In this correspondence (posted with permission), Ray Kurzweil and MIT president L. Rafael Reif discuss the future of online education and its impacts on residential education. Also see the three related posts today (below). — Ed.

Hi Rafael,

I enjoyed your insightful piece in today’s WSJ on the emergence and future of online education. It eloquently makes the point that online teaching is here to stay. But I find it hard to accept the comfortable conclusion that “online education may improve the financial model of residential education. If a university’s courses can be offered online for small fees to people around the world, we might arrive at a sweet spot where high numbers of online learners are getting extremely good value for their fees and the university that creates the content is using those fees to serve the mission of the university as a whole — part of which is to make education, on and off campus, affordable.”

This reminds me of the positions of leaders of the print book industry just a few years ago. It seemed inconceivable at that time that the print book business with its half-millennium history would become worthless in just a few years time, so the predictions by industry leaders were that the venerable print book business would coexist happily with the augmentation of e-books that would allow people to travel easily with their favorite book.

The situation now, just a few years later, is the following. In Microsoft’s recent investment in the e-book division of Barnes & Noble, that division was valued at $1.7 billion. After the deal, the parent organization is worth about $800 million, so the brick and mortar part of Barnes & Noble actually has a negative value. Borders also achieved a negative value and no longer exists. It is my view that a similarly disruptive revolution is going to occur in higher education.

This revolution will be accelerated by the financial crisis that higher education now presents. That crisis is not simply that universities are finding their finances strained but rather is evidenced by the extraordinary escalation of the price of their service to its customers.

The rise in the cost of higher education has been worse than any other sector in the economy including health care. The reasons for this are not clear but a contributing factor has been the preoccupation with brick and mortar expansion.

There were criticisms of e-books a few years ago such as the lack of complete content, the limitations of the readers, and so on. These limitations have now been largely eliminated and a stunningly quick revolution has shaken that industry to its core. Other communication, media and knowledge industries have had similar experiences.

I think the first-tier universities, such as MIT, Stanford and the Ivy League schools, will have a bit more time to adjust, given their prestige and the buffer of their endowments, but this transformation will ultimately have profound consequences for all participants. After all, Barnes & Noble and Borders were premium brands also.

MIT does have a powerful — and well deserved — brand and that will serve it well in the new e-learning field. It is very positive that MIT is playing a leadership role in this arena.

And as I said before, it was very fitting that you were selected as the new President given your personal leadership in MIT playing this role. However, I do think that when the change gets going, it will happen faster and more profoundly than people expect. It is easy to get lulled by hundreds of years of tradition and stability.

Best, Ray

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Hi Ray,

Thank you for your excellent and thoughtful note.  I need to think about it some more, and I truly appreciate your candor and insight.

Warm regards,

Rafael