What an interesting argument in this piece from the Atlantic. As we mentioned previously, Internet technologies cut into older markets if they impact the revenue stream. So far, MOOCs are not impacting the revenue stream. This article goes further to point out that even the for-profits aren’t generating the quality to be much of an impact on traditional universities. Maybe quality doesn’t matter all that much in higher education (as discussed previously), but it does matter if the sense of quality (or lack thereof) impacts success in the job marketplace. If the for-profit’s can’t compete with the non-profits in terms of getting jobs, and they can’t touch the non-profits revenue streams, then there really isn’t much threat from for-profits or MOOCs.
New innovations don’t disrupt old industries by merely competing with them. They do it by cutting into their source of revenue. The music industry ignored the Internet, tried to sue it out of existence, and then let Apple effectively monopolize digital music sales, which gave Steve Jobs the power to set prices at 99 cents a song. Journalism saw its ad dollars whittled away by the profusion of online media outlets and Craigslist. As George Washington University’s David Karpf has noted, if the Internet is to conquer higher education, it needs to hit colleges in the pocket book. And so far, there’s no sign of that happening.
The simple truth is that nobody has figured out how to build a cheap, high-quality online university. Not even close. So far, the biggest investments in Internet education have come from the for-profit sector, and their results have been, to put it lightly, lacking. For-profit graduates have worse job prospects and earn less than their peers who attend nonprofit schools. A new study released this week suggests that many for-profit diplomas are literally worthless in the marketplace. This even holds true when you control for student characteristics like wealth. And so perhaps not surprisingly, their alums are responsible a disproportionate fraction of student loan defaults.