The traditional higher education revenue/value model is dominated by the concept of each participant paying for the services prior to delivery irrespective as to the results of the product. This is called tuition which is also the underlying model of the sports and entertainment industry (tickets).

For too long this has been viewed as the only model.

Employment Agency Model

The Stanford introduction to AI course was a true watershed event. With 160,000 students taking the online course and 23,000 passing it of which 253 had perfect scores and entirely new revenue/value model emerged. The professor realized that there was tremendous value in knowing who the world class students were to companies like Google, Apple, Microsoft. These companies cheerfully pay a recruiters fee of 20% to 30% of newly hired employees first years salary for the connection. To make the math easy lets assume a starting salary of $100,000 for the top 1% in the world. At the low end of the recruiting fee that translates into $1 million of revenue for every 50 students. The 253 with perfect scores could be worth $5 million dollars. By representing the top five percent an organization could fund the education of the rest of the world for free.

Advertising Model

One of the great ironies of traditional higher education is how in order to maintain the purity of the classroom it scorns advertising while doing nearly anything to capture an ESPN spot for its sports teams. The assumption for the need for academic purity is never matched against the desire of the students for lower class costs. Often student tickets to sporting events are free. Imagine a world where that also applied to classroom lectures.

Trade Associations

If you were asked to name four big organizations that have a vested interest in students receiving the very best accounting education in the world the answer is pretty straight forward. Imagine a system where the big four accounting firms could make a tax free annual donation of 1% of their gross revenues to fund the development of the very best free online accounting courses. That amount works out to be about $50 million a year for which there is no question that incredible courses could be developed. Couple that with a skill level validation such as used in World of Warcraft and now those same companies can eliminate their annual recruiting costs by hiring the proven performers.

Repeat the process for aerospace, chemical and other industries.

The Cost of Ownership Model

The current cost of education discussion is framed by the academic community as the cost of production. The following paper explores costs from the customers perspective in terms of cost of ownership. Industry embraced this model fifty years ago. It is generally not recognized as a concept in academia.

The cost question in education needs to be reframed from how do we get more money for education to how do we get more education for the money.

The cost of ownership of education