The Coming Disruption In The Textbook Market

from the innovators-dilemma dept

Textbook pricing is always a controversial subject among college students and professors -- many of whom feel that the prices of the books are artificially inflated. Textbook publishers faced their first "shock" when internet booksellers came along, and they suddenly had less of a monopoly on the supply of books. But even that didn't decrease the price all that much. Over the past few years, a number of textbook publishers have been freaking out over the "threat" of "piracy." But rather than recognizing that they needed to improve their product to compete, they basically just looked for ways to make people pay even more. So, it really shouldn't come as much of a surprise that the market is ripe for disruption.

We've already seen some innovative business models enter the space, such as Flat World Knowledge and its free online textbooks with tiered pricing for additional products -- and it looks like various state education agencies are actively interested in moving away from the old model of super expensive textbooks. Reader MikeZ points us to an article detailing how a bunch of states have been making it easier for teachers to look at switching to online educational materials rather than textbooks, recognizing both that textbooks are often too expensive and not nearly as useful as some other resources. States that had budget line items for textbooks only are quickly redefining things so that money can be spent on other educational resources.

This certainly doesn't mean the end of the traditional textbook, but if the existing publishers follow the footsteps of other industries in trying to resist this disruption rather than adapt to it, expect plenty of angry stories about the evils of internet "piracy," with little recognition that piracy isn't the problem at all.

Filed Under: disruption, price, textbooks
Companies: flat world knowledge

Textbook Company Embraces Free For Infinite Goods, Charges For Scarcities

from the working-in-action dept

A reader who goes by the name of Kalazor, who is a college student, alerts us to the business model of a company called Flat World Knowledge, who makes textbooks and provides free and open access to them online:

Our books might feel like your current book – for a minute. They are written by leading experts, and are peer- reviewed, edited, and highly developed. They are supported by test banks, .ppt notes, instructor manuals, print desk copies, and knowledgeable service representatives. There the similarity ends.

Instead of $100 plus, our books are FREE online. We don't even require registration! Students just enter the URL they're given by their instructor and start reading. It's that easy. No tricks. No popup ads. No "a premium subscription is needed for that". In fact, our free books go beyond what standard print editions provide with integrated audio, video, and interactive features, powerful search capabilities, and more..

Even better – read our books where you are! If you are a student in Facebook, then read our book using our Facebook app. Still free. If you are an instructor using an LMS like Blackboard, you can integrate our book into your LMS. Yep. Still free.

The business model definitely matches the economic principles we've discussed in the past. Specifically, they focus on charging for scarcities, with the main one being convenience:

Are you reading this feeling a bit jaded? Something must be coming – some advertising, spam, a charge after a trial period, lock-in to a product, something. Breathe. Relax. It's just not coming.

Our business model eliminates the catch. We're giving away great textbooks and making them open because it solves real problems for students and instructors. In so doing, we are creating a large market for our product. We then turn around and sell things of value to that large market – more convenient ways to consume our free book (print, audio, PDF) and efficient ways to study (study aids). Sure, we'll make less money per student than the big guys. But that's okay. We'll be selling to a lot more of them, and we'll be doing it for a lot less money (thanks to technology like web-hosted services, XML, print-on-demand, and more). Like we said... just a smarter way to do business. For all of us.

They've certainly picked an industry that is wide open for such a change. Unfortunately, it looks like the site is just now launching, so I haven't been able to look at any of the actual books to judge their quality. They might want to talk to the economics professor we recently mentioned who's already giving away a great free econ textbook.

Filed Under: economics, free, textbooks
Companies: flat world knowledge

Textbook Publishers Continue To Freak Out Over File Sharing

from the and-start-fighting-back dept

It's been almost four years since we first wrote about textbook publishers freaking out over file sharing of textbooks, and it appears that not all that much has really changed in the interim, other than the fact that it's actually becoming a little more common for students to find scanned versions of textbooks online. The NY Times looks at the issue and how some textbook providers are trying to strike back. Of course, the main reason why students download textbooks is because textbooks are ridiculously expensive, but it doesn't look like publishers are fighting back by lowering prices.

Instead, they're trying to get people to pay more.

