Cengage Learning, Inc., the second largest publisher of higher education course materials in America, filed for Chapter 11 bankruptcy protection Tuesday. The move had been expected by financial analysts.
The company hopes to eliminate about $4 billion of its $5.8 billion in debt, the company said in a statement. The company's chief financial officer, Dean Durbin, blamed the company's woes on the move away from traditional printed textbooks to digital offerings, cuts in government spending since the recession, and piracy of its materials.
In a court filing, he said the company is working on a new business plan and pointed in particular to MindTap, a new cloud-based platform the company has elsewhere described as "more than an e-book and different than a learning management system." The company expects to continue to make timely payments to its vendors and offer the same wages and benefits to its employees, it said in a press release.
“The decisive actions we are taking today will reduce our debt and improve our capital structure to support our long-term business strategy of transitioning from traditional print models to digital educational and research materials," CEO Michael Hansen said in a statement. "Cengage Learning began an operational transformation six months ago under the leadership of our new senior management team, which is executing bold plans to enhance our customer relationships and introduce innovative digital and print products and solutions to meet our customers’ evolving needs."
Florida Governor Rick Scott signed a bill into law last week to encourage the state's K-12 and higher education systems to use massive open online courses, or MOOCs.
The law has narrower scope than early versions of the bill but its critics remain deeply concerned. An earlier proposal could have allowed anyone to create and seek “Florida-accredited” status for courses that Florida's public colleges and universities would have to granted credit for.
The bill Scott signed allows MOOCs, under certain conditions, to be used to help teach K-12 students in four subjects and also orders Florida education officials to study and set rules that would allow students who have yet to enroll in college to earn transfer credits by taking MOOCs.
Tom Auxter, the president of the 7,000-member United Faculty of Florida, said "intense and feverish" opposition from faculty helped scale back the plan. Still, he warned of a generation of "cheap and dirty" online courses offered to students before they enroll in college. “No matter how many times they use ‘quality,’ this is a cheapening of what higher education is all about,” Auxter warned, referring to supporters of MOOCs for credit.
Republican State Senator Jeff Brandes, who sponsored early versions of the bill, did not give the unions or faculty credit for the changes.
Much remains up in the air now, though. Brandes said he expected the scope of the law to eventually be expanded. Much will also be decided in coming months as state education officials study the issue and set rules about how to use MOOCs for college credit. “We’re giving them two years to set up all the rules and procedures they need to allow us to work with Udacity, or edX or Coursera to offer their wealth of knowledge in Florida,” Brandes said, referring to three MOOC providers.
Dean Florez, a former California state senator who leads the Twenty Million Minds Foundation and generally supports efforts to expand online education, said the Florida law encourages "practices that consider the future of the classroom from the early years into college.”
“Florida has recognized the opportunities inherent in MOOCs and in admirable fashion reached consensus on a bill incorporating all public education systems, from K-12 to higher ed,” he said in a statement.
Admittedly, it’s not one of the more urgent or troubling questions raised by Edward Snowden’s revelation that the National Security Agency has been collecting online communication on a massive scale. But I ask it anyway, in complete seriousness: How does PRISM deal with all the spam?
By a conservative estimate, spam makes up at least two-thirds of e-mail traffic; the figure can run as high as 90 percent. Only a little of it breaches the filters on your e-mail account, though not for want of spammer ingenuity. In addition, there are the spam blogs (splogs) and related webpages -- billions of them -- offering “content” consisting random bits of text copied from other sites, or streams of complete gibberish, with a few advertising links sprinkled throughout. Shady enterprises set them up to drive up the search engine rankings for the product or company so advertised.
So how does the NSA navigate across this bottomless, churning ocean of spam? Are there digital warehouses full of it somewhere -- systematically recorded and indexed, just in case Al Qaeda is hiding messages among the offers for online gambling, cheap term papers, and penis-related pharmaceuticals? Is there an exhaustive map of all the botnet systems out there – the networks of computers infected with software that turns them into one giant platform for distributing spam, or launching cyber-attacks? Is spam not just an irritating fact of life but a potential implement of 21st-century warfare?
