Free - Thoughts

So, finished up "Free: The Future of a Radical Price" this weekend. First, it is free in audio, if your like me and increasing addicted to your iPod for learning, try it out. The book was published in 2009 by Hyperion, and Chris Anderson (the editor of Wired Magazine) is the author. 

So many thoughts coming out of this one. To save the suspense, I'll go ahead and rate it 4.8 out of 5. The minor deduction was for the early chapters, which I felt were a bit dry and didn't really hook me in. But, after it got rolling, it really was fabulous and certainly, certainly worth your time. 

Now, like after I finish any book, a plethora of ideas are floating around in my head, so let me try to get a few of them down on ... well, in bits anyway. 

1. Free as a business model: It only works if there is something else with which to make money. But, if there is something else with which to make money, free as a business model almost certainly must be included in any planning. Something these days, should always be free. 

2. Understanding Atoms, Bits, Information, Knowledge and Neurons. There are some critical points in this book related to these topics. Atoms are physical things. Bits are not, mostly. To make an atom there is a cost involved. To make a bit (like this blog post), there really isn't one worth measuring. Information mostly does not need atoms, especially when you take away the paper. In this way, the information contained in bits on the Internet is not all that different than information contained in electrical impulses in neurons. What is different between those two is typically how that information is put together in a way which we may call knowledge. 

The instinctual price of information is zero, or free. Thus, as bits continue to make the production and storage of information easier, the price will continue to fall until it is to small to measure, which we'll consider free. The instinctual price of knowledge, though, might be different or it might not. And, that has some pretty important ramifications when you are in a knowledge industry. 

3. Higher education's business model is wrong. As those of you in Kentucky know, I have been spending a lot of time thinking about the higher education, specifically the college of education, business model lately as we build the Kentucky P20 Innovation Lab. Anyway, even before reading this book I was convinced the business model was wrong, but now I am more certain of why it is wrong. Higher education is pricing what it should be giving away for free: undergraduate education. Higher education's business model is to maintain relationships with some number of students for about 4-6 years. During that time, the University extracts the highest tuition possible and then pats the student on the butt and gives them their piece of paper. Relationship = over (besides maybe rooting for the basketball team). This is a bad business model. Universities would profit much more if they found a way to maintain the relationship with the student throughout their life, building in a pricing structure for the continuous information exchange the University offers. If this were the pricing model, undergraduate education should be free. It is the entry point at which you start the relationship, thus you want the highest number and best quality of relationships possible - free accomplishes that task, especially when everyone else is raising tuition. This initially free pricing structure works better from a number of angles, not the least of which is that the student pays when they have ability to pay, reducing the initial debt load on students and permitting universities to charge higher prices over time. Anyway, there are more points to it, but stop and think about it (let me know your disagreements, if you would please). 

4. Universities are the most well positioned entity to thrive in this economy: As if the previous point didn't cause you to question my sanity, this one will push you even further. I am not going to belabor this explaining all of the details of my thoughts here (this is again something better served in an article when and if I get time), but again this book reinforced an idea I was already quite set on. Universities are unique in that they are governmental, but also entrepreneurial. They can make, and hold, money. They can hold billion dollar endowments and make interest off of them. They can set up corporations. They can run hospitals. They can run golf courses and they can run basketball teams. And sell merchandise for all of it (and even do some advertising within it). All that, though, is just icing. The main point is that they are in the information business and, in a lot of ways, are the world's greatest content producers (yes, even greater than Hollywood and Newspapers now-a-days). Being a respected content producer (like most Research I Universities are) puts them in a very valuable position in an information economy. Also, although Universities are beholden the almighty dollar, they are less so than business. I get paid less than my peers in the legal world, because I value the return on reputation more. Increase my reputation, and you will increase my satisfaction in my position, with or without a raise. In that way, we are not so closely tied to money directly, as I don't value my work by the number on my monthly checks. In an information economy, though, while money may be scarce, reputation is abundant. This blog increases my reputation in both the law and education fields, and thus I publish it for free (even taking a not insubstantial loss on my part in hosting and software fees). This type of transaction, multiplied millions and millions of times, puts universities in a prime position to capitalize - that is, if they can muster a sufficient business model (see previous point).  

