The Future of Educational Publishing
The Future of Educational Publishing
1. The formal institutions of education are amongst the largest consumers of published materials. Without them book publishing would be a very different business.
2. Most educational institutions still find printed publications to be essential to the process of learning. The combined print publishing business for the education industry is worth in the range of $12-14 billion per year in North America.
3. At the same time, many of these same institutions are in the vanguard of experimenting with and implementing new forms of published material in their practices. Some of these materials still involve print; many are electronic. Furthermore many of these institutions are experimenting with the fascinating possibilities of supplementing printed materials with electronic content. For a short time this content was on CD-ROM. Increasingly it is solely online. (A book I recently purchased from O’Reilly has a notice on the inside back cover “There’s no CD-ROM with this book: you just saved $5.00.” Instead there’s a URL offering all of the required supplemental material online.)
4. The institutions of education are under ever-increasing pressure to change the ways they publish for students, in part because of costs related directly to the “extras” included with textbooks, which their publishers insist justify are essential to the pedagogy and the additional charges. This argument is now largely rejected by both the educational institutions themselves, and by the government and NGO agencies that monitor these practices. The consensus is decidedly not in favor of the publishers.
5. While the pressures on educational publishing are not strictly analogous with the pressures felt by all types of publishers, understanding these issues and their outcomes is illuminating and important.
My overall rating for traditional educational publishing is negative. Newer forms of electronic publishing for education demonstrate great promise, but still comprise just a fraction of the revenue of traditional print-oriented textbook publishers.
Overview of Educational Publishing
“We are educating people today in the same way as we did when there was 1% as much knowledge.”
– Danny Hillis, The Economist, March 22, 2001
There is no publishing segment under attack right now as strongly as the educational publishing sector. Most of the vitriol is focused on publishing for higher education (colleges and universities). With headlines screaming: “Textbooks at $200 each?” it’s challenging for the industry to mount a defense, or for anyone to make much sense of what’s happening here.
Of course the issues are complex and diffuse. They relate to so many factors: historic practices, industry concentration, and the labor-heavy practices in the industry.
My reference to “education” in this section is to the formal practice of educating people: in elementary schools, high schools, and colleges & universities (the so-called “higher education”). I’m also thinking of other institutions where cash is exchanged for “knowledge.” What I’m not referencing in this section is informal education: home education, self-education and the like.
How Large is the Textbook Industry?
The combined print publishing business for the education industry is worth in the range of $12-$14 billion per year in North America.
According to the Association of American Publishers, “more than 4,000 publishers offer more than 262,000 titles that are used in America’s post-secondary classrooms.” The site also states in its FAQ that “retail spending on new college textbooks last year was about $4.7 billion.” John Kremer quotes 2001 retail sales figures of “$5.8 billion on college textbooks, $3.9 billion on el-hi textbooks.”
According to a June, 2005 article by George Mitchell in the Publishing Research Quarterly, “According to the National Association of College Stores [NACS], there are about 4,830 such outlets in North America, 4,630 of them in the United States, the rest in Canada…3,180 North American stores (are) represented by the association…”
The NACS reports that “In 2007-08, students spent an average of ….$488 was spent on new and used course materials in the college store or its online equivalent.” It also offers a chart that indicates that 12% of purchases took place outside of the college store system. Further, the same NACS report just cites states that “NACS estimates 4,500 college stores provide service to U.S. higher education,” and implies that NACS membership (now indicated as 3100) is similar in demographic detail of the market as a whole.
NACS’ estimate of U.S. college store sales was $9.8 billion for the 2007-08 fiscal year, but with only 65% of that being for course materials, the total at retail is $6.37 billion. Broadening the figure to the total number of college stores, the total at retail is $9.2 billion However NACS reports also that “from the 2009 College Store Industry Financial Report, new book sales in U.S. college stores were 68.5% of course material sales, while used books were 30.5% of all course materials.”
Therefore retail sales for the original publishers would be $6.3 billion, the net some 70% of that.
Simba Information estimates the 2007-08 higher education market at $4 billion+ and the “PreK-12 school market” at $8.6 billion, although it does not state in its summaries whether these are retail or wholesale figures.
The Crisis Facing the Textbook Industry
The North American textbook industry is in the midst of an unprecedented crisis. The signs are everywhere. Perhaps the only group that appears to offer little credence to the crisis is the industry itself.
The major issue is the high cost of textbooks, mainly those used in higher education, where students must shell-out the cost directly, estimated, by the College Board at between $805 and $1,229 on books and supplies alone during the 2007-08 school year.