Three paragraphs ending in question marks seem like enough -- and all I have are suspicions, rather than answers. A normal response to spam is to ignore it or to resent the intrusion. Thinking of it as a definitive factor in contemporary life seems … peculiar. But Finn Brunton’s unexpectedly captivating book Spam: A Shadow History of the Internet (MIT Press) demonstrates that the stuff does far more than just burden or pollute the normal process of online communication.
For Brunton, an assistant professor of information at the University of Michigan, spam must be understood as a historical phenomenon – an especially dynamic nuisance, mutating almost as fast as anyone can figure out how to block it, transforming the digital environment by constantly flooding it. In a compact formulation that becomes richer as the book advances, Brunton defines spamming as the process “of leveraging information technology to exploit existing gatherings of attention.” Its history “is the negative shape of the history of people gathering on computer networks… It is defined in opposition to the equally shifting and vague value of ‘community.’ ”
That history spans at least four decades. The origins of the term in an infectious “Monty Python” skit give some indication of the community first obliged to deal with spam: the pre-Web brotherhood of techies that emerged around ARPANET and consolidated itself via the early computer bulletin boards, MUDs and MOOs, and Usenet. “Because it’s a joke whose humor relies on repetition,” Brunton writes, “and because geeks love ‘Monty Python,’ it became a rather tedious running gag in the early culture of networked computers” for a geek to cut-and-paste the word “spam” repeatedly.
The term’s application then expanded to cover various other impositions on everybody’s patience. Someone posting Star Trek fan fiction to a Lord of the Rings group, or vice versa, was spamming. So was the con man who – around this time 25 years ago – posed as an impoverished college student, asking people on scores of newsgroups to help him out by mailing a dollar to a post office box in Nebraska. This seems to have precipitated the first massive anti-spamming effort: after identifying the malefactor’s name and phone number, the offended parties made sure he received lots of hate mail, late-night phone calls, and unwanted pizza deliveries. Brunton treats this nonviolent vigilantism as a symbolic variant of the charivari, an old folk custom in which the community expressed its disapproval by surrounding someone’s house and making enough noise to raise the dead.
Early debates took place over how best to prevent or respond to spamming – by having groups come up with and self-enforce rules of conduct, for example, or a moderator serving as benign despot, or digital charivari measures administered with extreme prejudice. The strategies and tactics up for discussion were less a product of some pre-existing community spirit than improvised responses to bad behavior by obtuse newcomers. Resorting to legal or political measures in the offline world was not really an option, given the milieu’s libertarian streak.
By the early 1990s, more and more newbies were showing up on the Internet, only to find it “governed by cliques of weird, ferocious nerds only too happy to dictate when and how outsiders could speak, but [with] no power beyond their internal consensus.” Next year will be the 20th anniversary of the advent of spamming in the form everyone knows and loathes it today: “On April 12, 1994, users of roughly 6,000 active newsgroups logged on to find a 34 line message” advertising the legal services of a couple of moderately shady lawyers in Arizona. A few months later they would publish a book called How to Make a Fortune on the Information Superhighway, although not before provoking the mother of all charivaris: automatic phone calls filling their answering machine with noise, sheets of black construction paper faxed to their office until the machine burned out, and one of the earliest denial-of-service attacks mounted against their Internet service provider... “Usenet as a whole still operated within fairly tight limits of bandwidth, memory and cost,” Brunton points out. “Two individuals in Arizona had just enormously overconsumed the pool of common resources.”
But as understandable as the rage this inspired may have been (it’s gratifying to learn that one of the lawyers was eventually disbarred) ad hoc retribution could never have much deterrent effect, given all the money to be made. Brunton goes on to trace the rise of spamming as an increasingly despised though legal aspect of e-commerce -- and its quick degeneration into reliance on dishonest and exploitive techniques such as phishing.
Between the threat of anti-spamming legislation and the development of ever more effective tools for blocking spam, it became difficult for the merely shady businessperson to make quick, dishonest buck. The field was abandoned by just about everyone but the outright criminals harvesting credit card information or planting malicious software on the unwary public’s computers. Towards the end of the narrative, Brunton discusses a less-crooked though equally mercenary practice: the use of spammy techniques to influence search-engine results. As with e-mail filtering, search-engine algorithms are constantly under development to spot and deflect spam – which in turn inspires efforts to game the system.
