Sunday, October 21, 2007

Economics of OER

As I've been thinking and reading about the economic models of Open Educational Resources (OER), I can't help but think of some of the influential contributors and writers in the open source community like Bruce Perens and Eric Raymond. Perens discusses software and how most software is developed as infrastructure, not as a product to be sold. Many companies run the open source Apache web server and along side that run Microsoft Office and Windows for their desktop needs. They could easily use a closed-source web server or pay to have their own developed, just like they could easily use OpenOffice and Ubuntu on their desktops. It doesn't really matter, since it all comes down to someone's personal preference. Much of the commercial software used is the same as any other company is using. No one can claim that they have a strategic advantage over their competitors by choosing to use Microsoft Office, because anyone else can buy the same software and use it as well. It is non-differentiating. It may even make sense to collaborate with a competitor, making both of you more efficient. Raymond discusses how using open source software can create goodwill that attracts customers, increase the size of a market so you can grow (even if it allows your competitors to grow also), regain control over a market that you might be losing, etc. Since the Open Source community is several years ahead of the OER community, it is important to keep a collective eye on the choices made by our Open Source friends to provide some guidance about what might and might not work for open content.

kafeole (from Flickr)
Benkler discusses the marginal cost of information, which is effectively 0, with perhaps some nominal transmission costs. Although it costs nothing to pass along information to others, Benkler continues on to say that IP laws do make sense by providing an incentive for "market-based producers [to] engage in the useful activity of creating new information, knowledge, and culture." The tradeoff to be made in IP issues is to charge enough to make it worth it to be creative, but to still be accessible for reuse by others. If existing IP is inexpensive enough (or free) for others, it will be less expensive for the next author to build on that existing material. As prices of output rise, that just means that the prices of inputs rise for the next generation of material, so their output prices have to rise to match. Costs go up because either all new materials must be created (if that is even possible) or more money has to be paid out for every reused expression. Theoretically, if everyone reduced the price they charge, everyone's costs would decrease together, and with costs decreasing the price they charge for their products could be reduced...rinse...and repeat.

So how much of our OER are created to be sold, and how much is infrastructure? I'm not sure I could pinpoint a percentage. Thinking back to my bachelors and my MBA, much of the material we learned was in textbooks (the same textbooks used at Harvard or other prestigious universities, it was pointed out to us). So if I have the same textbook as a student at Harvard, and I have the same ability as him or her to go to Google or Wikipedia and read or publish information or even collaborate directly with that Harvard student, what makes the Harvard degree so different from mine? The actual content being deposited into us is non-differentiating.

USU is currently going through the re-accreditation process like all schools do once every 10 years, just checking to make sure everything is in order, to facilitate the transfer of courses between schools and to ensure that the students here can continue receiving federal financial aid by working towards an accredited degree. Not only does the entire school work to keep accreditation, but individual degrees and departments can be accredited. The result of accreditation basically ends up being that degrees should be mostly interchangeable, because we're following the same curriculum. There are obviously other reasons why certain schools are more prestigious than others. After Boise State University's perfect season, capped off by a win over Oklahoma in a BCS bowl, a survey showed that the national recognition for their football team had a positive impact on the school's reputation for academics and research (although the two are probably not related). There will always be something else to differentiate schools on, but it does not appear to be the content taught in the classroom.

Many of the textbooks we use are written by academics who are already being paid to develop course material, so they're double-dipping according to my calculations when they get paid to write a book. Writing research articles and book chapters already fits into the promotion and tenure process as well as their duty to teach their classes. Anyway, giving them the benefit of the doubt, if they were to contribute to a bank of learning objects or OER of some other form like Wikipedia, they might lose money from book sales. But how much of the money from book sales actually goes back to the author? Perhaps something like 10-15% of the new book market, so maybe $10 per book? One author goes so far as to say that the reason textbook prices are so high is because of the evil used book market (even comparing the sales of used books to pirated movies and music). Dr. Roediger talks about "wear and tear" on authors (apparently including himself) who are constantly releasing new editions of books in order to continue receiving their cut of new book sales "until laws are changed to prevent the organized sale of used books". He even mentions his temptation to trade off between two versions of a book to save himself the time of revising again and again every two or three years...right in the middle of his observations of other behavior he considers to be unethical like sales of complimentary copies of books or the bundling/unbundling of workbooks and CDs. That man needs to be slapped, er, I mean introduced to the wonderful world of OER. Seriously, he needs to be sent a special invitation to next year's Open Education conference. Look at the obvious frustration and wasted time that he is spending all to make a few extra bucks, when he could be releasing his materials so others can remix and add more insight and check for mistakes. The time he spends is greatly reduced but the quality of the result is higher. Dr. Roediger is already being paid to research and develop teaching materials, so let him get back to being productive by developing new ideas and actually teaching, rather than being so concerned about all the evil bookstores taking advantage of both students and authors.

It seems that everything would run smoother and more efficiently without having to worry about tracking all the IP issues inherent in creating closed content.

If the content becomes free, where does that leave degrees that are based on mastery of that free content? That one is going to have to wait for another day, but I imagine it will come down to paying for the actual differentiating features of an institution.

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