How Rupert Murdoch Suffered A Rare Defeat In American Classrooms

The media tycoon's many insurgent businesses have risen to the top of their industries. But after attempting to take over the education market, Murdoch has been forced to retreat.

Amplify, Rupert Murdoch’s attempt to disrupt the American education industry, had a lot going for it: a lot of hype, a lot of media attention, a lot of high-profile names, and a lot of money to spend. Then add to all that the fact that the education industry seemed especially vulnerable — dominated by big, cozy, slow-moving incumbents, just the way Murdoch likes it.

But none of that mattered in the end. As it turns out, Murdoch's News Corp. couldn't even make waves in the education world, much less disrupt it. During its short life, Amplify bled money, losing $193 million in 2014 alone.

On Aug. 12, News Corp. said it was in final talks to sell Amplify, had written down the value of the business by $370 million, and would wind down the education unit's first and most ambitious project, a custom-made tablet computer that was supposed to revolutionize education technology. The venture lasted just three years at News Corp.

Amplify’s high-profile failure, despite the people and money backing it, is a sign of just how strange and difficult to navigate the education industry can be. The company underestimated almost everything about the industry: the deep entrenchment of the biggest players and the complexities of selling to school districts — not to mention the surprising political power of parents and teachers unions, who had a not-insignificant hand in the company's troubles.

Amplify’s pitch, when it launched in July 2012, was simple: It was neither an education publisher like Pearson, bogged down by the legacy of printed textbooks, nor a tech company like Apple, which didn’t understand teaching and curriculum. It made products that straddled that line: a tablet customized solely for classrooms, and, later, an education curriculum made only for digital devices.

And it had money, too, to the tune of hundreds of millions of dollars in investment by News Corp, which had exited the education business a decade prior when its publishing arm, HarperCollins, stopped printing textbooks. Amplify hoped the money would allow it to compete on the same level as the country's dominant textbook companies, Pearson, Houghton Mifflin, and McGraw-Hill, known in the industry as the "Big Three."

Rather than starting at the bottom, selling directly to individual schools and teachers as many startup ed-tech companies were forced to do, Amplify sold its products just like the big textbook companies did, sending fleets of salespeople to peddle Amplify's wares directly to school districts.

“I would like to disrupt the delivery model, too, eventually," Amplify CEO Joel Klein told BuzzFeed News in April 2014. “But these things don’t happen overnight. You have to meet the market where it is, even if you’re a disruptor.”

But from the beginning, Amplify seemed to struggle to meet that market. Big players like Pearson, who have decades of experience in the industry, sell their products largely on the basis of their prior relationships with school districts, who prefer to work with companies they already know. Districts have been known to dole out massive no-bid contracts to the likes of Pearson simply because they had had good experiences in the past.

Getting a district to adopt a new product is a difficult task in and of itself. But getting a school district to switch products, abandoning a company that’s been working for them, is even harder, said Karen Billings, the vice president of the education division at the Software and Industry Information Association.

“Schools tend to stay with companies and products that they’ve been successful with,” Billings said. “They’re not going to switch over unless they have a real reason to change.”

Amplify, with its brand-new device and English Language Arts curriculum, was asking many districts to do exactly that, Billings said, counting on the fact that they would abandon prior relationships with tech companies and textbook providers in favor of a new and untested product.

One of Rupert Murdoch’s biggest competitors in the media industry appears to have managed to make inroads in education in a way that Amplify couldn't. Discovery Education, a subsidiary of Discovery Communications, started making an all-digital curriculum just a few years before Amplify, and, though it is still relatively tiny, has since grown into a full-fledged education company, producing digital math, social studies, and science curricula.

But Discovery had a key advantage that Amplify didn’t. It already had a relationship with many school districts, producing supplemental science videos that are used in half of American classrooms.

Discovery also made its first full curriculum in science, where it had significant name recognition and, said CEO Bill Goodwyn, “a big head start, in that we had access to a lot of incredible content.” By the time Discovery launched its first “core” curriculum, in math — a much higher-stakes area for school districts because of testing — it had a five-year track record making curriculum. Amplify’s first and only curriculum was in English.

