Present is Prologue

Category: Business & Economics

The “Business & Economics” category covers the business aspects of ed tech, including the financial health and business models of individual companies, economic aspects of selling in education that shape the available offerings, and coverage of markets and investment.

Moody’s Downgrades Blackboard Debt, Focuses On Learn Ultra Delivery

In Spring 2015 Moody’s affirmed their B2 rating for Blackboard’s nearly $1.4 billion in debt as part of the company’s acquisition of Schoolwires, with a negative outlook for the ratings (meaning there was risk of a further downgrade). Three weeks ago, that downgrade took place.

(“Moody’s”) downgraded Blackboard Inc.’s Corporate Family Rating (“CFR”) by two notches to Caa1, from B2, as well as its Probability of Default Rating, to Caa1-PD, from B2-PD. Moody’s also downgraded Blackboard’s $135 million first-lien revolving credit facility and $920 million (remaining balance) first-lien term loan to B3, from B1, and its $378 million second-lien notes to Caa3, from Caa1. Moody’s also changed Blackboard’s outlook to stable, from negative.

Put in regular terminology, the previous B2 rating indicated that Blackboard ((Disclosure: Blackboard is a subscriber to our LMS market analysis service and is a sponsor for our recent Empirical Educator Project summit.)) had “the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitments.” But with the new Caa1 rating, Blackboard “is currently vulnerable, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments.”

The rationale for the downgrade is that Blackboard holds a very high amount of debt (now more than $1.4 billion) relative to its earnings, and revenue growth is not coming from its core markets.

Blackboard’s core North American Higher Education (“NAHE”) and K-12 units, representing 56% of total revenue, continue to show weakening top line results, suggesting that the success of its new Ultra user interface is still uncertain. Blackboard’s international segment, also weak, has shown modest stabilization of late. Only the campus enablement segment, consisting of recently acquired educational community communications and transaction processing services and representing a quarter of Blackboard’s revenues, has shown healthy, reliable revenue growth. Some ratings support is provided by Blackboard’s high level of revenue visibility, with three quarters of 2017 revenues coming from recurring products and services, and underpinned by its 90% renewal rates in 2017. Both of these measures, however, represent declines from prior years.

The turnaround is stalling, and the credit cards are maxed out. Blackboard has continued to cut costs, including “late-year layoffs”, and Moody’s expects “overall revenues to be flat to down slightly in 2018 as competitors have stifled market share gains”.

While this is not good news for Blackboard, the ratings action does give the ed tech community additional insight into the operations and health of the company. Blackboard total revenues are between $700 – $720 million, with earnings (EBITDA, adjusted by Moody’s) between $160 – $180 million.

And in the rationale for the ratings comes specific commentary on Learn Ultra.

Software renewals have been weaker than expected in the NAHE [North American Higher Ed] segment, as the company strives to sell its latest learning management system (“LMS”) software enhancement, Ultra, into a crowded and very competitive marketplace. Given operating seasonality tied to the academic year, the behind-schedule launch of Ultra, in mid-2016, meant that measurable revenue and EBITDA [Earnings before interest, tax, depreciation and amortization] contributions from it began to be realized only in the 2017 academic year. There are indications that Ultra is gaining traction relative to Canvas and Desire2Learn, and Moody’s believes the packaging of Ultra with transaction- and payment-processing services may support its competitive positioning. But the success of Ultra is far from certain, and the threat from existing and possibly new competitors remains high as barriers to entry, specifically for web-based software, are relatively low. Meanwhile Blackboard, with a brand new CFO, is focusing its research, sales and marketing, and product development resources in an effort to ensure Ultra’s future.

We have covered the 2014 announcement and ongoing fate of Learn Ultra here at e-Literate, and claiming a “launch of Ultra, in mid-2016” is generous at best. At that point there were educator previews with no ability for institutional adoptions. Fall 2017 is the closest to what I would say is an actual launch. As of a January, 2018 meeting Michael and I had with Blackboard’s management team, they claimed dozens of schools actively piloting Learn Ultra ((I have asked several times for this list, or a subset of this list, of schools piloting Ultra to allow interviews. If and when we receive schools to interview, we will cover in another post.)), and their flagship customer University of Phoenix is beginning rollout of the LMS starting this month.

