The missing middle of online higher-ed


When the campus is reduced to a screen, are Princeton and Phoenix the same?

One may indeed think that higher ed going online create some sort of level-playing field, and in fact, may even give the challenger an advantage. This is based on what happened in Amazon-vs-B&N: When the rules of the game change, new and disruptive players can compete better. Technology can trump track record and endowment.

But this belies a lack of understanding how higher education works. Education is NOT about the delivery of content: A lot of it is about signalling of value. Amazon could sell the same book as B&N using a different media and the customer could attain the same outcome - the reading experience! The outcome - in terms of expectation and outcome - from Princeton and Phoenix is quite different. 

Besides, when something moves online, brands become more - not less - important. Metaphorically speaking, if Princeton to Phoenix was a 10:1 advantage offline, it is likely to be 100:1 online. In that case, the campus is a great leveller: Mock gothic columns and sprawling lawns or sports fields can take the edge off some of the differences and create a sense of permanence and seriousness even for the most lightweight of the players. But without these, in the online-only world, brand rocks!

In Higher Education, brand is built on rankings. In rankings obsessed markets, such as China, there is no going around the fact, and therefore, it is extremely difficult for challenger institutions to compete. In others, brand is built around faculty prestige, institutional and other endorsements and counter-intuitively, price. The pricier the online offering, usually the greater its attractiveness, particularly in the emerging markets. 

I have learnt this at my cost somewhat. With my Indian upbringing, I naturally assumed that there is a mid-market segment (after all, we are serving the 'middle class') in international education. Few failures later, I have understood that within the limited context of demand for it, the middle ground is really really narrow. In fact, online erases middle ground, leaving only the free and the premium at play. As for affordability, one must look beyond price (loans, flexibility of delivery, concurrent employment opportunities and placement) to make that happen. 

Therefore, it's no surprise that the biggest plays in online education leverage the biggest names of the brick-and-mortar higher education. Harvard, Princeton, Cambridge and the other brands abound online, often carried to new geographies by OPM (online programme management) providers. It may be counter-intuitive, but OPMs are not necessarily playing for the middle market: They are going after the premium end of the online higher education.

Online higher education is going to be more exciting going forward, as countries look to relax regulations and instead try and encourage more people to study online. China has taken significant steps and India is going down the same route, bringing millions of new learners into the sector. New ventures are now likely to start and investment may pour into the sector, but most, sadly, may go in the elusive search for the missing middle of online higher education. That, as I have learned, is the graveyard of ambitions.




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