Thursday, November 14, 2013

Cable and College: A Response to Josh Boldt

Josh Boldt raised some eyebrows this week with his piece comparing the relationship between colleges and faculty to the relationship between cable companies and television networks.   He framed the piece around the tiff between Time Warner and CBS in New York.  In short, CBS wanted much higher fees from Time Warner for permission to rebroadcast its content.  Time Warner balked, and the standoff went on long enough that Time Warner briefly took CBS off its feed..  But CBS wound up winning, since it had football, and there was enough viewer outcry that Time Warner had to cave.   

Boldt reads the case to suggest that in the new economy, content providers -- whether networks or faculty -- actually have the upper hand, if they’re willing to use it.  They just have to be willing to get tough on middlemen, whether cable providers or colleges.

It’s an appealing metaphor.  It’s accessible, concrete, and flattering to his likely audience.  But I don’t think he followed the logic all the way out, and that’s why I don’t buy it.

What tipped the balance in the CBS-Time Warner dispute was the viewers.  They cared more about the loss of football than they did about higher retransmission fees, at least in the short term.  Or at least the loud ones did.  Since cable providers have monopolies in most of the areas they serve -- do NOT get me started on that -- customers don’t really have the option of choosing to go with someone else if they want cable.  In most of the country, it’s the local provider or nothing.  (Satellite helps somewhat, in some places, but not in apartment-heavy Manhattan.)  So customers can’t really vote with their feet.  And some content -- in this case football -- is unique; if you’re a Jets fan, you’re a Jets fan, and there’s just nothing to be done about that.

(Before I get the hate mail, let it be known that I was sentenced by the football gods to be a Bills fan, having grown up in Rochester.  Bills fans suffer enough that we can say anything about any team at any time.)

I don’t know which part of that is supposed to apply to the faculty-college relationship.  Most colleges don’t have local monopolies, at least in suburban and urban settings.  And most faculty don’t have well-known, highly desired expertise that is entirely unique to them individually.  Yes, there are exceptions at top-flight research universities, but I’m thinking of the average English or Psych professor.  Some are better teachers than others, but the whole concept of the transfer of credit assumes a certain level of consistency.  From the outside, non-experts (such as prospective students) can’t be expected to know which American history professor is a life-changer and which is merely competent.  They rely on institutions to do that screening for them.

In other words, in the case of the Time Warner-CBS conflict, the issue was scarce and in-demand content bumping up against a monopoly provider.  (The monopoly is starting to crack a bit with online options, but it’s still pretty powerful.)  In the case of exploited adjunct faculty, the issue is a panoply of providers trying to reach consumers who don’t know how to distinguish one provider from another.  In that context, the balance of power is very different.   The role of the aggregator in that context is far more important.

I’d draw different lessons from the cable tv parallel.

First, as I mentioned in my book, the old “variety show” that pre-millenials remember -- Donny and Marie, Tony Orlando and Dawn, etc. -- only made sense in a context of three or four broadcast options.  When channel options multiplied, the variety show became untenable.  People who wanted comedy could find comedy, people who wanted music could find music, and so on.  In a context of expanding educational options, similarly, I’d expect to see the “comprehensive” model come under increasing strain.  Institutions outside of rural areas won’t be able to be all things to all people anymore; they’ll have to pick niches.  I don’t go to Comedy Central to watch music, and I don’t go to ESPN to watch cooking shows.  Comedy Central and ESPN thrive by having distinct identities.  When the viewer has hundreds of options instead of three or four, providers survive by specializing.

Second, disintermediation doesn’t necessarily work to the benefit of the content creator.  As I argued here last year, aggregators with market power still have to distribute at least some of their gains to providers just to keep the peace.  When they lose that market power, the share-able surplus goes away, too.  Compare the revenues that musicians got from record companies to the revenues they get from Pandora or Spotify to see what I mean.  

Finally, and relatedly, even cable eventually bumps into price sensitivity.  As the markups for programming go from “absurd” to “obscene,” other sorts of providers start to pop up.  If I don’t feel like paying for Showtime -- which I don’t -- I can watch “The Big C” through Amazon video.  Some go farther and drop cable altogether, getting by with a combination of digital rabbit ears and internet video. “Cord cutting” is still very much the exception, but a few years ago, the term didn’t even exist.  Now the concept is out there, and some brave souls are trying it.  As the options multiply -- whether Netflix, Hulu, or whatever -- I expect to see it gain momentum.  Even with a (sort of) monopoly, there comes a point at which customers just don’t way to pay that much.

I think we’re at that point in much of higher education, especially at the non-elite private colleges.  As options multiply and the entry-level job market remains tight, it’s getting harder to sell $50k tuition.  Increased faculty bargaining leverage wouldn’t change that.  

It’s easy to attack institutions for all of their very real imperfections.  But it doesn’t follow that doing away with institutions will bring perfection.  If professors have to hawk their pedagogical wares individually, I see a bifurcation emerging quickly: a few superstars will do very, very well for themselves, and the overwhelming majority will have to reduce their activity to a hobby.  The idea of making a middle-class living as an academic will go the way of the record advance.  

Cable companies aren’t in trouble because they’re too cruel to content providers.  They’re in trouble because they’re hitting the limits of what people are willing to pay.  I don’t blame Boldt -- at all -- for wanting to get more money into the hands of providers.  But let’s not let frustration at the institution blind us to the very real economic constraints on the customers.