In the week since we published our Unizin exposé, there has been nary a peep from the group to us, or apparently to the traditional news outlets either. When we ran the piece, we emailed Indiana University CIO Brad Wheeler to request comment or corrections. We have not heard back from him yet. Brad, if you're reading this, our door is always open. Talk to us.
Luckily for us, we don't need to rely on new pronouncements from Brad to give us more insight into what's going on. It turns out that he's been speaking in public about this idea for years. He just hasn't called it Unizin. And from what I can tell, it should give edX cause to worry.
If you want to understand Unizin, you really have to understand Brad Wheeler. He is clearly leading this group and has a history of starting such coalitions (like Sakai, Kuali, and HathiTrust, to name a few). Unizin has his fingerprints all over it. And if you want to understand how Brad thinks, the first thing you need to know is that he is a professor of information systems at a business school. He thinks like a business school professor. For as long as I have been aware of his work, which is about nine years now, he has been focused on the problem of the ed tech ecosystem as an inefficient market. For example, in a 2012 EDUCAUSE Review piece co-authored with Charles Henry, Brad and Charles wrote,
Currently in higher education, we are seeing a growing misalignment between the buyers (higher education institutions) and sellers in these areas.The commercial side has swiftly adapted to scale, consolidating in every domain where there are efficiencies in digital distribution and reuse. Many firms have bought up former rivals in order to vastly consolidate the suppliers of critical software, content, and services. They did so to achieve better economics by scaling the combined revenues of their acquired firms and splitting operational costs over more products.
Colleges and universities, however, remain highly fragmented with mostly one-off “deals” that aptly illustrate the price and cost inefficiencies of skewed markets. A large number of uncoordinated buyers will have little effect on pricing terms when a few suppliers are near oligopolies in terms of industry structure. Beyond price, colleges and universities are also collectively and unintentionally ceding critical capabilities in many categories of essential software, content, and services, necessitating that they buy these capabilities back from the commercial markets.
In their view, the paucity of vendors and consolidation in the space has given the vendors unhealthy leverage over their customers. The solution to this problem, in their view, is for customers to stage their own consolidation in order to rebalance the power relationship with the vendors:
Within the academy, many have expressed outrage at the pricing and sales strategies of the aggregated commercial firms. We dismiss that point of view.he problem lies not with the commercial firms, who rightly endeavor to transfer money from higher education institutions to their shareholders.The problem lies in the behavior of those of us in higher education—the buyers who fail to aggregate at scale in the interests of our institutions. Achieving multi-institutional scale in order to level the playing field and become players in the new game in this era of digital distribution and reuse requires that we make behavioral changes. These changes are neither pro-commercial nor anti-commercial, and attempts to frame them as such are without merit. The changes are, rather, pro-institutional.
Brad thinks a lot about how universities as institutions can recover some of the money that they are currently giving over to vendors. Here he is in 2007, writing about open source Learning Management Systems:
Developing sustainable economics and advancing the frontiers of innovation are the dual challenges for application software in higher education. Sustainable economics means that an institution’s base budgets can support the licensing fees, developers, maintenance, training, and support required for application software. For example, it means that the viability of a course management system (CMS) is not dependent on the next grant or on a one-time budgetary accommodation. Since making changes to application software invokes cost, minimizing change is one tactic for achieving sustainable economics through lower IT costs. In higher education, however, the creative nature of colleges and universities motivates faculty and staff to innovate with new pedagogy and with the use of online resources. Application software that fails to evolve or to allow experimentation and innovation in teaching is unlikely to be well received.
Higher education is in search of a new model to address these dual challenges, and open source application development has been proffered as a solution. Open source software, which is usually obtained without paying any licensing fee to its creators, allows developers to modify the inner workings of the software. In contrast, commercial application software, which is usually licensed for an annual fee, does not allow the inner workings of the software to be modified. Open source software is not free, however, when properly viewed from a total cost of ownership (TCO) perspective. Like all other systems, it requires investments for hardware, user support staff, training, integration with other systems, and so forth. Thus licensing fees, technical support, and control of destiny in evolving the software features are the discriminating cost factors. But licensing fees are not trivial: some estimates place licensing at 20–25 percent of the TCO—in the hundreds of thousands of dollars for many institutions.
