Colleges Must Shake Up Their Business Models to Counter New Competition Online, Former FCC Chairman Says

America’s leading colleges and universities must “embrace massive experimentation” to stay competitive as more and more educational choices become available thanks to the Internet, said Reed Hundt, former chairman of the Federal Communications Commission and a senior adviser on information industries to McKinsey & Company, during a conference late last week on the future of the Internet.

“What happened to the recording industry is what is happening to the newspaper industry,” said Mr. Hundt, referring to the financial troubles of many music labels and newspaper companies now that songs and news stories can be found free online. “And what’s happening to the newspaper industry will probably happen to elite universities.”

In an interview after the session, The Chronicle asked him to elaborate. “The music industry had the following view, ‘We’re going to package these songs, maybe you’ll like one of the songs a lot but the rest will be our way,’” he said. In a similar way, colleges are saying to students: “You take these 25 courses, we’re going to give you a degree — some of the courses you’ll really like, others you won’t but we’re telling you what you have to do.”

Now that professors are putting course lectures online and new for-profit colleges are emerging, he said, students may soon ask themselves why they have to do things the old way. “That basic model is under assault when you create so many different channels of supply, and when you create so many ways for the audience to reach the suppliers,” he said.

He said that judging by the amount of money that institutions like Harvard University (where the conference took place) have building up in their endowments, it seems that campus leaders have not yet figured out what the next big investment should be in their future. “They haven’t decided how to redefine their mission for the 21st century,” he said. —Jeffrey R. Young