Technology is disrupting the education industry. Last week’s Economist features several articles on the reinvention of universities thanks to ever increasing costs, changing demand, falling government subsidies, and disruptive technology. They explain how the Internet, which has already turned businesses such as newspapers, music, and retailing upside down, will do the same to education. As public support declines with increasing costs, universities must reinvent themselves (gravitating to the MOOC or other scalable teaching methods) in order to stay afloat. And as costs increase without a change in quality, businesses crumble.

Their focus is on higher education and the means by which they demonstrate their point is free online learning such as MOOC’s, massive open online courses. The term MOOC was coined in 2008. Early MOOC’s consisted of course content transmitted through RSS feeds. Students participated by using collaborative tools. MOOCs have existed the last few years, but with low enrollment numbers. Unlike traditional online courses, MOOC’s are usually free, credit-less, and pretty massive.


Administrators are beginning to realize the potential of MOOC’s. edX is a non-profit startup jointly created by Harvard and MIT. They tallied 370,000 students in its Fall 2012 courses. Meanwhile, Coursera had 1.7 million students by the end of 2012 while joining forces with top level universities including  Princeton, Brown, Columbia and Duke. Demand for education is soaring worldwide. MOOC’s are widely accessible and give people the ability to learn whenever and wherever they want.

Revenue (for the for profit Ed-Tech firms) is generated in coordination with the institution creating the MOOC, with a cut going to the platform displaying the content (the firm) and a cut going to the institution. Some firms will offer a first MOOC free, but a fee is then required for the second course. Support based models tie revenue to the amount of support needed for a course. Non-profit providers like edX require minimum payments up front.

Automation in the workforce is a trend displacing many jobs and will continue to do so in the future. Advanced degrees are prized because they help grant greater job security. MOOC’s allow people to do as much schooling as desired. Although faculty are unable to respond to the masses online, students can reach out to one another or form study groups. This format combs together education, entertainment, and social media (social networking). MOOC’s can help people in their careers and expand both intellectual and personal networks. The flexibility is countered with high dropouts and low completion rates.

These courses give no guarantee that completion will be accepted as college credit. This can change when digital courses align themselves with established curriculums. Established universities still create most MOOC’s. The elite universities (Ivy League, Oxford) are the least likely to lose out to online competitors. Students at schools below the Ivy League level become more vulnerable to rising tuition costs because of a smaller ROI. The overstretched and expensive higher education model favors the likely prosperity of MOOC’s in the coming years. Low startup costs and powerful economies of scale are big advantages of MOOC’s over institutions.

Low costs of providing courses allow for universal distribution. Quality and quantity in education is easy. Combining them is the difficult part. Handcrafted teaching methods must be substituted for more scalable teaching methods (MOOC’s, broadcasted lessons, franchise agreements with teaching centres). MOOC’s are what will ruin inefficient universities.