What is going well at Blackboard is the movement to a SaaS (software as a service, aka ‘the cloud’) model for the LMS – for both the traditional experience and Ultra experience. As of January there were 284 schools on Learn SaaS and 49 others in migration. In a purchase-only report, Moody’s acknowledged this strength and noted the investment that Blackboard is making in this area (more than $50 m expected in 2018).

While the company has shown good progress in migrating its legacy Learn customers onto the appropriate SaaS-based platform from which those customers may choose, in turn, to migrate to Ultra, Blackboard’s efforts to make those transitions smooth for its customers have entailed elevated capital expenditures, which will likely continue through 2019, cutting into free cash flow.

Put this all together, and 2018 is the year that Blackboard needs to transition from ‘wait until Learn Ultra is ready’ to ‘Learn Ultra had better lead to increased sales’. I have been impressed with the new management team’s transparent approach to dealing with analysts, and with their honest approach to understanding the problems they need to solve. But the company needs to deliver, and this is shaping up to be a newsworthy year for Blackboard, for good or ill. There’s a lot to watch here.

April 10, 2018
Online Program Management: Spring 2018 view of the market landscape
Nearly two years ago I wrote two blog posts giving a high-level view of the Online Program Management (OPM) market landscape. This is a growing but messy market, and the market changes since mid 2016 call for an updated view.

OPM providers are for-profit organizations that help non-profit schools develop online programs, most often for Master’s level programs. These companies provide various services for which traditional institutions historically have not had the experience or organizational capability to fully support, at least for fully-online programs and often for non-traditional student populations. Some examples of the services include marketing & recruitment, enrollment management, curriculum development, online course design, student retention support, technology infrastructure, and student & faculty call center support.

The OPM market has historically been known for a full-service, revenue-sharing model, based on the premise that most traditional institutions are not only operationally unprepared to offer online programs at scale but also are not set up to invest in online programs up front. There are extensive costs, particularly in marketing and recruitment as well as curriculum and course design, that cause most scalable online programs (that is, those designed with the intent and infrastructure to allow more than just a few dozen students) to require investment over the first several years, before tuition revenue catches up. Rather than requiring the institution to spend sizable up-front money without a guarantee of repayment, revenue-sharing OPM vendors provide this financing themselves – which is in itself an expensive proposition. It often takes three to five years for an OPM company to become profitable for any online program, which is why they often require 10-year or even longer contracts.

As the online education market has matured, however, there has been a growing pushback against revenue-sharing as the only model available. Thus there is an emerging unbundled fee-for-service OPM model, in which the companies offer the same services, or some subset, for the market price of those services. The institution pays for the services used, mostly independent of the amount of tuition revenue coming into the online program. This category leads to the program, or institution, to take the up-front financial risk but not have to sign contracts sending ~40 – 60% of the tuition revenue to the vendor. Fewer strings attached but more responsibilities and risks for the school.

With the recent success of Southern New Hampshire University and longer-term models from Penn State World Campus (as well as others), there are also questions about whether non-profit schools can create scalable programs without an OPM partner at all. This category, for obvious reasons, is not presented in our market landscape but is a real option.

In our view, there is not an either-or proposition in the market. We see strong arguments for both bundled revenue-sharing models and for unbundled fee-for-service models, and I personally do not believe that the market is moving away from revenue sharing as much as there is pressure for additional models. There are a growing number of choices available to schools, but there is also a crowded marketplace that is becoming more difficult to understand.

With that setup in mind, on to the market landscape graphic.

As before, please note that this view is intended to give a visual overview of the market landscape and is not comprehensive in terms of vendors represented. This is especially important to understand for the Fee for Service category, where there is no clear definition yet of what is an unbundled OPM provider and what is a product or service provider who happens to serve online programs. Treat this category as illustrative and not exhaustive.