5. The future of schools may lie in Universities' ability to understand free: Because of their content production nature, their ability to pay global experts affordable salaries, their ability to be entrepreneurial, their ability to subvert some regulations, their ability to partner with K-12 and other capabilities inherent to both government and business, the future of our schools may be dependent on the University's ability to participate in a meaningful, but cost efficient way. Cost efficient may mean free, or it may mean cheap, but either way it must mean less than what business would charge if given the same task. Undercutting private business is not something that Universities have historically done well, but it is something they have every natural advantage to do if they get out of the industrial model of higher education, and into something a little bit more suitable for the information age. If and when they do, they will be juggernauts because they will control a lot of very high quality content. How they manage to release that content will be key. They need to be able to release it for nearly free, but they also need to find a side business that is profitable. Perhaps a freemium model of some sort. But, if they do figure it out, they can push an enormous amount of high quality content to our K12 students for little cost, this can both strengthen the transitions between high school and college, but more importantly it can free up a lot of teacher time that can be reallocated to personalized learning and activities in local classrooms. 

Anyway, those are just some initial thoughts, but ones I wanted to share. It was a great book. I listened to much of it twice and I can't wait to listen to it again (why not, it's free). 

Comments

[Neal Hutchens]

Very interesting posting, Justin. I think that you especially discuss some really important issues with how colleges and universities have struggled to integrate concepts from business and free-market rhetoric in a useful, thoughtful way. Of course the issue isn't new. Thorstein Veblen warned more than a century ago of the dangers of higher education (and other parts of society) blindly adopting business models and concepts. More recently, scholars such as Patricia Gumport have criticized the trend and urged us to understand that colleges and universities should be viewed as institutions with a role in society not merely the same as that performed by businesses. One of my favorite books somewhat related to the topic is Robert Birnbaum's "Management Fads in Higher Education" where he discusses the seemingly never-ending efforts to apply techniques adopted in business to higher education.

You touch on a key problem and that is that institutions and their leaders often tend not to discriminate in the techniques or strategies borrowed from the business world because of a lack of clear vision of how/what colleges and universities are supposed to do and which techniques or concepts derived from business might actually be beneficial to higher education. For instance, the student-as-customer mantra, which may not always be bad if used to do things such as improve teaching, can also get translated into charging the most tuition that the market will bear at a public college or university as a way to deal with declining state support. The president of the University of California system, Mark Yudof, for example, has advocated this type of response in reaction to falling state support.

As you correctly point out, however, there are "costs" with this type of tactic and thinking. Instead of building a life-long relationship with students based on seeking to give away as much as possible the education provided, institutions have instead focused (fixated) on tuition as a revenue stream to deal with the now systemic lackluster state support for public higher education. That is, institutions have looked increasingly to tuition to fill financial holes created by states backing away from their financial support for public higher education. Placed in this difficult position, some institutional leaders have fallen back on market lingo and concepts, thinking that as long as strong demand exists then it's okay to raise tuition levels, even if recognizing that is not the ideal for how higher education should work. But, as you point out, I'm not sure this approach is very farsighted or particularly enlightened, even in relation to cutting-edge business thinking. After all, Google achieved its economic success by giving away content, an idea that you essentially propose with higher education content.

Perhaps college and university leaders should pay a little more attention to some of these emerging market models. Such an approach of giving away educational content as much as possible might really result in a life-long "customer." Instead, students and their families are seeing less and less difference between colleges and universities and other business, like the local cable provider, who charge as much in fees as the market will tolerate.

Again, thanks for a post with a lot of food for thought.