A deep understanding of how school districts operate – and the sometimes glacial pace of change in the industry — has been important for Discovery, Goodwyn told BuzzFeed News.

“The big three publishers have been out there for so long, and have just dominated the marketplace. It’s not an easy thing to do to disrupt them,” Goodwyn said. “For us it wasn’t a fast, go-to-market strategy where you build a product and go out and sell it. We spent a lot of time talking to districts, understanding what their goals are and what they need and how to give those to them.”

“Clearly,” Goodwyn said, “the education business is different than the media business. You can’t do these things quarter-to-quarter — you have to have a leadership at the highest level that believes in doing these things, in keeping its promises.”

For one company, however, grabbing market share in the education business has been anything but slow. Google was hardly a blip on the education world radar in 2010, when News Corp. bought the testing company that it would eventually transform into Amplify. But more than half of all devices sold in education are now Google Chromebooks, outstripping even iPads in sales.

“Is the industry still ripe for disruption? Absolutely. The disruptor has been Google,” said Phil Maddocks, an industry analyst with Futuresource Consulting. “They’ve come from nowhere.”

Google Chromebooks had a lot of advantages over Amplify’s tablets. They are cheaper than almost any device on the market. They also come with keyboards — a necessity for many state tests, which are increasingly taken by computer, and a feature that is increasingly in demand for older students.

Chromebooks are also better suited to the “extremely fragmented” education market, where many districts and teachers prefer to piece together content and apps, rather than turning to one company for curriculum, apps, and devices. While Amplify’s tablet was technically “content-agnostic,” meaning it could run other companies’ software, it was envisioned as a “complete mobile learning system,” in the company’s words. It came designed to be bundled with Amplify curriculum, with hefty discounts for school districts if they bought Amplify’s content alongside it. That subscription cost an additional $99 a year.

“They were really offering only one solution,” Maddocks said. “In the past, when we’ve seen hardware try to link up with content, it hasn’t worked. It all comes back to the fragmentation of the [content] market — every district wants a different solution.”

Like Discovery, Google had also already established a foothold of its own in the education world before it began to sell big-ticket items to districts. Most teachers were already using some of its products, like Gmail and Google Drive, in their classrooms, and the company had made extensive outreach to teachers a part of its business model.

Amplify hit a major bump in the road early in its journey, after one of the company's first trial users, in Guilford County, North Carolina, suspended use of the 15,000 tablets it had bought because of serious technical problems, including shattered screens and melted charging cables.

It was a high-profile misstep: Just a month before, Guilford County and Amplify's now virtually defunct tablet had been the subject of a sprawling and mostly positive 5,000-word New York Times Magazine article, “No Child Left Untableted."

Guilford County, an early and major win in 2012, was by 2015 still "by far the company's largest contract," according to Bloomberg News.

“When you’re really small and just starting out, you can’t afford missteps,” said Goodwyn, Discovery's education chief. “We recognized that compared to the Big Three, we were too small to have any issues. We couldn’t screw up.”

Amplify also quickly became a favorite target of two of the most formidable forces in education: parents groups and teachers unions. In the wake of the British phone hacking scandal, the mere association of Rupert Murdoch's name with education set off parents groups, who took down an Amplify-associated venture, inBloom, in part because they said they feared Murdoch's company having a hand in the storing of their children's sensitive data.

Beyond's Murdoch's reputation, Klein, its CEO, was among the education industry's most polarizing figures and has been one of the unions' greatest foes since his tenure at the helm of New York City Public Schools.

And despite how it had looked when News Corp. headed back into the education market in 2010, companies like Houghton Mifflin and Pearson were not as print-bound and slow to adapt as they had seemed. Houghton Mifflin, the biggest player in the elementary education space, made heavy investments in technology, and its sales are now mostly digital, though by a slim margin.

“I really do think they just came in too late to make any real impact,” said Billings, of the SIIA. “Schools had already started using the tablets they liked from the tech companies they liked. The curriculum publishers they’d already been working with had started transitioning with them to digital, if they wanted it.”

In a long letter to Amplify staff announcing the company's impending sale, Klein offered his own explanation. "Amplify's work has been so innovative and transformative that we've been ahead of the market," he said. "That, in part, helps explain what has happened with our tablet business."