There are three primary changes to note in the graphic’s design since 2016:
- We have combined different categories of Certificates into one column on the right side of the graphic, since it was difficult to to differentiate between OPM target markets.
- We have added a sub-category of MOOC Providers under Full Service Revenue Share category to capture the recent changes in that market.
- We have combined the Fee for Service and General Contractor into one category labeled Fee for Service, again due to difficulty differentiating service offerings.
We should also note that there will likely be another sub-category of Full Service Revenue Share to capture the ongoing pivots by former for-profit institutions. Graham Holdings sold Kaplan University to Purdue University and remains a single-client OPM provider for that new brand Purdue University Global. Grand Canyon University is converting to a non-profit institution with the remaining for-profit company turning into a (single-client?) OPM provider. Bridgepoint Education plans to turn Ashford University and University of the Rockies into a combined non-profit institution, leaving the remaining for-profit company as an OPM. We are not ready to add this sub-category, and it is not clear yet if these providers plan to go beyond servicing the non-profit conversions.

There are several changes to the vendors listed:
- Pearson no longer refers to the Embanet brand that they acquired and now goes by Pearson ((Disclosure: Pearson, 2U, iDesign, Unicon, and Blackboard are sponsors for our Empirical Educator Project. See this post for more details.)) Online Learning Services.
- 2U, after the May 2017 acquisition of GetSmarter, now serves certificate programs and not just masters degree programs.
- Wiley no longer refers to the Deltak brand that they acquired and now goes by Wiley Education Services.
- DeVry Integrated Education Solutions no longer appears to be active in the market, based on outdated web site (key executive listed has been gone for seven months) and no marketing or competitive presence. We have removed their listing.
- Cambridge Education Group’s CEG Digital unit has emerged as an OPM provider serving UK-based institutions.
- We (re)added Udacity based on the success of the Georgia Tech Masters in Online Computer Science program, which has helped spawn the new sub-category of MOOC Providers in the market, even though Udacity appears to have no interest in pursuing other higher education degree offerings.
- We added Coursera as an OPM Provider, as this market now appears to be their core market moving forward.
- We added FutureLearn based on their continuing expansion as a MOOC-based OPM provider.
- We added edX with their MicroMasters initiative.
- We added ExtensionEngine as a Fee for Service provider based on their work with Notre Dame and related program creation.
- We changed Greenwood Hall to AnswerNet. After a spectacular implosion from Greenwood Hall a few months ago, AnswerNet acquired the remaining assets. It is not yet fully clear if AnswerNet will not provide more than Call Center services, so we’ll keep an eye on this one.
- Excelsior College’s Educators Serving Educators (ESE) initiative, launched in 2012 to provide a non-profit OPM offering, is no longer active.
We’ll keep updating our landscape diagram over time and look for other methods to help make sense of this market.
April 2, 2018
If At First You Don’t Succeed, Try To Be An OPM: Conversion of for-profits and MOOCs
Two weeks into March, this has already been a busy month already for the transformation of for-profits and MOOCs. For-profit universities are in a race to become nonprofit by separating academic programs from behind-the-scenes services, and MOOCs are focused primarily on monetization and moving beyond free and open courses. The common thread tying these messy transitions together is the move to become new forms of Online Program Management (OPM) providers.

Best Way to Make Money? Go Nonprofit

Arguably the biggest news was March 5th when the Higher Learning Commission (HLC), the regional accreditor, approved the Kaplan University / Purdue University deal to create Purdue Global. This was the final approval step as Purdue acquires Kaplan, leaving Kaplan University, leaving Graham Holdings (Kaplan’s parent company) to serve as a single-client OPM provider.

The following day Grand Canyon University announced that it had received approval from HLC to convert into a nonprofit institution. As described in their press release, the remaining for-profit company will become an OPM, even if they choose not to use that name [emphasis added]:

As part of the transition, GCE will sell certain academic-related assets to a non-profit entity that will carry the Grand Canyon University name. Following the sale, GCE will operate as a third-party provider of educational and related services to GCU and potentially, in the future, to other universities. The structure is similar to that at hundreds of non-profit universities in the country that outsource services to third-party providers.

And yesterday, Bridgepoint Education announced that they were formally seeking to convert Ashford University into a nonprofit in a similar deal as Grand Canyon. At least they are more direct about the OPM tie-in as described at Inside Higher Ed yesterday.