The price of textbooks has never been dirt-cheap, but the last several years have seen the price of many texts climb to $150 or more. Suddenly a range of individuals and groups have taken notice.
If the complaints were limited to a few articles in USA Today and Reader’s Digest there would be little to remark upon. But, unfortunately for college textbook publishers, the “problem” has reached the highest levels of both State governments and the Federal government. Now it’s impossible to ignore.
A central aspect of the textbook industry is highlighted in a 1996 report by Dr. James Koch, An Economic Analysis of Textbook Pricing and Textbook Markets. As Dr. Koch notes: “The textbook market is remarkable because the primary individuals who choose college textbooks (faculty) are not the people that pay for those textbooks (students). Only a few other organized markets in the United States are similar in this regard. A comparable situation exists in medicine where doctors prescribe drugs for their patients, but do not pay for those drugs.
“Analogous to the market for prescription drugs where prices have risen rapidly, in the market for textbooks the separation of textbook choice and textbook payment profoundly influences pricing. Albeit for primarily good purpose, students end up being coerced to pay for someone else’s choices. This tends to make their textbook purchases less responsive to price increases than their purchases of items such as cheeseburgers and jeans.”
The textbook publishing industry is also very concentrated. As the GAO report referred to below states: “While there are hundreds of college textbook publishers, there has been substantial industry consolidation in recent years, with sales at five of the largest publishers representing over 80 percent of the market in 2004.” (And the concentration continues.)
At the same time, if there were no alternatives available to 1,000-page hardcover books, critics might find their hands tied. But the explosive growth of much lower cost (and arguably more effective) digital learning tools changes the perspective on the problem. The question can now be legitimately posed: is a student better served by a $100 three-year-old book, dense with text, than by a low-cost interactive Web-based curriculum? The question does not offer a black-and white answer, but by raising the doubt, the case for expensive textbooks is made ever the more vulnerable.
The GAO’s Hot Potato
In July 2005, the United States Government Accountability Office (GAO) published a 51-page report called “College Textbooks: Enhanced Offerings Appear to Drive Recent Price Increases.”
In its introduction to the study, the GAO stated that “The federal government strives to make postsecondary education accessible and affordable, primarily by providing financial aid to students and their families. Given that nearly half of undergraduates receive federal financial aid, Congress is interested in the overall cost of attendance, including the cost of textbooks. We were asked to determine (1) what has been the change in textbook prices, (2) what factors have contributed to changes in textbook prices, and (3) what factors explain why a given U.S. textbook may retail outside the United States for a different price.”
The introduction to the report is headlined:
“Enhanced Offerings Appear to Drive Recent Price Increases”
The text continues: “In the last two decades, college textbook prices have increased at twice the rate of inflation but have followed close behind tuition increases. Increasing at an average of 6 percent per year, textbook prices nearly tripled from December 1986 to December 2004, while tuition and fees increased by 240 percent and overall inflation was 72 percent. The cost of textbooks as well as supplies as a percentage of tuition and fees varies for first-time, full-time, degree-seeking students by the type of institution attended-72 percent at 2-year public institutions, 26 percent at 4-year public institutions, and 8 percent for 4-year private institutions.
Annual Percentage Increase in College Textbook Prices, College Tuition and Fees, and Overall Price Inflation, December 1986 to December 2004
“While many factors affect textbook pricing, the increasing costs associated with developing products designed to accompany textbooks, such as CD-ROMs and other instructional supplements, best explain price increases in recent years. Publishers say they have increased investments in developing supplements in response to demand from instructors. Wholesalers, retailers, and others expressed concern that the proliferation of supplements and more frequent revisions might unnecessarily increase costs to students.
U.S. college textbook prices may exceed prices in other countries because prices reflect market conditions found in each country, such as the willingness and ability of students to purchase the textbook. While geographical barriers have historically limited the reentry of textbooks intended for international distribution back into the United States, known as reimportation, recent advances in electronic commerce have broken down this barrier. In response to concerns that the international availability of less expensive textbooks might negatively affect textbook sales, publishers have taken steps to limit large-scale textbook reimportation.”
