Another signature feature of a winner-take-all market is the so-called Matthew Effect. The sociologist Robert Merton coined the term, referring to a verse in the Book of Matthew: “For unto everyone that hath shall be given, and he shall have abundance; but from him that hath not shall be taken away even that which he hath.†As a leading producer expands its market share, additional revenues enable it to further refine the offering that made it a leader. The revenue from its early lead helped Intuit add the ability to process state tax returns, which extended that lead.
Sometimes the Matthew Effect is a simple matter of a particular supplier’s becoming part of a product’s identity. Daisy Ridley is clearly a talented performer, but before the director J.J. Abrams cast her as Rey in “Star Wars: The Force Awakens,†hundreds of other candidates might have seemed equally promising. Once the film became a box-office bonanza, her lock on the role was virtually unbreakable .
The Matthew Effect and related positive-feedback processes have driven some of the biggest success stories of the internet era. Google dominates search because the more queries the company processes, the more effective its algorithms become. And despite criticism and competition, Facebook dominates social media because the more members a network has, the more useful it becomes as a place for people to interact.
Similar feedback effects are poised to reshape the market for academic instruction. The move to remote course offerings had been happening slowly, fueled in part by chronic budgetary shortfalls at many colleges and universities. But because the pandemic has greatly amplified those cost pressures, it will accelerate the transition. And although the average quality of remote instruction has been low, the sheer scale of recent efforts has sped the discovery of ways to improve it.
Like tax preparation software, a large number of remote courses will compete for reviewer and student approval during the early going. And similarly, a handful of contestants will eventually be judged as best.
Economies of scale are the driving force here. Most of the costs of delivering remote courses are fixed, which means that costs per student fall sharply with volume. The cost of producing a first-rate instructional video is the same, for example, no matter how many students view it. The only additional expense of expanding remote courses would be the hiring of local graduate teaching assistants.
As the leading remote offerings are more widely adopted, the additional revenues will fuel further improvements in quality. Over time, the most successful remote courses will enjoy a growing cost advantage, since their expense per student declines as more people use them.