Bridgepoint will continue on as an online program management (OPM) provider — a booming space in higher education. The company will negotiate with Ashford to enter into a shared services agreement, with Bridgepoint likely handling data management, course management software and services, technology, and financial aid processing for the nonprofit university.

“As an OPM, Bridgepoint Education will bring years of technological and academic innovation and intellectual property development to other colleges and universities that desire to serve students through online education programs,” Schray said in a written statement.

In an interview here at e-Literate when Purdue and Kaplan announced their acquisition plans last April, Trace Urdan (now at Tyton Partners) described the market forces involved in some of these moves.
- Non-profit entities – both public institutions and private non-profit institutions – “wanting to get into the adult market and the online market”. This is the big push behind the Online Program Management (OPM) market, kick-starting these non-profits into online programs targeting adult education.
- For-profit entities “feel like they are being burdened by being for-profit”. One part of this is the regulatory burden from the Department of Education and even accreditors. But there is also a marketplace burden as non-profits like Southern New Hampshire University keep growing enrollments while for-profits are dropping.
- There is a “the investor enthusiasm for the services model” with OPMS, “and this is a model that investors love – it gives you access to the growth in online education, affiliation with strong brands, and it’s more or less free from the regulatory hostility” of the for-profit sector.
Beyond the market forces, however, there is another underlying factor affecting these moves. As described by legal team at Cooley Education:

So, why did this happen? First, and most obviously, we are in a different regulatory environment – at least as far as the federal Department of Education is concerned. In late 2017, the Department of Education dropped its opposition to for-profit conversions vehemently articulated by then-Secretary John King, most recently approving the sale of South and Argosy Universities and the Art Institutes owned by Education Management Corporation to a nonprofit created by the Dream Center Foundation. This change in federal policy shifted the emphasis on approvals back to the accreditors and the states.

At the accreditor level, the politics may be less important in understanding the outcome than the process. At about the same time that Kaplan-Purdue was first announced, HLC began working on revising its policies and procedures to establish new benchmarks by which such transactions would be measured. HLC made two significant changes: it updated its procedures for review of Change of Control transactions and, in a politically astute move, also established a policy that Department of Education approval must be obtained before HLC acts on a change of control application, thus insulating itself from second-guessing in Washington. (HLC’s change was telegraphed in late 2016 when it deferred acting on the sale of the parent of the University of Phoenix to a private equity group pending prior ED approval.)

Significantly, HLC now has relatively clear guidance governing what is needed for OPM relationships and for-profit conversions.

How Do We Make Money? The Answer Is Simple – Volume

Meanwhile Coursera announced their plans to further focus on the monetization of supporting online degrees, as described at EdSurge on March 5th.

These days, though, many MOOC platforms are courting the traditional higher-ed market they once rebuked, often by hosting fully-online masters degrees for colleges and universities. And today, one of the largest MOOC providers, Coursera, announced it’s going one step further in that direction, with its first fully online bachelor’s degree.

Coursera is not alone here – most notably Georgia Tech and Udacity launched an online master’s of computer science in 2013. In a related move, edX has begun its work supporting online master’s degrees through its MicroMasters program, and FutureLearn – spun out of the Open University of the UK – supports multiple degree programs.

While the Coursera news focused on the new bachelor’s program, the bigger news was the expansion its graduate programs as described at Inside Higher Ed.

Online education platform Coursera has set a goal of offering 15 to 20 degree programs by the end of 2019. The company took another step toward that goal Wednesday, announcing new degree offerings from the University of Illinois at Urbana-Champaign and France’s HEC Paris.

“This is our coming-out party for online degrees on Coursera,” Nikhil Sinha, Coursera’s chief business officer, said in an interview.

FutureLearn announced their own expansion of online degrees last month.

For the MOOC providers, their move into the OPM space seems to be driven by their leverage of current registered learners as a marketing channel, as described in a separate IHE article.

