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One of the consequences of the e-pill scenario that I painted in my Ephemeralization post is the increased threat to colleges and universities in the “middle.”

Most American colleges and universities lie in the middle between the seventy or so top institutions that are wealthy enough to set their own agendas — even in tough financial times — and the proprietary, for-profit universities whose growth seems to be unperturbed by the financial meltdown of the last couple of years.

For many universities in the middle, online instruction threatens to hollow out their value. This is especially true for those institutions whose courses have been charted to follow the elites. When I raised the possibility of new kinds of technology enabled courses, the reactions were predicable:  lots of reasons that the online experience was vastly inferior to in-person instruction.  If that’s the value that the middle is holding on to, then the rapid embrace of online courses by top institutions is a real threat as larger numbers of the best students enroll in elite online courses and  price-sensitive students continue to choose the customer-friendly, jobs-oriented online programs at proprietary colleges.

Now in today’s The Choice blog at the New York Times, Rachel Gross asks:

“What if you could graduate from an elite university without ever stepping foot on campus — if instead, you had merely to open your laptop?”

The implications are staggering:  no more artificial size limits for entering freshman classes; elite curricula repackaged; focus on market share. Can an elite institution enroll fifty thousand students?  In 2000, executives at Hewlett-Packard asked whether HP could profitably produce and sell a forty-nine dollar printer.  They are really the same question.

In both cases, the answer is yes, but only if you can figure out a way to grab and hold increased market share with increased quality and service. As HP found out, you cannot turn your value proposition upside down by nibbling around the edges.  You have to be prepared to dramatically change your business model.

If Rachel Gross is right, then top-ranked institutions are already making this leap.  No more arguing over the drawbacks of online instruction or snarky comments about the low-brow nature of the  for-profits.  That means some at the top have already figured out new business models. If so, they are not talking about it. Whether it is a razor-and-razor blade platform, a cost-cutting approach to commoditized courseware, or a hybridized delivery model, every advance at the top threatens the stability in the middle.  I don’t think many will survive by nibbling around the edges.