Rethinking the Economics of On-Line Education; Considering Three Different Models of Faculty Involvement in Emerging On-Line Education

One of the most interesting aspects of the move toward on-line education is its financial aspects. Universities are buying in certainly because they tend to like to follow demand and they perceive student comfort with this form of knowledge delivery.  But what makes accommodation to taste more compelling is the financial aspects--on-line education provides  a means of substantially increasing income margins for universities as they leverage their teaching staffs per student.

 

(Pix (c) Larry Catá Backer 2013)

Yet it may be that the leveraging potential of on-line education may be far smaller than theory might suggest.  The reason is simple--while synchronous knowledge delivery has great leverage potential, the move toward student centered and assessment/outcomes based education methodologies cuts deeply in the opposite direction.  These models are grounded int he idea of constant supervision and management of student involvement in course work.  That requires a greater rather than a lesser involvement of faculty in the conduct of classes.  Where on line classes can leverage lecture contact hours per faculty members, the requirements of surveillance and assessment/outcomes based  education requires substantially greater numbers of faculty to mind the students enrolled in these on-line courses. 

This post considers three distinct "approaches" to this problem that have been proposed or that will likely be influential in determining the emerging structures and expectations of on-line education and the reconstruction of the role of faculty within universities.  

The first approach is arguably the most radical and the least likely to succeed.  It is least likely to succeed precisley because it fails to deliver the one product most desired by universities from emerging on-line delivery mechanisms--positive revenue flow. This approach can be characterized as a "flow through" model of on-line education where a portion of the value added form this method of education delivery is passed on to faculty.  In effect the profits of leverage are shared and labor is treated not as a commodity that is priced and paid like other production inputs, but rather as a capital investment that is entitled to a return on its labor investment. 

An example of a variation of this approach was recently reported.  See Goldie Blumenstyk, Business Model for Education Venture Calls for ‘Empowering Adjuncts’, The Bottom Line, The Chronicle of Higher education (Aug. 6, 2013).

So much of the innovation in higher education today seems based on structures that treat faculty members as an afterthought, and a low-paid one at that. A fledgling online-education venture called Oplerno, however, aims to do just the opposite.

It’s based on a business model ensuring that 80 to 90 percent of what students pay will go directly to the people teaching the courses.

There are “phenomenal professors making poverty wages” right now, says Oplerno’s founder and chief executive officer, Robert A. Skiff Jr. “That’s a misallocation of capital.”

With Oplerno “we’re trying to recreate the relationship of a small group of people learning from a teacher,” says Mr. Skiff. “But instead of the institution capturing the money, we want the teacher to.”

Oplerno is seeking to attract experienced professionals as well as traditional academics as faculty members. But unlike some other for-profit models, in which faculty members are recruited to teach a standardized curriculum, those who teach for Oplerno will be expected to develop their own courses—and will own the intellectual-property rights to them.

Courses will run for 12 weeks but can start at any point during the year. In a way, it’s the anti-MOOC, with the focus on small classes of 25 to 30, rather than one instructor teaching thousands, and an expectation of more student-faculty engagement. “People have to learn from people,” says Mr. Skiff. “There has to be a relationship between the student and the teacher.”

Oplerno LLC (the name is short for “open learning organization”) isn’t one of those Silicon Valley education darlings. At this point, with just Mr. Skiff and two other employees on the payroll and about $50,000 in start-up funds, it’s barely a molehill on the landscape of higher-education reinvention.

But the company, which Mr. Skiff describes as a “a self-organizing, nonlinear, complex adaptive system,” does present an interesting approach.

In addition to “empowering adjuncts,” Mr. Skiff says he sees Oplerno as creating greater transparency for students. Once faculty members have proposed their courses, they will also provide detailed information about their syllabi, their expectations of students, and their own expertise for teaching it. (Students will be graded on a portfolio of their work.) The Oplerno “marketplace,” where courses will be listed, will also have space for prior students—and outsiders—to comment on courses.

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The transparency extends beyond the students and the faculty. Eventually, says Mr. Skiff, he hopes to partly evaluate courses based on feedback from employers who have hired Oplerno students or alumni.

Professors will set their own prices, but Mr. Skiff says his goal is for most courses to be priced from $500 to $1,500 each. Oplerno will take 10 percent or $100 per class, whichever is greater, so a professor teaching a $1,000 class with 10 students would earn $9,000.