Spam is “the hyper-thyroidic version of existing uses of the Internet. Spammers take advantage of existing infrastructure in ways that make it difficult to extirpate them without making changes for which we would pay a high price, whether in the hobbling of our technologies or in contradicting the values that informed their design.” And Brunton ends on an unexpectedly challenging note:
“If ‘spamming’ at the most general level is a verb for wasting other people’s time online, can we imagine a contrary verb? That is, can we build media platforms that respect our attention and the finite span of our lives expended at the screen? How would all the things transacted on a computer screen look if they took our time – this existential resource of waking, living hours in a fragile body – as seriously as they could?”
This book, the author’s first, started life at the University of Aberdeen as a dissertation -- a thing difficult to believe because it is so consistently well-written. The analytical and narrative elements are joined in a cogent and seemingly organic way, rather than through the usual shotgun wedding of methodology and source material. I have not come across so absorbing and rewarding a scholarly volume on so unappetizing a topic in quite a while. As for my questions about how spam is being processed by the digital panopticon, that's something for a later historian of spam to explore. Much later, let's hope.
Lawyers and a disability rights advocate stressed that faculty members must be proactive rather than reactive in making sure their online courses and materials are accessible for students with disabilities.
FutureLearn, the British provider of massive open online courses, is planning to create "badges" that can be earned for each section of its MOOCs, Times Higher Education reported. This will make it easier for those who enroll to show that they have learned something even if they do not complete the course. Martin Bean, vice chancellor of the Open University, which created FutureLearn, said that it was "sad" when journalists talk about those who don't finish MOOCs as "dropouts." He said that these badges might change that. "As a vice-chancellor I get very annoyed when I see people who don’t complete [courses] described in negative terms. We’re trying to design FutureLearn pedagogy around a 'mini-MOOC' model, shorter in duration and broken down into bite-sized pieces," he said.
Love MOOCs or hate them, there’s something to disappoint everyone in the Udacity/Georgia Tech services contract amendments that Inside Higher Ed’s Ry Rivard obtained through a public records request.
Although MOOCs have monopolized definitions of higher education reform for nearly two years now, some academic managers have wondered whether they shouldn’t extend online instruction on the base of their existing online programs, rather than partnering with an MOOC platform like Udacity. A consortium of Midwestern research universities recently took a major step in this direction in suggesting that their members might evolve their own "coordinated platform for the development and delivery of online or blended courses” for the whole consortium’s use.
In contrast, the strongest argument to skip internal development and hire MOOC companies has been the companies' claim to bring revolutionary cost savings to colleges and their students with their revolutionary technology. Unfortunately for all concerned, there is no sign in the Udacity spreadsheets of massive online cost-cutting services. Nor can the savings that do appear be traced directly to the Udacity platform.
The contract, between Udacity and the Georgia Tech Research Corporation (GTRC), aims to create a MOOC master’s degree in computer science — described as "the first professional online master of science degree in computer science (OMS CS) that can be earned completely through the ‘massive online’ format." The hook is the low low price -- $6,630, according to Rivard, or one-seventh of the $40,000-plus price of a face-to-face computer science M.S. at the same institution.
But when we look for massive cost savings in the Georgia Tech-Udacity spreadsheets, what do we find? In Year 1 (Exhibit H), things don’t look so cheap. The two entities together will spend about $3.1 million running a program for an estimated 200 students in the first semester. This comes to around $15,700 per year per enrolled student. The figure is close to what the University of California Office of the President says it spends educating all UC students averaged together (Display 6). In Year 1, Udacity-Georgia Tech costs look like those of a good, conventional public university program.
But wouldn’t Semester 1 naturally be burdened by start-up costs and a steep learning curve? Yes, were Georgia Tech designing the platform from scratch. But Udacity is supposed to have already solved higher education’s "cost disease" with its technology. We’ll note that Year 1 is not plug-and-play. Years 2 and 3, when student volume increases, feature courses that are in the can, and low marginal costs of instruction could kick in.
Here’s where things get disappointing.