Roughly half of the students in Coursera’s current degree programs took one of the open online courses first, essentially enabling students to “try these degrees before they buy them,” Maggioncalda says. So not only do students have a chance to see how they like a professor, or how well they perform, before enrolling in the for-credit program, but Coursera also asserts that it can drive down the cost of acquisition of students by tapping into its 31 million users.

Coursera’s institutional partners “share a certain percentage of the learner fee with us in exchange for distribution to our world of learners, and the whole delivery of the system on our platform,” Maggioncalda says.

New OPM Models

Two years ago we described how the OPM market has evolved beyond its full-service tuition revenue-sharing origins to add unbundled service offerings – not to replace the previous model but to augment it. What we are now seeing are two new models within the OPM market becoming much more clear: the remnants of for-profit conversions into nonprofit status, and MOOCs supporting online degree programs. Both of these models are driven by markets that need to move beyond their origins as well. A lot of changes happening in the education space.
March 13, 2018
Top Hat Marketplace: What is it and should we care?

When Top Hat announced their latest round of financing a year ago ($22.5m), I admit to having been skeptical, or more accurately cynical, about their stated purpose. The company was primarily known for its mobile and laptop-based classroom response system , but now it is claiming to be a digital content company.

Top Hat, the Canadian education technology startup, completed a new round of funding to give it more firepower to go after textbook publishers like Pearson Plc. [snip]

Top Hat is one of a handful of startups trying to find ways to disrupt the traditional textbook publishing industry, dominated by companies like Pearson, Cengage Learning Inc. and McGraw-Hill Education Inc., which is owned by Apollo Global Management LLC. All of these firms have added digital educational materials to their range of products, but the transition has been rocky.

Then in the summer the company announced their new Marketplace.

The Top Hat Marketplace answers the urgent need of professors and instructors to easily find and create educational content that is interactive, easily customizable and much more affordable for students than conventional textbooks. The educational content in the Top Hat Marketplace breaks the slow-paced publishing model by allowing educators to provide one another instant feedback. This collaborative community-sourced model means that the Marketplace’s content is continually being updated and improved upon.

We at e-Literate have been covering the long-running and messy transition to digital curricular materials, including the search for new business models for content companies. But the announcements from Top Hat, to me at least, had the feel of a company pivot leveraging big, bad publishers as the bait for naive investors. Quite often it feels like the official greeting of ed tech entrepreneurs has either been “we’re going to beat Pearson” or “we’re going to beat Blackboard”. Top Hat and its products do not neatly fit into typical categories, but this may mean that we’re seeing a new model emerge, or at least a modernized and serious attempt to establish the self-publishing model.

The Marketplace provides a series of textbooks and ancillary material, (course notes, question packs, presentations, etc) that instructors can browse, adopt, modify, and share with students either as mandatory or recommended resources. Students pay fees between $0 and roughly $65 for the materials. A spokesperson for Top Hat clarified a recent change:

As we’ve already discussed, 90% of the content in the Top Hat Marketplace is free for instructors and students to use. However, by the end of January, students no longer need to use the Top Hat engagement app to access this content—meaning, students will no longer need to pay the per-term app fee to use free textbooks and content.

Other than reasonably low prices, nothing noteworthy so far. What is unique is that there are two primary sources for the content – self-publishing by instructors and open education resources (OER) from OpenStax. As described in the press release this summer:

“We leveraged our existing relationship with educators already using our classroom engagement tools to test and launch the Marketplace,” said Mike Silagadze, co-Founder and CEO of Top Hat. “The Marketplace finally puts educators — the people at the forefront of learning — in charge of their course materials.

The Marketplace has been designed as a self-publishing platform for educators designed around collaboration tools called Textbook. I interviewed Demian Hommel, senior instructor of geography at Oregon State University, and his experience helps explain the path that Top Hat is taking from classroom response systems to content marketplace. Hommel is an “an advocate for place-based and experiential education, service learning, and research-informed teaching” and has used the classroom response system for several terms. In the meantime, he has wanted to create a geography textbook but did not want to go through the traditional publishers. Since he already knew of Top Hat, when they announced Textbook and the Marketplace Hommel decided that he wanted to go with the self-publishing route.