More specifically, rather than responding to the root cause of the downloads, textbook publishers are trying to come up with systems that students can't get around paying for, such as online subscriptions to "extra" information to go along with a textbook. Of course, we've seen this before at times too, such as the time when a company offering just such a subscription went out of business in the middle of a semester, taking down its website and all of the materials the students were using. That worked out great.

Basically, the textbook publishers are reacting in exactly the wrong way. Rather than focusing on ways to actually add value and make it worthwhile to pay, they're looking to come up with ways to lock people in and force them to pay. That's bound to backfire eventually. It'll just take a smarter textbook company to embrace more reasonable strategies, and for professors to only use educational materials from those companies not focused on bankrupting students.

Filed Under: competition, file sharing, textbooks

Government-Funded Textbooks: Let's Not And Say We Did

from the bad-ideas dept

One of the retorts I sometimes hear when I criticize our current system of overly broad copyright protection is that the only alternative is government funding of copyrighted works. This is not, of course, what most of us are advocating, and there's every reason to think that a properly balanced and limited system of copyright protection (along with some clever business models) can create plenty of incentives to produce creative works without asking the taxpayer to pay for them. However, every once in a while you come across someone who really does want the government to fund creative works. Dean Baker, for example. is pushing his plan to have the government pay for college textbooks that would then be placed in the public domain for public consumption.

This is a bad idea for a bunch of reasons. For starters, there's no reason to think that government-funded textbooks would be any good. Financing textbooks by selling them to students ensures that textbook publishers have an incentive to produce books that meet the needs of students, or at least their professors, and to improve textbook quality over time. In contrast, if textbooks are financed by taxpayers, the textbooks that get produced are likely to be determined more by politics and bureaucracy than by the needs of the customers. The result is likely to be a lot of mediocre textbooks focused on topics that federal officials think are needed, rather than what will actually get used. Second, there's a basic issue of equity here. College students tend to come from families that are wealthier, on average, than the general public. Less than half of young people attend four-year colleges. So it seems a little perverse to tax everybody in order to subsidize the textbook purchases of relatively privileged college students. Means-tested financial aid programs are much better at reaching students who really need the help. Finally, it's worth asking whether we want to take the risk of politicizing the content of college curricula. We already have enough politics involved in deciding what goes into textbooks used in public high schools, which are publicly-funded. Do we really want the federal government put in charge of deciding what kind of textbooks the country's college students need?

What's really needed, I think, is to find ways to leverage the web for lower-cost distribution of instructional materials. There's no reason to think that college students 20 years from now will still be getting course information from giant paper books. Whether textbooks are replaced by Wikipedia-style collaborative textbook projects, by companies selling site licenses to websites full of instructional materials, by ad-supported instructional websites, or by some business model nobody's thought of yet, there's every reason to think competition from the web will revolutionize the textbook market in the coming years and give both instructors and students more choices about how information is disseminated. We ought to let that process play itself out, and not get the government involved in deciding what should be in our textbooks.

Filed Under: copyright, dean baker, government funded, public domain, textbooks

Are Used Textbooks To Blame For The High Price Of Textbooks?

from the damn-that-marketability dept

It's back to school season, and once again, students are getting gouged on textbooks. There are plenty of reasons for this. The biggest has been that you had inelastic demand. Students were required to buy the textbooks and, especially in a pre-internet age, there were usually only one or two sources where you could buy the books. That's started to change thanks to the internet, but the NY Times has an odd opinion piece suggesting that the inelastic demand has nothing to do with high book prices, and that it's all due to those damned used book sales. The idea presented by the accounting professor who wrote the article is that book publishers have to sell textbooks at an insanely high price in order to capture the profits from the additional sales afterwards. That may make sense from an accounting standpoint, but it doesn't hold up under an economic analysis. You might be able to make the case that thanks to used book sales, students are more willing to pay the high price for a book knowing they can resell it at the end of the semester and recoup some of the costs. However, the idea that the book publisher is baking in all that extra profit to offset future resales ignores the fact that the market should squeeze out that extra margin -- if there was a real free market. The professor's suggestion that school's simply buy site licenses to textbooks and have the schools pay a set fee per student is an interesting one that could make sense in some circumstances, but hardly seems likely to cure the problem of high prices. If anything, it gets rid of the competitive price pressures of the market, and simply opens up additional opportunities for publishers to gouge even more by charging higher rates while knowing there were no substitute products (used books) in the market.

Filed Under: economics, textbooks, used books