model would allow consumers to:
- Take any courses you want in the available in the subscription catalog
- Take courses on demand throughout the year
- Take them in any sequence and stacked in whatever way works for the student
- Pay an affordable monthly rate, which would be discounted if a person pays for a full year in advance
- Complete a year of college credit at a discounted subscription price with no additional fees or materials costs
- Stop or start the subscription at anytime
There are obviously a number of challenges to such a university subscription model, particularly for large, high-residence institutions. These universities will need to maintain their current business models, to support existing infrastructure and staffing costs, and will be hesitant to cannibalize their current revenue streams. These institutions — generally large public and private universities — are also brand sensitive and will be afraid that such a business model will lessen their appeal with their existing markets.
On the other hand, smaller institutions that are struggling with enrollments, as well as those with strong online programs should be receptive to the model. My guess is that one or more of these institutions will begin offering a subscription plan in the not-too-distant future. Once that door is opened, expect to see a number of fast-followers and a new source of tuition pressure in the marketplace.
Rob Reynolds, Ph.D.
Executive Director, TEL Library