Hommel’s interest in publishing models does not seem to be driven by financial considerations, at least for himself, as he said he is not sure how well Top Hat will be able to scale usage of the Marketplace. One big driver for self-publishing was the interest in keeping the textbook current in a changing world of geography. Hommel views the Marketplace as providing a convenient platform enabling active learning techniques and the ability to control and update his textbook over time.

There is another differentiator in how Top Hat provides content – the remarkably easy method to enable instructors to modify content, whether in the authoring process or as customizations to content that instructors choose to adopt. Basically, if you can author a post in Medium, you could create and modify content in the Top Hat platform.

Consider Hommel’s Geography textbook. Here I have added the book to my course and hit edit in one section. By placing the cursor between text and an interactive text discussion prompt, then choosing the pop-up “Add” icon, I get the choice to add any of the following elements:

This is the same interface as originally used to author the textbook. Beyond the ease of editing (customizing for my class, adding my content) is the apparent ease of accepting updates from the content author, based on a new feature introduced in a limited trial in September. The instructor sees a notification about updated content, reviews the updates, and (if all works out) decides whether to update while maintaining any customizations made by instructor.

The functionality also promises to allow an instructor to review and adopt customizations made by others who are working on the same base content.

This is not an easy problem to solve, but if Top Hat is able to resolve how to deal with conflicting updates and local customizations, the intuitive user experience could change how faculty members and course designers collaborate and update content.

Top Hat does have some real challenges in establishing themselves as a full-fledged content provider. One was mentioned by Hommel, when he pointed out the lack of broad awareness of the Marketplace amongst faculty even at his university. Top Hat is known for its classroom response and presentation systems, and with the Marketplace acting as a two-sided market, it needs sufficient supply of self-publishing content and sufficient numbers of adopting instructors.

CEO Mike Silagadze response when I asked him about the adoption challenge is that the Classroom adoption, which they claim to be used “at 75% of North America’s leading colleges and universities and reaches millions of students”, has established Top Hat’s direct relationship with thousands of faculty members. In this way, they are betting that Demian Hommel is a model – aware of company through Classroom, interested in textbook usage based on self-publishing model, and willing to extend their personal usage of the company’s products.

One other challenge is that it is not a done deal that self-publishing has sufficient demand on the content creation side. Are there enough instructors in a broad array of disciplines who want to invest the time and effort to create textbooks without a clear model of possible financial reward? This is the bet that Top Hat is making, that the market can grow to the point that there are reasonable clear answers on financial rewards. And there is the hope that there are enough Demian Hommels who are willing to make these commitments without financial drivers.

I do not know if this product will take off, but if it does the Marketplace would establish a viable self-publishing model for faculty willing to work within the Top Hat platform. Over the past year in particular, the landscape of digital curricular materials is adding new models, and the Marketplace is worth watching.

There is also an OER angle based on Top Hat’s marketing and the OpenStax partnership, which I’ll describe further in another post.

Update 1/8: Corrected timing on change to student access and fees.

January 7, 2018
Cengage Unlimited Draws the Battle Lines in the Curricular Materials War

As Phil wrote about recently, Cengage has announced “Cengage Unlimited,” which is being described in various outlets as the “Netflix” or “Spotify” of curricular materials. It’s an all-you-can-eat digital subscription service to Cengage’s complete catalog. Spotify is probably the more apt comparison, both because the Netflix analogy is contaminated and because the music industry is a more apt analogy for the economic pressure this puts on content creators.

Make no mistake; this is a potential inflection point in the curricular materials market. There is a war raging between curricular materials that are “good enough,” meaning that the lower price has a bigger impact on student outcomes than any differences in the quality of more expensive alternatives, versus “better enough,” meaning both instructors and students believe the product makes a sufficient difference in student outcomes that the more expensive product is worth the premium. Cengage is betting the farm on “good enough” beating out “better enough” and, win or lose, their bet could cause tectonic shifts in how curricular materials are developed, purchased, and used. It will have implications for inclusive access, adaptive courseware, textbook companies, textbook authors, and the landscape of options available to students and teachers.

(more…)

January 7, 2018
Before We Turn Over Curriculum To Apple And Amazon . . .

