Welcome to the weirdest back-to-school season of our lifetimes. If the current crisis is forcing us to rethink the ways we teach our young people, it’s also exposing just how broken the current system is. Right now education is treated as a product instead of a service, and it’s a poster child for everything that’s wrong with that kind of thinking.
Take college, which generally entails a few years of socializing along with some ostensibly useful coursework. Then you get stamped with a degree and a loan (most borrowers carry between $25,000 and $50,000 worth of debt), and thrown into the workforce. Goodbye and good luck.
In other words, college is a product. A discrete, finite event. Once it’s over, it’s over. The college system is the only industry that fires a quarter of its customer base every year. The only contact most of us have with our alma mater these days is when they ask us for money.
So how could college education reform itself? Well, let’s try to re-imagine it as a service instead of a product.
As Ray Schroeder notes in a piece in Inside Higher Ed called “Subscription Rather Than Tuition”: “In education, we ‘buy’ our degrees — that is, we pay for them through tuition and fees. While cumulatively going into debt more than $1.6 trillion, many pay for the purchase over a lifetime. And when the last semester ends, so does our service — with minor exceptions in the alumni association area. Meantime, the bills continue without any new value add.”
Let me suggest how education could be transformed under a new Subscription Economy:
In the old model, you pay for a time-stamped diploma. The problem, of course, is that in our work lives we’re forced to learn new things all the time. What happens when a college graduate who is ten years into the workforce gets promoted and suddenly needs to pick up a new skill-set? Lots of frantic googling.
In the new model, your college offers you a service level agreement for lifelong learning. What if college lasts 40 years, instead of four? What if we spend a few years on campus, then take short online courses throughout our entire career for professional needs as well as intellectual interests?
In the old model, you make a huge upfront investment in your college education, which can potentially leave you stranded in debt for decades to come. In the new model, you make smaller ongoing fees that track directly to usage and value. You pay a lighter, ongoing subscription as opposed to a heavy, static tuition. It’s like subscribing to car service versus shelling out half your salary to buy a car.
In the old model, you’re stuck with a product that’s slow to adapt, slow to change. In fact, it doesn’t change at all — your college education is just stuck there in the dim recesses of your memory. In the new model, you have a constantly updated service that is responsive to your immediate needs. It’s like a streaming service, as opposed to a CD collection.
In the old model, you have to visit a fixed physical location to buy the product (ie. get an education). In the new model, you have access to an anytime, anywhere educational service whose online experience is supplemented by its physical location, not the other way around.
In other words, college education as a discrete, isolated transaction turns into college education as a recurring service based on mutual value.
Here is Schroeder again: “This model of constant change and sustaining new needs is not best met with a ‘once and then done’ model of higher education. That model may have worked in the 19th and 20th centuries, but it is not a good fit for the 21st century. Just as consumers are leasing, renting, subscribing to other services and products to meet their changing needs, so too is higher education on the brink of changing to meet the evolving and ever-expanding needs of our clientele.”
Fortunately, things are changing in higher education. Here at Zuora we’re working with all kinds of innovative education companies, including digital textbook subscription services like Cengage and technical learning resources like Pluralsight. But most (if not all) of these changes are in direct conflict with the current product-based business model of higher education.
I understand the value of great teachers, lively classrooms, and beautiful campuses. But I also think that many colleges and universities in this country are going to have to reinvent themselves in some pretty fundamental ways if they want to stay viable.
What will education look like in ten years? If there’s a lesson from the last few months, it’s that it will look very different than what we’ve grown up with. And that’s a good thing.
For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.
And check out his book SUBSCRIBED: Why the Subscription Model Will be Your Company’s Future – and What to Do About It.