BRING 'EM ON. Daniel Drezner likes market segmentation in higher education.

I for one, welcome our new online overlords competitors. While these schools provide a similar service, as this point they're expanding the market rather than cutting into a stagnant one. If offshore outsourcing means anything, it means that a lot more people are going to have to get a lot more education. As far as I'm concerned, the more schools, the better.

The New York Times article he links to is today's recommended reading. Some excerpts, with observations.

Today, 1 in 12 college students attends a for-profit institution, and the business has grown to $23 billion in annual revenue for 2002, the latest year analyzed by Eduventures, an education market research company in Boston. The University of Phoenix alone has about 201,000 full-time adult students at 142 campuses and learning centers. Enrollment in for-profit institutions is growing at three times the rate of nonprofit colleges and universities, says Sean Gallagher, an analyst with Eduventures.

So don't get excited, and don't even panic,
Instead of going to Harvard, they all went to Phoenix?

Why?

The education market didn't always look so rosy. Not that long ago, traditional colleges came to envision nontraditional education as a potential cash cow. Prominent universities like New York University and Temple rushed in with the creation of for-profit subsidiaries that promised to blend ivory-tower class and dot-com nimbleness. But by 2001, most of those highly touted experiments had failed. Columbia's for-profit program, Fathom, which offered online courses in partnership with institutions like the University of Michigan and the University of Chicago, folded early last year. Less grand online programs continue.

What went wrong? For one, new courses proved far more expensive to develop and run than anticipated. And the if-you-build-it-they-will-come sensibility of the dot-com years was as ill suited for higher education as it was for most businesses. Jared Bleak, who has studied the for-profit education market as a postdoctoral researcher at Harvard, says that the earlier failures came from a fatal disconnect between the educational mission of the traditional universities and the entrepreneurial notion of ginning up a quick for-profit business that could provide an entirely new endowment.

Ya gotta know the territory ... Doing something just because somebody else does it well, or because it's a fad, well, doesn't make a lot of sense.

In fact, online programs at traditional universities like UMass and the University of Maryland University College, which had built organically on existing distance-learning programs, were quietly booming as nonprofit ventures.

ONE of the classic mistakes that a company makes as it feels its way into a new business is a failure to fundamentally rethink content and process -- in this case, course material being put online. Adult learners want their education quick and to the point. Successful programs offer a kind of education that might strike some as downmarket.

On the other hand, not everybody is cut out for connecting Summa to customer service, or sorting through the classical allusions in landmark regulatory cases. Talking shop and calling it education might suffice, although not everybody agrees.

Fitting perfectly is what continuing education strives for. A big part of the business plan is to strip away the elements of a traditional college that cost so much: fancy campuses, dormitories, athletic complexes, tenured faculty and the pond that shows up in every brochure. At the same time, the institutions strip away things that can be frustrating to students -- the commute, parking woes, long lines at registration, inconvenient class times. They focus on what in the business world is called customer service, often nonexistent at traditional colleges. ''They tend to be better at student services than traditional institutions are,'' Dr. Twigg says. ''Adult students are more demanding. You can still push kids around.''

Hmm, so much for Jacuzzi U?

''Do they serve a niche? Sure. Are they legitimate institutions of higher education? We remain unconvinced,'' says Stephen Wollmer, a spokesman for the New Jersey Education Association, which represents teachers in the state's community colleges. The group fought to keep the University of Phoenix from opening a campus in the state. It was a six-year, off-and-on battle. Things got nasty: at one point, Phoenix lawyers sent a threatening letter to the teachers' union demanding they stop using the phrase ''diploma mill'' when describing Phoenix. For one, the group opposes the university's policy of not granting faculty tenure or the academic freedom to choose course content.

Sounds like a classic regulatory case: the existing service is adequate, the existing carriers are capable of providing additional service should it be required; the applicant is not competent to provide the proposed service. What is the reality, with free entry?

Traditionalists may be most rattled by the for-profits' stated purpose of providing an education that leads to employment. ''Students are looking for a job outcome,'' says Mr. Gallagher, the education analyst, ''and that's what the for-profit institutions are focused on.'' They do so by building direct relationships with employers and employment agencies. ''The for-profit institutions are very savvy at aligning their offering to employer needs,'' he says, especially since many companies pay for their employees' continuing education. More than half of University of Phoenix students get some reimbursement from their employers.

Plus ca change. Didn't the Advertising Council once put up car cards advising "To get a good job, get a good education?" The point was to encourage people to stay in high school and get on the college track. Why does it come as a surprise that somebody would unbundle the job training from the football team?

But the analogy to customer service goes only so far, Dr. Noone says. ''Customer service doesn't mean always saying yes,'' she says. ''If people come in and say, 'I want an A,' the answer is not necessarily going to be yes.'' The university tries to strike a balance between rigor and helping students succeed, she says.

Students do not have to meet the tough entrance standards of many universities, but Dr. Noone says that is by design.

''We'd like to think that somebody who might not have been successful in school 15 years ago might be successful now,'' she says. About 35 percent fail to complete the program. ''A lot of students who end up not completing the program say that it is because it was too rigorous,'' she says. For others, ''life just gets in the way.'' Children are born or jobs lost, and education goals recede.

Hmm, those market incentives lead to a defect rate much lower than that of the traditional colleges and universities taken together? Makes one think ...