Recently I have been interviewed twice by EdSurge regarding education initiatives by the Big Five tech companies (Amazon and Apple, specifically). The first interview centered on iPads for all and Swift programming initiative at the Ohio State University.

Hill believes Apple’s main motivation to do this collaboration with Ohio State was to sell devices.

“The way I sort of look at them, Apple is like the Godot of education, where they’re the world’s largest company, and people keep waiting for them to do something meaningful in education, and not just sell devices, but actually get involved in education, change the game somehow,” says Hill.

That has been a pattern with Apple, he argues, pointing to a big iPod program at Duke University in the early 2000s, which many see as failing to live up to the hype, or the failed iPad program at Los Angeles Unified School District more recently.

Beyond the device sales, however, the more significant part of the initiative centered on programming skills:

[The Apple / OSU collaboration] seeks to “integrate learning technology throughout the university experience,” an iOS design laboratory and opportunities for students to learn coding skills to make the ready for a career in the “app economy.”

This plan is based on Apple’s “Everyone Can Code” initiative that sets up labs and a curriculum to teach students to program in Swift, Apple’s app language primarily designed for iOS, tvOS, watchOS, and macOS (although there are a small number cases of using it for Windows and Android). Just two weeks after the Ohio State news, Apple announced that “Australia’s RMIT Joins More Than 20 International Universities in Adopting Apple Curriculum”.

Apple today announced the global expansion of its Everyone Can Code initiative to more than 20 colleges and universities outside of the US. These schools will now offer the App Development with Swift Curriculum, a full-year course designed by Apple engineers and educators to teach coding and app design to students of all levels and backgrounds. Now hundreds of thousands of students from around the world gain the opportunity to become proficient in the Swift programming language and build the fundamental skills they need to pursue careers in the booming app economy.

In a second interview with EdSurge, I was asked about recent support from Amazon giving away Echo devices and promoting Alexa.

In August, Amazon gifted 1,600 Echo Dots to engineering students at Arizona State University living in a new dorm. John German, an ASU spokesperson, said at the time that the university’s motivation was to develop an opportunity for its engineering students to get skills in the “emerging field” of voice technology. An Amazon spokesperson explained in August that Amazon officials imagine a world where their devices are entwined in student life.

To push these efforts further, Amazon launched the Alexa Prize, a research competition where university teams developing new ideas for conversational artificial intelligence can get monetary prizes. A team from the University of Washington won the 2017 competition, getting $500,000. Applications are now open for the 2018 competition.

My comments on the combination of moves by Apple and Amazon:

For Phil Hill, an edtech consultant and blogger at e-Literate, it’s no surprise that big tech companies want college graduates to be familiar, if not well-versed, with their tools. He says these companies want to fill the gap “between traditional corporate training and higher education,” creating a “tighter connection” between students getting a college degree and an initial job with the needed skills.

It’s not a new endeavor by any means. Hill remembers that in the 1980s, Sun Microsystems provided workstations for university students. The company’s business plan explicitly stated under its marketing approach to put “SUN workstations into selected universities to gain visibility.” The idea, says Hill, was to get people “sort of hooked on using Unix” and programming skills that could be used in the workforce.

Sun also worked closely with schools to establish physical training centers. In 1999 the company and the University of Pittsburgh opened an “Academic Java Center” meant to train and certify students in Java technology.

Beyond showing my age, what I wanted to highlight with the SUN comments is that there has been a big change in tech industry that colleges and universities should be cautious about. The big five tech companies operate on closed ecosystems, with custom programming languages, custom devices, and proprietary platforms. Whereas the focus on Java in the 80s and 90s enabled students to learn a general-purpose language that could run on any number of platforms, Swift is primarily for the Apple devices, and Alexa is for Echo. Company-specific languages and technology.

The initiatives from Apple and Amazon are not just to give out freebies, they intend to get more students learning their proprietary languages and coming out of college with skills applicable to their closed ecosystems. Also mentioned by EdSurge is an initiative from Google to promote its virtual reality platform Daydream. These efforts specifically include designing curricula for higher education institutions to adopt.

