edX's Innovative Business Model (Analogy #2)

In this Chronicle of Higher Ed piece, Anant Agarwal explained the two flavors of edX' business model. In the 'supported' model the client institutions pays $250k up front and then 30% of all student fees for the course over that amount. In the second, the 'self-service' model the upfront fee is $50k with the client institution surrendering 50% of all student fees beyond that.

Imagine that model in the context of the textbook publishing industry.

McGraw Hill owns the rights to a well know text such as Hill & Jones "Strategic Management". It decides to sell "Strategic Management" to universities liek SJSU. It charges half the initial cost of developing the book (any one-time fees to author, focus groups, reviewers stipends, any other fixed fees to copy editors, etc) and then takes 30% of gross sales thereafter. Or on a chapter by chapter basis, charging 10% of the books development cost, and then taking 50% of grow sales for each chapter used.

Now that's a deal most publishing companies would love to get.

edX's Innovative Business Model (Analogy #1)

In this Chronicle of Higher Ed piece, Anant Agarwal explained the two flavors of edX' business model. In the 'supported' model the client institutions pays $250k up front and then 30% of all student fees for the course over that amount. In the second, the 'self-service' model the upfront fee is $50k with the client institution surrendering 50% of all student fees beyond that.

Imagine that model in the context of the music industry.

EMI owns the rights to a well know band like Pink Floyd. It decides to sell "Dark Side of the Moon" (1973) to stores like Amazon or WalMart. It charges them half the initial cost of making the album (cost of the studio time, fixed fees to the engineers and producers, etc) and then takes 30% of gross sales thereafter.  Or on a track by track basis, charging 10% of the album's initial recording cost, and then taking 50% of grow sales for each track sold.

Now that's a deal most recording companies would love to get.    

Apple's Cook

Tim Cook testified before Congress today to explain Apple's aggressive use of the 'opportunities' created by inconsistencies between different countries' tax codes to avoid paying US federal taxes. Much as Mitt Romney did before the election, he claimed that it would be irresponsible for Apple not to exploit them. But he also maintained that Apple "liked simple" which these arrangement were patently not, and that it hadn't contravened either the letter of the law (quite probably true) nor the spirit of the law (a patently absurd claim, since this implies that Congress intended for tax law to afford corporations the opportunity to pay less federal income tax). 

Of course, it is conceivable that the lobbyists and the proposers of tax legislation did indeed intend for the tax code to leave more money in corporate coffers while appearing, for the purposes of public relations, to do the opposite.