First of all, the budgets don’t fit with the enrollment plan. Each student takes "6 credit hours (2 courses) per semester" in a 12-course master's. The enrollment forecast "assumes 200 pending full standing (degree-seeking) students begin the program each semester and all 200 in semester 1 become full-standing students .... in semester 2." So in semester 6, the enrollment forecast has semester 1 students in their final term, and five more semesters of 200 new students apiece, for a total of 1,200 students. That is a lot of growth in the existing program that now admits 150 new students a year (page 2). But on the spreadsheet, year 3 revenues have increased nearly 14-fold, to over $19 million. This income requires over 2,800 student FTE in Year 3 (based on Year 1 per-student revenues), which is more than double the enrollment forecast found in the footnotes.
But in fact, the partnership is not collecting $6,630 per year but per degree, and the degree is estimated to take three years. So the typical student in any given year is paying $2,210 in tuition. At that annual price, $19 million of Year 3 revenue requires 8,700 paying student FTE. This figure is larger than the total number of computer science master’s degrees granted in 2009-10 in the United States (Table 4). Even after noting an untapped global market, this Year 3 number is not credible for degree program enrollment.
At least two conflicting enrollment scenarios are supported by different parts of these documents: (1) growth to 1,200 in Semester 6, and (2) growth to 8,700 in Year 3. (1) fits with reasonable estimates of the time it takes to design and produce new classes, hire and train many "course assistants" (CAs), solve infrastructure issues, and so on, while abiding by the Georgia Tech faculty’s desire to enforce the institution’s high academic standards.
Scenario (2), however, fits with MOOC hype about the "digital revolution" cracking open closed universities to massive global markets by teaching at "effectively zero dollars marginal cost per additional student," in the words of Coursera's co-founder, Daphne Koller. With $14.4 million in expenses in Year 3, a OMS CS with an implausible enrollment of 8,700 students would spend about $1,655 per year per student, or under $5,000 per degree. The cost is ultra-low for a master’s degree, or for any other kind.
How would the OMS CS get to this cost? The simple answer is that it wouldn’t. The faculty working group expected a 30:1 student:TA ratio. The contract says 1 contact hour per student credit hour, or 104,400 contact hours per year for 8,700 students, each of whom gets a total of 12 hours of personal attention in that time, or 36 hours over the 3-year program. At the same time, the first-year co-sponsor, AT&T, expects 100 percent online instruction, which is cheap only when stripped of personal attention (whether online, via Skype, or in person). There is a big difference between 290 CAs with the 30:1 ratio, the 87 who at 40 hours a week could deliver 12 hours per student per year, and zero for the online model that eliminates personal attention. (The budget for student support suggests something close to 87.) With this slippage, Udacity can appeal to the corporate belief that the future of teaching is no teachers, while hiring quasi-teachers to suppress that belief’s results.
Let’s turn from price to cost. Regardless of real enrollment growth, the spreadsheets undermine two key assumptions about commercial MOOCs. The first is that MOOCs offer an automation of teaching that will allow the elimination and/or the cheapening of most teaching staff. This is how Taylorism worked in assembly-line industrialization, and how robotics has worked in manufacturing.
But in the budget, the category of "student support" grows in lockstep with revenue (up 13.8x and 13.9x respectively). One simple reason is that the Georgia Tech faculty wants the OMS CS to have "world-class quality," and that means "blended" or "hybrid" courses. Fully online courses are cheaper, but they generate the highest attrition rates in the history of higher education. Quality MOOCs are always blended MOOCs, and blended MOOCs have lots of CAs (coming mostly from Udacity), which means they aren’t actually MOOCs in the sense of the imagined near-zero personnel costs that has set the business and policy worlds on fire.
This is an important admission that a MOOC is "as good or better" than hands-on instruction only through much hands-on instruction. (Coursera’s recent announcement of 10 public university partnerships also focuses on blended services.) This blocks online’s alleged cost revolution — although online support for instruction obviously helps with costs.
Next, there’s an unpleasant surprise in the equally relentless growth of "Operations, Materials, & Supplies." This is where Udacity’s proprietary technology was supposed to rescue teaching budgets from the medieval methods that currently bloat them. In fact, looking at the budget, its platform does nothing to cut operating costs. The cost of examinations is particularly large. The big savings, ironically, come by squeezing innovation — payments to course creators flatten out — and by leveraging overhead. But there’s nothing novel in these practices. It’s easy to reduce expenses by giving the same lecture over and over, which is what existing online courses are designed to do. The same goes for running more volume on the same equipment, which is another time-honored university tactic.