Here he is in 2010, writing about the problem of academic journal fees:
Imagine if an efficiency consultant uncovered the following situation. In 1984, an important business function in a university began using a convenient copy service for $0.10 per copy. The university staff provided most of the labor, and the copy service company provided the machine. Twenty-six years later, the university is still using the copy service and still providing most of the labor costs, but the price has changed—to $0.85 per copy. In addition, the copy service now imposes restrictions such that only certain members of the university can read the copied documents. If others want to read the copies, the university must pay extra for the number of readers of the document rather than just the per-copy fee.
Ridiculous? A fee that is 850 percent of the rate twenty-five years earlier? The fee should be approximately $0.21 per copy if it had tracked with the U.S. inflation rate and had gained no technology efficiencies in twenty-six years. Surely, no efficiency expert would affirm continuing to rent the copier under these terms. The expert would undoubtedly point out that the university could own and operate a copier for a much lower cost and without any restrictive use rules that impede the university's work. If this situation were found in a non-core administrative area, it would be viewed as outrageous and would be changed immediately.
In fact, a very similar situation exists today in a core area of research and education. This copier example is imperfectly illustrative of the cost and restrictive use imposed on most academic libraries by academic journals. For example, in 2006 a group of 275 doctoral/research universities paid a combined $1 billion to essentially rent the "journal copier" system that would provide their faculty, staff, and students with access to scholarly journals. In 2010, they are paying even more, and the real scale of the cost to colleges and universities spans globally to institutions of all sizes. A sweeping study from the United Kingdom estimated total annual expenditure for journals at £597.4 million (approximately U.S. $952 million) in 2006–7. The total estimate for scholarly communications—inclusive of faculty time for editing and reviewing—was £5.4 billion (approximately U.S. $ 8.6 billion).
And here he is in 2012 writing about textbooks:
Over the years, students and content creators (authors and publishers) have been engaged in a self-reinforcing, negative economic loop for textbooks. Creators only get paid for their investment and work when a new textbook is sold, and students save money by purchasing a used textbook at a lower cost. Creators price higher as fewer students buy new, and students either seek used books or older editions, go without an assigned text, or turn to digital piracy in response to higher prices.
Early signs in the shift to digital were also troubling. Shrewd students who succeeded in buying a used textbook and selling it back had a net cost of about 35 percent of the book's list price, but less than half of students generally succeeded in selling back. In 2010, e-text pricing was around 70–75 percent of a new paper book or roughly double the cost of the buy-sellback net cost for students. E-texts (naturally) had no option for sellback, and they were riddled with restrictions concerning printing, length of access, and so forth. In addition, publishers were employing a bridging strategy to kill the used-book market by combining single-use website codes with new textbooks for essential online materials. If a student bought a used book, he or she would then still need to pay retail price for a website code.
Thus, while the shift to digital provided new opportunities for students to save money and publishers to rethink their business models, the trend was heading in precisely the wrong direction for content pricing. Also, publishers, bookstores, and others were coming forward with clever new software and hardware platforms for students to read and annotate e-texts. In the absence of a university plan, it is not unreasonable to foresee that a freshman could, with five courses, have seven e-texts requiring four or five different types of software just to study! Obviously, that makes no sense.
As we will see, Brad has gone on record that Unizin is driven by the same concerns (although he doesn't use the coalition's name). Whatever else it is also about, you can bet money that it's about controlling vendor costs.
Not Just the LMS
But if Unizin were only about controlling the cost of the LMS, it would be an odd way to do it. First of all, why invest $1 million per university for a 7-year payback? (And by the way, one thing we don't know yet is what that $1 million covers. Does it cover migration support, for example? Licensing? What is the total cost of Unizin, including moving to Canvas, and how much of that money goes to Instructure in the end?) Also, if you're trying to drive down prices, then you get more leverage from a larger buying club. Internet2, which will reportedly be the business entity that will host Unizin, already has an agreement with Instructure through it's NET+ program. If you're not familiar with it, NET+ is essentially a buyers' club for all Internet2 members. Working through members who act as sponsors for a vendor, Internet2 develops a range of review criteria to ensure that the product in question is secure, scalable, offered under equitable contractual terms, and so on. And then they negotiate a price. This is a great approach if you want to get better pricing from vendors while at the same time encouraging a healthier vendor ecosystem. On the one hand, you are aggregating demand across many institutions, so you have a lot of leverage. On the other hand, you are also rationalizing the due diligence process for the vendors, so that purchasing decisions by Internet2 members will presumably not be painful tell-me-everything RFPs. (In fact, it may eliminate the need for RFPs altogether.) This reduces the cost of sales for the vendors which, in turn, makes it affordable for more vendors to be competitive. NET+ is a great program, and Brad was involved with its creation.