The Revision Cycle
According to the GAO report, “Publishers agreed that the revision cycle for many books has accelerated over time, but most said that it has been stable in recent years. While textbook revision cycles can vary based on several factors, such as the level of the course and the discipline, publishers told us that textbooks are generally revised every 3 to 4 years, compared with cycles of 4 to 5 years that were standard 10 to 20 years ago. Publishers say that the revision cycle is driven by instructors who want the most current material and may seek products from competitors if they are unable to meet the demand. Publishers cited a recent poll of 1,029 college professors commissioned by the Association of American Publishers that found that 80 percent of those polled think it is important that the material in the textbook be as current as possible. However, this may not be universal across disciplines. For example, over 700 mathematics and physics instructors from 150 universities across the country have petitioned one publisher to delay revisions until there have been substantial changes in content or teaching methods that merit revision.”
My comment: while there are a handful of disciplines in which the information does not change significantly from year to year, my view is that for most textbooks even a three-year revision cycle is far too leisurely. Publishers I have spoken to say that professors do not want a more rapid revision cycle, as it would force them to do the work of revising their class curricula. At the same time I note that the larger publishers, with their current workflows, would also have difficulty meeting a more rapid revision cycle.
In the face of all of the criticism that textbook publishers are facing today, a vast array of alternatives are lining up to take over the practice (and the revenue) from print-focused publishers.
As Scott Palmer notes in an article at Inside Higher Ed, “Clearly, the movement toward digital content delivery is gaining steam. And, as such, it is not surprising to read that the technology’s more vocal enthusiasts are forecasting nothing short of a revolution in academic research, teaching, reading, writing, and publishing once it becomes ubiquitous.”
Palmer’s article offers many cautionary notes around the changes being proposed by the numerous vendors and industry groups concerning a revolution in educational publishing. His reasoning is sound. Nonetheless, my sense is that change is coming, and coming fast, and this is not good news for the large publishing conglomerates that can easily be outmaneuvered by start-ups, certainly in this very tradition-bound industry.
The negative voices abound, such as in this 2007 Washington Post article which states, “Educational software, a $2 billion-a-year industry that has become the darling of school systems across the country, has no significant impact on student performance, according to a study by the U.S. Department of Education.” But any limited study of aspects of the impact of new technology on the educational system is bound to create conflicting results and predicted outcomes.
Indeed an April 2007 report from Inside Higher Ed, notes that “Starting this fall, all students at Northwest State Community College, in Archbold, Ohio, will be required to take at least one online course to graduate.
“More than 60 percent of last year’s graduates already took one or more online courses, but administrators and college trustees want all students to be well versed in independent research and discovery – skills that employers demand, they say – and feel that online education is one way to accomplish that.”
A July 25,2008 article in eSchool News, titled “Copyright Fight Looms Over College Textbooks” provides a very good summary of what’s happening both legally and illegally in light of the problem. The article points to a growing trend where “several web sites allow–and, in some cases, encourage–students to make available scanned copies of textbook pages for others to download free of charge, often using the same peer-to-peer file-sharing technology that is used to swap music and movies online.” This is hardly surprising. The textbook publishers are launching legal challenges, and seem likely to have the same success achieved by the music and film industries.
The more interesting development is the more creative attempts of various startups to seek a new model for textbook publishing. Open Text Book, run by the Open Knowledge Foundation, is an online registry of textbooks and related materials that are free for anyone to use and distribute through a Creative Commons license or similar agreement.
A company that I’ve been talking to has an even more intriguing idea. According to the article: “This fall, a start-up enterprise called Flat World Knowledge will conduct what it calls “the nation’s largest test of open college textbooks.” The nationwide beta test involves hundreds of students from 15 colleges and universities, who will use Flat World’s free and open textbooks in a single class or section at each school. The beta test begins next month and will run through the end of the fall semester, Flat World said.”
Flat World’s model breaks no laws. It commissions new textbooks from well-established authors, and offers them as free electronic downloads. If a student wants a printed version, they are available using print-on-demand technology for between $30-$50 dollars.
There are numerous additional initiatives that will shortly change the face of educational publishing. It’s an exciting time for this industry, although perhaps not for the large firms that have dominated educational publishing for so long.
Published July 16, 2009
1. The Association of American Publishers (AAP) includes a Higher Education Division representing “the nation’s leading developers of post-secondary course materials” and a separate group for K-12 School publishers, whose members ”are the nation’s leading developers of instructional materials, technology-based curricula and assessments for America’s next generation of citizens.”
2. The National Associal of College Stores (NACS) is a rich source of information on textbooks and other courseware in highter education.
3. MERLOT is a free and open online community of resources designed primarily for faculty, staff and students of higher education from around the world to share their learning materials and pedagogy.