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That’s where some of the self-organizing comes in. Mr. Skiff says that, as faculty members sign on, he hopes they will start to “develop their own networks” to attract others, so that Oplerno can eventually offer certificates, programs, and at some point full degrees. He plans to apply for accreditation this fall from the State of Vermont to award credit for its courses.

Ayaz Ul Haque, managing director at Exalt Capital Partners and an informal adviser to Oplerno as it begins to position itself to raise additional funds, says the ideas behind the company are appealing in the current climate. With the value of higher education “under the microscope,” he says, Oplerno offers a sense of clarity about the “black box” of college costs.

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(From Goldie Blumenstyk, Business Model for Education Venture Calls for ‘Empowering Adjuncts’, The Bottom Line, The Chronicle of Higher education (Aug. 6, 2013).)

The problem for universities with this approach is precisely that it treats labor like capital and re-directs revenue from the institution to labor-investors.  Of course, the problems of implementation at large institutions cane be complex, and the model of entrepreneurial faculty pose additional problems.  But the concept that faculty out to be induced to sell their labor as an investment in the enterprise provides a novel way of advancing an agenda to move toward more responsive, student centered education of ultimate benefit to the university. It would be interesting to see if internally plausible variations of this concept might work within a large research university.

Universities tend toward two other more  traditional solutions to this problem have been proposed by universities which have bought into the idea of the revenue enhancement potential of on-line education.  The first focuses on re-shaping the expectations and training of faculty.  The idea runs something like this--while older faculty may be harder to train, it should become an expectation for new faculty that they must teach on-line.  That expectation might be easily internalized since they will be coming increasingly from generations more accustomed to technology enhanced learning as students.  As a result, over time, there should be an equivalence between classical and on-line teaching as part of the expected teaching packages of faculty.  The difficulty of this approach is the assumption of equivalence.  Where on-line classes have many more students per instructor, the additional demands on faculty time required by emerging outcomes/assessment pedagogy will substantially increase the amount of time faculty must devote to teaching.  For teaching faculty that is an issue of compensation and efficiency.  For faculty at Research 1 institutions expected to write and acquire substantial grant funding, the time drain may be fatal to young careers.   As a result, there will likely be a move toward faculty segmentation, one that is already being adopted quietly in many institutions:  one group of elite faculty will be expected to undertake substantial research and provide classical instruction, the other will be a group of faculty whose role is substantially teaching.  The differences between teaching and research faculty will eventually be evidenced by differences in wages, working conditions and status within the university.  Tenure lines will likely have to be re-drawn to take this new division of labor into account.

The other solution is similar but segments education delivery in different ways. Under this model all faculty will be expected to teach on-line.  But teaching on-line for research faculty will be understood to mean designing the course, providing lectures and some availability for student tutorials--all within the expectation parameters of the classical education model.  As for the rest, each class will be staffed with a number of adjuncts and facilitators who will be expected to engage in the bulk of "face time" with students and to undertake the assessment/objectives based portion of the course.  The resulting stratification will be steeper.  Eery teaching faculty will be supported by a larger number of substantially lower paid facilitators whose sole responsibility will be to implement and run the on-line course.  While they might be induced to these positions with the hope that they might eventually rise to faculty rank from them, it is more likely that these positions with be treated as technical quasi-clerical with little possibility of advancement.  The university will then be able to more efficiently leverage its employee resources through this more  steeply graded labor segmentation.

Either way there is a price that will be paid. Certainly faculty cohesion will be reduced.  The recent trend toward faculty classes, currently based on tenure status, will be accelerated,and performance segmentation between research and teaching faculty will be made wider.  Lastly, of course, the structures on which classical shared governance are based, no¡w almost a century old, will be eroded perhaps to the point of irrelevance.  As a consequence, it is likely at some point that lower tiered teaching staff under either model will find unionization the better means of preserving an institutional stakeholder voice.  For others, especially higher end faculty, third party organizations, like the AAUP may serve again, as it did a century ago, as a professional association protecting faculty interests within the industry in ways that increasingly servile faculty senates are no longer able to do. But for the university, this more precise division of labor, using on-line education as the opening wedge, promises to increase its ability to generate revenue well above its operating costs.