And it does not appear to be what Unizin is doing, despite the fact that Internet2 is the "fiscal agent" for Unizin.
I can think of several possibilities to account for this. First, it is possible that Unizin is, in fact, using NET+ and is negotiating some additional clauses needed by the coalition that will eventually be incorporated back into the NET+ program. The second possibility is that the coalition has needs that are different enough from those of the larger Internet2 community that they feel they need a separate arrangement. The third possibility is that the reason for negotiating separately has nothing to do with contractual needs. Rather, creating a club of attractive peer universities might fulfill a political need to provide cover for the CIOs at their home institutions.
Which of these is right? Or is there some other explanation? We don't know. Unizin isn't talking. But my guess is that it's actually a bit of all three. I suspect that NET+ was probably the starting point of the contractual negotiations, that the coalition has needs beyond generic LMS use, and that some of their needs are political in nature. I base that conjecture on a paper and presentation in which Brad Wheeler makes the case for an approach that is uncannily similar to what we know about Unizin.
Speeding Up On Curves
If you want to understand Unizin, you must read Brad's paper "Speeding Up on Curves" and view his presentation by the same name. Both are important. The article has the more cogent and complete argument, while the presentation contains some revealing improvisational riffs. The article in particular makes the case for the creation of a coalition of interdependent universities to provide an LMS, content repository, and learning analytics system.
Brad writes about four educational technology-enabled models, in decreasing order in cost and revenue generation:
- Residential education (flipped classrooms): $$$
- Online courses and degrees: $$
- Massive Online Courses (MOCs): $
- Massive Open Online Courses (MOOCs): Free1
He argues that these tools are necessary to scale institutional revenues in the face of declining public funding and rising operational costs. He envisions a new, digitally enabled marketplace:
It looks to me like Brad is trying to run the table. He wants to control costs from LMS vendors, MOOC platform vendors, analytics and content management vendors, and textbook vendors, all in one shot, while scaling up revenue through online offerings. In business school jargon, he wants to transform the Unizin cohort into a vertically integrated cartel that controls its entire value chain.
That's a very big vision. In my experience, however, universities do not typically put up $1 million for vision. They need something more concrete and immediate. On the other hand, licensing an LMS doesn't seem sufficient justification for a $1 million investment with a 7-year payback either. There must be something in the middle ground between the tactical LMS license and the big picture that is attracting the other Unizin schools. What is it? What's the pitch? Again, we don't know. Unizin isn't talking. But I have a guess, and edX isn't going to like it.
How Much Does Free Cost?
Suppose you're an executive in a big R1 university or university system. Suppose you're very well aware of and very worried about the economic trends that Brad has outlined in his "Speeding Up On Curves" article. (The second supposition is practically redundant to the first one.) Suppose you don't know what the answer to this problem is but you feel like you have to be in the MOOC game in case some sort of partial solution should emerge out of it. What are your options?
- You could go to Coursera. This is the easiest option in some ways, and has the benefit of reaching the largest number of eyeballs. But it feels like you're surrendering your brand, which you believe is one of your core assets, to Coursera's brand. And beyond that, the whole Silicon Valley thing makes you uncomfortable, particularly when you don't understand how they intend to make money (or don't believe their answers when you ask them that question).
- You could go it alone and put out your own MOOCs on your own platform. But your LMS might not be set up well for MOOCs, and in any event, how would anyone know that you are putting them out? You aren't confident in your ability to market courses in a way that will attract tens of thousands of students on your own.
- You could go to edX. It's a non-profit run by universities, so it's closer to your comfort level. And it is getting significant student traffic---more than you could probably get on your own. But it costs a lot of money to join that club---anywhere from $1 million to $5 million, from what's leaked out into the public about the prices that particular schools have paid. And what you get for that money, beyond the brand recognition and the portal destination, is a very immature platform and some community that you could easily reproduce elsewhere.