The Udacity-GTRC contract raises the question of what exactly Udacity brings to the table. First, it brings its platform. Yet its platform is not transformative — not visibly better, faster, or cheaper than what Georgia Tech’s computer science department has already created or could create with new resources for this purpose.
Second, there are some net revenues. With a profit of $1,665 per degree, the program would earn $14.5 million on the untenable 8,700 graduates, or about $4.8 million per year. Sixty percent of this total (or $2.9 million) would go to GTRC. This amounts to a bit over 1 percent of GTRC’s annual research revenues, even with this high number of enrollments. On top of this, GTRC would get 20 percent of gross revenues and 20 percent of gross profits for non-OMS students that use Georgia Tech courses through Udacity. But these are MOOC students who will in general not pay anything. Georgia Tech probably has better margins on its existing extension programs, and could also support its institutional needs with new, smaller programs that it runs on its own.
What Udacity does bring to the table is platform branding. The company has positioned itself as a first mover and dominant player in what it describes as a new global market. Its founder is high-status, famous, and influential. Sebastian Thrun is associated with Google’s driverless car and with Stanford’s artificial intelligence program. He co-signed a deal to provide three entry-level courses to San Jose State University in the presence of the governor of California.
A similar story of brand dominance can be told about Coursera and its co-founder Daphne Koller, whose access to decision makers extends to the World Economic Forum conference at Davos. The three main MOOC companies have had the clout to sign deals directly with a given institution’s senior managers, over the heads of the university faculty. Since Internet and communications technologies seem always to lead to oligarchy (Google/Bing/Yahoo) or duopoly (Apple OS /Microsoft Windows), Udacity can pitch its platform as one of the very few ways for universities to stay in a global online game.
In exchange for presenting itself as an oligarch in waiting, Udacity extracts quite a bit from Georgia Tech. Udacity gets the intellectual content for a master’s program of 20 courses at an upfront cost of $400,000. It borrows Georgia Tech’s reputation as its own, at a huge discount (no training of graduate students, no support for labs, no decades of accumulated know-how through which Georgia Tech earned its reputation). It acquires these courses for a proprietary platform: Georgia Tech cannot offer these OMS CS courses, created by its own faculty, to a competing distributor.
Udacity expects Georgia Tech faculty members to maintain and update course material, and can use their latest version. While requiring that Georgia Tech not compete with it, it can take Georgia Tech-created courses and offer them to tens or hundreds of thousands of non-registered students — and sell a program certificate for those courses. These courses will differ from Georgia Tech’s in being "minimally staffed to rely on course assistants only for student assessment," but will use Georgia Tech’s content to compete with Georgia Tech’s and all other masters’ programs. With these courses, Udacity enters the master's certification business, selling a complete degree program without a degree’s intellectual ecology, physical infrastructure, interpersonal venues, and sunk costs.
Udacity’s business model requires that it become a dominant platform. With a series of Georgia Tech-style deals for entire degree programs, it could leverage university content — with sustained free-riding -- to appear to the public as a global university.
For two years, claims about the cheapness of the MOOC format overcame widespread doubts about their educational and social effects. During this time, the main MOOC companies did not release specific financial projections. Now we finally have two spreadsheets, and their claims to cheapness are not confirmed.
If these costs are typical, it will be more efficient for universities to partner directly with other universities to develop online instruction for underserved students -- and avoid taking on yet another middleman to do one of their two basic jobs.
McGraw-Hill Education plans to acquire adaptive learning software maker ALEKS. The software maker and the publishing giant have worked together over the past decade on math courseware for McGraw-Hill. ALEKS also has a standalone product, which McGraw-Hill said it will continue to offer in the "near term."
The acquisition marks McGraw-Hill's first since it was acquired by private equity firm Apollo Global Management. ALEKS is one of a number of companies trying to figure out how to make education software respond to and aid students.
In today’s Academic Minute, Vasileios Lampos of the University of Sheffield reveals what detailed analysis of a period literature says about the spirit of the age. Learn more about the Academic Minute here.