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Matchmakers: The New Economics of Multisided Platforms by David S. Evans and Richard Schmalensee
Published in May of 2016.
There are two book that every person who wants to radically disrupt higher education - and every person who wants to preserve the core practices and culture of higher education - should read.
These are the same two books. And neither of these books are about higher education.
They are, Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You - co-written by my colleague Geoff Parker (see my review here), and Matchmakers: The New Economics of Multisided Platforms.
For both good and for ill, platform thinking is coming to higher education. We need to be prepared.
The central argument of Matchmakers is that modern multisided platforms, such as Airbnb and Uber, have the potential to disrupt incumbent industries at a pace and scale that are dramatically different than in the past. A multisided platform is one that matches buyers and sellers of a service or product, but that does not offer that service or product itself.
These platforms are nothing new - in fact they are as old as the ancient market bazaar - but a combination of information age technologies has fundamentally altered the impact of these matchmakers. Uber is able to disrupt the taxi market (and in the future perhaps the private automobile ownership market), only because of the emergence of smart phones, mobile apps, and unlimited bandwidth.
Matchmakers, which really should be read alongside Platform Revolution, does an excellent job of reviewing the conditions in which platforms succeed, (such as OpenTable, YouTube and Facebook) - and when they fail to gain or lose traction (such as MySpace, Google+, and Friendster).
The question left unaddressed in Matchmakers is how should the track record of multisided platforms disrupting incumbent industries influence how we think about postsecondary innovation?
Is higher ed ripe for a new set of competitors to leverage the advantages of unlimited bandwidth and ubiquitous computing to improve access, lower costs, and increase quality?
A more fundamental question may be are colleges and universities already multisided platforms?
The postsecondary business model is one that aggregates funding from students (tuition), government (state funding, research grants, etc.), and philanthropy. Highly selective institutions don’t try to maximize tuition revenue - as doing so would threaten selectivity, student quality and diversity - a result that could lead to decreased status and lower levels of philanthropy. The research and teaching missions of a university are always in delicate balance, with some schools choosing to prioritize externally funded research over a highly tuition dependent model.
And of course, the best institutions need to attract and retain both the most productive scholars and the best students. A college or a university is a platform for investigators to conduct their research, and for educators to teach their disciplines - as much as it is a platform for students to gain experiences, an education, and a credential.
What might a school do differently if it saw itself in terms of platform thinking and platform economics?
What would we lose in terms of our social mission if we followed the logic of the platform?
The idea of the university as a platform is coming.
Those of us determined to preserve the core values of our institutions - values that are often at odds with the dictates of the marketplace and the current political environment - would do well to wrap our heads around the logic of the platform.
Both Matchmakers and Platform Revolution are excellent books. I recommend them both for any reading list on academic transformation.
What are you reading?