Suppose somebody came to you and said, "For the same cost of an edX membership, I can get you a vastly more mature platform for MOOCs, which also happens to be the sexy new LMS that your faculty are bugging you to let them use for their more traditional courses, and a coalition that can build a brand to rival edX while still being run by your peers and not some icky VCs. I also can offer you a much grander vision of bigger benefits, but even if you don't believe that vision will come to pass, you can think of getting the chance to be in on the ground floor as a free bonus."
This pitch would be perfectly aligned with Instructure's pitch for the Canvas Network (their MOOC support), as I wrote about previously. It also would be aligned with the positioning of the LMS in "Speeding Up On Curves":
Distribution Platforms. The Learning Management System (LMS) and its variants have long been viewed as the online learning distribution platform. But now, as content becomes platform, Coursera is growing like a juggernaut, edX is expanding, and publishers are producing adaptive learning systems. If we back up fifteen years and look at the initial heterogeneity of the LMS space, we see that the path to scale for software platforms played out with mergers and acquisitions and yielded a few dominant options with high switching costs among them. The platforms become increasingly important as education becomes more digital, since they provide distribution for educational experiences, courses, and degrees to students who are on or off campus. In business terms, these platforms are how our educational services reach markets of students both near and far away. And just as happened with Internet commerce more generally, students are becoming far more discerning in their educational purchases that these platforms enable.
Brad has framed the LMS as the storefront, which is probably the principal innovation of xMOOC platforms.
What are the odds that the participants in the Unizin coalition are moderately to highly motivated by the MOOC question? Well, let's see:
- The University of Texas paid $5 million into edX.
- The University of Michigan has a number of courses on Coursera.
- University of Wisconsin-Madison has a few MOOCs on Coursera, and University of Wisconsin-LaCrosse has a developmental math MOOC that was among the MOOC Research Initiative grantees featured in a recent e-Literate TV episode.
- CSU is offering MOOCs on its own and offered credit to students who successfully completed a Udacity course (and offer which got no takers, as it turns out).
- The University of Utah has a couple of MOOCs on Canvas.net (including one on the linguistics of swearing).
- Also in 2013, the University of Florida "launched the state's first MOOCs" on Coursera.
- Indiana University also recently launched its first MOOC.
- As of 2013, Purdue was "cautiously moving ahead" with collecting faculty proposals for teaching MOOCs on a yet-to-be-determined platform, while OSU's faculty senate were discussing the pros and cons of getting into MOOCs.
Yes, I believe there is a pretty good chance that an alternative edX-like coalition would be interesting to the executives from at least some of these schools. And if so, then going with the vanilla NET+ contract probably wouldn't be enough. For starters, they would want to create an edX-like portal, separate from the generic Canvas.net portal, for this coalition. It would be their edY, or something. There might (or might not) be software-related steps beyond the contract that Instructure would have to do, like adding code to the Instructure instance of Canvas or spinning up a Unizin-specific instance. And there may be other, administrative-related functionality changes that the coalition would want (for example). Perhaps more importantly, though, if the Unizin stakeholders want to be able to go back to their campuses and make a case for edY, they will have to come with a group of schools that they believe will hold up well (in the eyes of their campus stakeholders) against the likes of Harvard and MIT. A big, splashy launch of a Unizin coalition with a number of peer schools who are all going to market together, supported by the LMS that all the cool kids dig, could be just the ticket. The group could conceivably use the NET+ contract as a starting point, but they would want to separate themselves from it somewhat for both substantive and political reasons.
Again, this is all just guesswork. But it fits what we know.
So if the medium-term ambition of Unizin is to create a MOOC portal, who is threatened by that? I don't think it hurts Coursera too badly. They now have enough eyeballs that I think even schools in other coalitions are likely to hedge their bets and put a course or two on that platform. edX is another matter, though. Assuming that Unizin could succeed in making a big media splash and attract students to their course catalog, I don't see what edX offers that Unizin on Canvas couldn't do better, and the value to administrators of getting all MOOC and non-MOOC courses on the same supported platform shouldn't be underestimated. If I were Anant Agrawal, I would be very worried about Unizin poaching my customers.
But What About the Big Vision?
The LMS + MOOC pitch explains why these universities might be interested in a coalition, but it doesn't fully explain the interest in the Learning Object Repository and analytics system. To explain that, you need to look at Brad's bigger ambition. And I think both the goal and the strategies there get dicier. But more on that in a future post.
- Whether MOOCs are actually low-cost relative to the other options on Brad's list depends a lot on how you're measuring cost. [↩]