Episode 7: Subscription Models in Higher Education?

by Feb 3, 2020

Welcome to Education and Technology Futures, a videocast that highlights interesting trends and connections in the worlds of education, technology, and culture.

The ever-expanding subscription and membership model has its roots in the serialized novels of Charles Dickens and the mail-order subscription programs of the last century. How long will it take for this model to become common in higher education?

Full Transcript

Full Transcript

I remember being a freshman in my college dorm back in the late ‘70s and reading a card with what seemed like an incredible offer. The card was from a company I had never heard of — Columbia House — and it told me I could get 8 free records for a penny if I just agreed to buy an additional record for the regular retail price. Better yet, to get started I only had to tape a penny to the registration form and mail it in. Even more incredible, I had a whole year to choose the one record I would buy at full price.

It was a great hook and a smart move by Columbia Records to employ a mail-order subscription model to generate a new channel of recurring revenue for its music catalog.

Of course, this kind of business model isn’t a new phenomenon. Charles Dickens and his publisher achieved much the same goal by releasing his novels in serialized form, requiring loyal readers to purchase the novels a chapter at a time.

Dickens’ first full-length novel, The Pickwick Papers appeared in 20 parts over a period of 19 months. (The last part was a “double issue” that included parts 19 and 20). Each part contained 32 pages of letterpress, 2 illustrations, various advertisements, and came wrapped in a flimsy green-paper front and back cover. The price for each part was one shilling (except for the last “double issue,” which was two).

As Robbie Kellman Baxter points out in her recent book, this now-popular membership or subscription model has a number of key differentiating elements.

  • It allows companies to shift the customer model from the transactional to the relational.
  • It changes the product relationship from ownership to access.
  • And it shifts the transaction model from a single payment to many smaller payments.

These days, there is hardly anyone who isn’t involved in at least one membership-model program, whether it’s for TV and movies, shaving supplies, or fresh meals delivered right to your doorstep.

Even in higher education, where the market has long clung to a fairly unique and insular product model, we’re seeing the subscription model sneaking in at the fringes.

  • Students can gain unlimited access to a large portion of Cengage’s course materials and technology tools by paying a little more than $100 per term.
  • StraighterLine’s college course offerings are available through a monthly subscription plus a per-course fee.

My thinking is that, in the coming decade, these types of models will become increasingly pervasive in education. For example, it makes perfect market and business sense, to use this model for offering associate’s degree programs and certificate catalogs to businesses as an employee benefit. Why not give employees access to an entire catalog of degree and/or upskilling programs for a monthly per-employee benefit charge of $125 per month?.

If my early experience with Columbia House is any indication, the risk to the providers offering these models will be low, while the value of relationships and recurring revenue will be surprisingly high.

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