Extraordinary company

Higher ed tech writers are chewing the cud over the not very surprising news that Blackboard is partnering up with major content publishers Cengage, Macmillan, Pearson, John Wiley & Sons and (last year) McGraw-Hill, and that McGraw-Hill itself is now friending everyone in the LMS world.  The language of this new set of deals is that of the soothing murmur: students will now be able to transition seamlessly from Anywhere U via their LMS to centralised content repositories managed by Big Publishing, all without the pesky impediment of multiple passwords.

Here’s how it all looks to Jim Behnke, who is chief officer for learning at Pearson, quoted in the Chronicle of Higher Education last week:

He described Blackboard’s course-management system as an “enterprise system” that helps professors do things like access course rosters and send official grades to the registrar. “Those are very important, but they’re not necessarily about the teaching and learning, and that’s our business distinction.”

Pearson’s business distinction is significant to those of us who thought teaching and learning might actually be our business distinction, whereas it turns out that we’re really here to take the roll and grade papers.  Can’t wait.

But seriously, this palming of teaching and learning from our hand to theirs is a particularly important bit of corporate prestidigitation that’s worth looking at again in slow motion.

Here’s one reason why: in the UK, Pearson are moving towards degree-awarding status in partnership with Royal Holloway.  The support of private providers offering low-cost degrees that can be taken in your lunchbreak, online, seems to be one of the goals of the UK Government’s proposed shake-up of higher education. A great deal has been written about this, but if you have a bit of time and a cup of tea, this is quality diatribe from The Plashing Vole, who evidently spends his time fencing so knows how to make a point.

There’s also quite a lot being written about the acquisition of Blackboard by Providence Equity, much of it on the question of motivation. Why is private equity interested in a company whose primary business involves public education, particularly if public education has got itself into some kind of bubble?  I’ve found two sources particularly helpful as I’m trying to fumble my way to some low-level understanding of all this.

First, Michael Feldstein maps out two possible reasons for the acquisition. He suggests that one is the soaring levels of LMS-dependency in the educational vertical, that makes the purchase of a big LMS market leader a safe bet, like buying up rental properties whose tenants can’t afford to move. His second thought is that there are two new waves of LMS expansion on the horizon: one into developing educational economies (Brazil, Russia, India, China), and one in response to the emerging demand from US institutions to provide superior reporting and analytics. So if there’s still room for growth, there’s room to turn a profit, although if the strategy is about gentrifying the neighbourhood, rent hikes can’t be far away, and the existing tenants might want to check their leases.

George Siemens has also looked closely at the Providence portfolio, and gives the third part of the explanation as to why we should take this acquisition (and its startling price tag) seriously, because it contains some very important clues as to the direction in which we’re travelling.

Providence Equity are not novices in the education market.  Since 1989, when they launched with a focus on acquisitions in communications, they have extended their interest and their mission now is “to build extraordinary companies that will shape the future of the media, communications, information and education industries.” To this end they’ve staked claims in several education services, including Archipelago Learning, who are themselves a collector of bits and pieces such the Australian-developed Reading Eggs program. Once you accept that the business distinction of education involves the quality of backstage mergers and acquisitions that make it all possible, this kind of statement seems much less out of place:

To achieve our goal, we create value by forging lasting partnerships with talented entrepreneurs and executives and providing them with the capital, industry expertise and broad network of relationships that they need to succeed. We invest in companies with compelling growth opportunities and partner with management teams looking for more than capital.

So Siemens is right, I think, to suggest that if Providence are prospecting in our sector, they are doing so because we’ve made this a smart move. If higher education in the US and the UK is in crisis, and LMS demand is about to experience a twin surge in both the US and emerging markets, then it makes sense for Big Publishing, private equity, and various other dealmakers to try to fix what we do next.  He puts it very clearly:

And, if you’re an entrepreneur trying to make a profit by offering a service to a troubled sector, Providence Equity has taken the right approach. In the US and UK in particular, higher education is at the early stages of a massive shift from public ownership to private ownership and entrepreneurial solutions. As the funds flow to innovators – or in Bb’s case, value hubs – tremendous wealth will be created for the risk-takers. In language and ideology that I’ve heard in numerous discussions over the past five years “education is the last industry to globalize”. Providence is one of the early companies out of the gate.

But here’s the good news. If education is becoming indivisible from media, communications and information, it’s not just because they’re all content-heavy, but because they’re all hostage to similar social forces.  Audiences, users and students are fairly unruly, and although it’s often unwise to predict what people will get up to next, the tea leaves indicate that we like free stuff, stuff that we can mess with, and stuff that we can share. So even the big publishers won’t have knowledge in lockdown, and the edupunks and DIYers will be highly active in lobbying for its more open use.

This means that the risks being taken on the future demand for premium services—formally managed and accredited teaching and learning, driven by a focus on content—are a bit more significant than we might think.  So perhaps this is also a nudge to universities to think ahead to how we want to engage with all of this, on our own terms, and not only on the basis of the values and priorities that matter to the extraordinary company we’re keeping these days.

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