Posted by: crudbasher | August 31, 2011

eTextbook Publishers Just Don’t Get It

(cc) ario_

Textbook publishers have a great business model. Their customers get Federal loans to purchase their products, they don’t have much competition, they have a new captive crop of customers each semester, and they can change their products just a little bit to justify a new edition.

So you would think that a digital version would go over like crazy right? No distribution costs anymore. Higher profit margins. But the article I have linked to below says etextbook sales are only in the single percentage range of textbooks. So what is the problem?

The problem is one of expectations. Consider the music business. They were making a killing by selling CDs which cost a dollar to manufacture for 15-20 dollars. Even accounting for all the other costs, it was still extremely lucrative. Enter the MP3. Music became easily digitized and with the Internet,it became easily distributed. I think most people don’t view something digital as an actual asset in the same way as something physical. We realize that things that are digital are not scarce, therefore they have no value. It’s just economics. Interestingly, people will pay a little bit for songs. Witness iTunes. We pay for the convenience of access, not for the product itself.

Students realize that there are a finite amount of textbooks printed. When you purchase one, you have a very small, but non-zero amount of that resource. The publisher is giving you something and they no longer have it. But when you purchase an eTextbook, the publisher gives you something but they still have it. There is no scarcity in that model therefore people will only pay a much lower price.

Textbook publishers have a short window of opportunity to reach college students. They haven’t exactly built up a great reputation among college students so far. They have long been known as overcharging for their products. Still, some new textbook companies have great ideas. For example, the Science textbook with life long updates. That is worthwhile. You aren’t paying for the content, you are paying for the service to update it. I think students will accept that for some textbooks if they think they will be useful to them in the future.

The strength of textbook publishers, namely limiting supply to keep prices high will leave the industry wide open to disruptive competitors. Imagine if a group of physics professors got together and decided to create their own self published textbook. They could sell it for a low price because they can use it in all of their classes. Their overhead is very low and their update rate could be high. They could offer to update all version sold each year with their newest work. By subscribing to their textbook, you would also get access to their social network providing valuable networking and contacts.

They would want their textbook to be as widely spread as possible because it increases their reputation, therefore increasing demand for their services and network.

Textbook publishers are just the latest in a long line of traditional media companies tried to force their old business model onto the digital realm. As with all the others, they will fail.

  • etextbook publishers still trying for scarcity model

    tags: etextbook technology education nell

    • If you’re looking for a textbook example of technology obstruction by the media industry, look no further than e-textbooks.


      “About 90 percent of the time, the cheapest option is still to buy a used book and then resell that book,” says Jonathan Robinson, founder of, an online retailer of discount books. “That is really an obstacle for widespread adoption [of e-textbooks], because smarter consumers realize that and are not going to leap into the digital movement until the pricing evens out.”

    • Meanwhile, e-textbook sales at the nation’s universities are stuck in single digits, with little hope of escape before 2013. According to Simba Information , in the next two years e-textbook revenue will reach just $585.4 million and account for just over 11 percent of all higher education and career-oriented textbook sales — a notable but not yet predominant force in the marketplace.
    • Over a quarter of college students (27 percent) think their laptop is the most essential item in their bag, compared to just 10 percent who pick textbooks, according to a recent survey from Wakefield Research and e-textbook vendor CourseSmart. Almost three-quarters of students (73 percent) say they wouldn’t be able to study without some type of digital technology, while nearly two of five (38 percent) say they’re unable to go more than 10 minutes without checking one of their digital devices.
    • Perhaps unsurprisingly, the biggest customers of e-textbooks are the ones who simply refuse to pay .


      “I pirate every single textbook that I can — which is about half of them,” says a 23-year-old engineering student at the City College of New York, who requested not to be named. “I either torrent them or I go on an online forum set up by a few other students from my school where they put up the textbooks on their own. At least in my major, most of the students are pirating.”

    • Some educators, like New York University journalism professor Mitch Stephens, think that grassroots demand could spur progress in the field of teaching, much as the business world was up-ended by mobile consumers who brought their beloved smartphones into the office, knocking RIM off its perch and forcing historically closed IT departments to open up.

Posted from Diigo. The rest of my favorite links are here.

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