Perhaps it would be useful to compare these recent initiatives with the Cisco Networking Academy, which provides curriculum and support for 9,500 schools and over 1 million students worldwide that “identifies and develops the skills people and businesses need to thrive in a digital economy”. ((Disclosure: Cisco is a past client of MindWires, our consulting business, including advice on Networking Academy. Amazon is also a past client.)) The Networking Academy also includes Cisco hardware and software as part of their package, and there is a focus on Cisco-specific platforms.

One difference, however, is that the Networking Academy can lead to general-purpose certifications in addition to Cisco-specific ones, including those for C, C++, Linux, and CompTIA entry-level computer installation.

What we see here is an evolution of big-tech support for colleges and universities that mirrors the general tech industry migration from more-open to more-closed ecosystems. Higher education institutions need to be fully aware of and cautious of these changes, as the more recent efforts lose most of the general-purpose educational outcomes and encourage students to move into a closed ecosystem. An Ohio State U graduate of the future who has gone through the Everyone Can Code curriculum will be much more likely to remain an iOS app programmer than an Android programmer, for example. This means that the schools entering into the new partnerships are tying themselves much more closely with specific companies than was the case in the past.

There are real benefits to these initiatives (even though the iPads for all benefits are overblown), but these decisions should not be taken lightly just for the promise of free stuff. There are real implications to tying curriculum to specific company ecosystems. And maybe schools would do well to insist that these partnerships include support for alternative languages and more general-purpose learning outcomes.

Update 12/30: Clarified language that while Swift is primarily designed for Apple devices, it can be used in cases for others. See comments below for additional info.

December 29, 2017
Cengage Unlimited Textbook Author Update
The Textbook & Academic Authors Association has a blog post up exploring the implications of author royalties that I raised in in my last post on the subject. Here are some of the highlights:
- What we’ve heard from Cengage’s competitors is true; most of the authors were not given significant notice prior to the announcement. This was done for reasons of competitive secrecy; Cengage didn’t want the word to leak out before they were ready.
- Because Cengage Unlimited doesn’t officially launch until August 2018, the company believes it will have time to work out the details with the author.
- Cengage has stated that it intends to honor existing contracts with its authors but also claims that those contracts grant it the flexibility it needs for Cengage Unlimited.
- There is precedent for coming up with pricing models. Publishers already bundle products together and have contractual provisions in place to handle pricing for such bundles. So legally, they have a precedent. But how this would apply to an “everything” bundle is far from clear.
- A key to figuring out author royalties on these bundles will be usage, which means new technology tracking and some uncharted territory in terms of metrics. For example, Cengage says that the student just putting a product in their digital locker is not sufficient to count as usage for royalty purposes. But then what is? And does the publisher have the ability to track this usage reliably? And how intrusive would this tracking be?
- The lawyers quoted in the article definitely give the impression that there is a lot of gray area—and variability—in terms of what author contracts do and don’t permit. So there will be Intense negotiations and quite likely some lawsuits (although author lawsuits against textbook publishers is apparently relatively common).
- The argument given by Cengage to its authors is that the authors have as much motivation as publishers to get back to a world in which all students buy their curricular materials, even if it’s at a lower price.
I see a couple of main take-aways from this. First, we should not underestimate the complexity of the move that Cengage is making from legal, technical, and financial perspectives. And they definitely don’t have it all figured out yet.

Second, the question of royalties and what counts as usage is going to raise all sorts of analytics questions, some of which many overlap with student privacy concerns. Who has a right to know how much students are using books in which ways? And what steps are taken to keep those data properly anonymized for people who need the aggregate but not individual data (such as authors or their lawyers)?

Third, all this complexity is definitely going to incentivize Cengage to use as much content as possible that they either own outright or can adopt under a Creative Commons license.

And finally, the argument that Cengage is making to its authors brings to mind yet another analogy to a disruptive service in the tech industry. We’ve already seen analogies to Spotify, Netflix, and Amazon Prime for Cengage Unlimited, but it may be like iTunes in one important respect. The idea is that it reduces incentives for piracy by giving students easy access to the product at a reasonable price is exactly the same argument that Apple made to the music industry.
December 23, 2017