28th June 2012: Deakin’s Lecture Value Migration

The Australian‘s Andrew Trounson reports that Deakin University is replacing lectures with online, open source, ‘cloud’ content:


Traditional lectures look set to go by the wayside at Deakin University. As part of a new strategy students will increasingly access online, open source content from around the world, freeing up academics to focus on smaller tutorial groups delivered not just face-to-face but increasingly through social media like Facebook.


Deakin’s decision is an ‘early move’ response to MIT and Harvard’s online courses. It fits both Clayton Christensen‘s disruptive innovation thesis (low-cost entrant to a new market) and Adrian Slywotzky‘s value migration thesis (value migrates from the individual lecturer’s intellectual capital to the open source ‘cloud’). [For more details read a draft research monograph and Masters essay I did on Christensen and Slywotzky.]


We can make several inferences from Deakin’s decision. GE and private equity-like models are influencing managerial decisions to cut high costs (including possible offshoring). The espoused rationale is to cut content development costs and prioritise customer-facing activities (with an eye to student experience survey results). ‘Lagging’ universities are responding in a game-theoretic way to what ‘leading’ institutions are doing (in what may be a form of Stackelberg competition). These strategies will place Darwinian selection pressures on academic lecturers who will become either ‘world class’ subject matter experts/researchers or content facilitators.


Core Economics’ Stephen King has a more optimistic view: “If done properly, the type of inverted classroom approach that Deakin has announced can work well and improve learning outcomes . . . This is a smart, brave move. But make sure, in the short term, that the University invests in the platforms, training and re-engineering that are needed. If it is just a strategy to save money, it will fail.”

CPRF08 Paper: Disruptive Innovation, Radiohead & Nine Inch Nails

I recently blogged about a presentation the 2008 Communications Policy Research Forum in Sydney on disruptive innovation in the music industry.

You can now download an Adobe PDF version of the PowerPoint slides here.

The refereed paper has been published in the Proceedings of the Communications Policy Research Forum 2008 (pp. 155-175 or PDF file pp. 179-199).  You can also download a local copy of the paper here.

The paper’s case study examines why Radiohead and Nine Inch Nails released their new albums as digital downloads.  I suggest a major reason why, and one that was overlooked by Web 2.0 pundits, is that each artist was in the ‘label shopping phase’ of a new contract and defected after negotiation problems with their major labels.  This fits a pattern in mergers and acquisitions: the major labels lost artists due to integration problems in a merger or acquisition.  Terra Firma Capital Partners has since partially confirmed this hypothesis: the private equity firm endures more post-acquisition integration problems with EMI and is fighting against government regulation of Great Britain’s financial services sector.

The paper’s data appendices contrast the artists’ strategies with signficant events and innovations in music industry contracts, conglomerate mergers and deal structures.  Somehow I missed U2‘s March 2008 deal with Live Nation: I found out about it in an October 2008 announcementGuns n’ Roses also finally released Chinese Democracy (MySpace audio stream): a new album that has taken 15 years, a rumoured US$14 million budget and 14 recording studios in New York, Los Angeles, Las Vegas and London.  I may write a paper on it . . .

CPRF08 Presentation: Disruptive Innovation, Radiohead & Nine Inch Nails

I recently spoke at the 2008 Communications Policy Research Forum in Sydney on disruptive innovation in the music industry.  My presentation looked at the reasons for why Radiohead and Nine Inch Nails pursued online release strategies for their respective albums In Rainbows (2007) and The Slip (2008), and evolved from some initial thoughts here. The reasons suggested in media coverage – Web 2.0 experiments, disruptive innovation and freeconomics – were ‘true yet partial’ explanations.  They overlooked two significant facts: (1) both artists were in the ‘label shopping’ phase near the end of their contracts; and (2) both artists were frustrated with their respective labels EMI and UMG, who each triggered artist defections due to post-merger integration problems.  The presentation also discusses the role of Disruptive Innovation Markets, the Disruptive Information Revelation principle, and lessons for journalists, new media theorists, policymakers and valuation analysts.  Thanks to the Network Insight Institute team (Mark Armstrong, Cristina Abad and Mark Armstrong) and the two anonymous reviewers for their help.