Where is the Netflix for College Textbooks?

A $14 Billion Dollar Textbook Industry Unscathed by Tech


Shock

College textbooks cost too much. Anyone shocked?

Awe

The reason? The technology sector has failed to solve the problem. Create the killer app. Provide the scalable platform. To stimulate innovation through competition.

Yes, the sector that brought down Motown, turned my neighborhood Borders into a laundromat, eliminated Kodak AND my camera—has not squared off with the four large textbook publishers and the monetary hold they have on 20 million U.S. college students.

Publishers & Rapid Dominance

My friends at Wikipedia provided an interesting definition which I think best describes the level of control publishers have on the textbook industry.

It has been a campaign of shock and awe with an outcome aimed to produce numbing dominance over all adversaries.

Definition: “overwhelming level of Shock and Awe against an adversary on an immediate or sufficiently timely basis to paralyze its will to carry on . . . [to] seize control of the environment and paralyze or so overload an adversary’s perceptions and understanding of events that the enemy would be incapable of resistance at the tactical and strategic levels.”

Textbook publishers today have student’s paralyzed to a point that they rarely buy textbooks according to the advocacy group U.S. PIRG in their recently issued report “Fixing the Broken Textbook Market.” The report tells us that “not only are students choosing not to purchase the materials they are assigned by their professor, but they are knowingly accepting the risk of a lower grade to avoid paying for the textbook.”

Our faculty also refuse to recognize their amassed power as the actual buyers of textbooks and have conceded control of their curriculum guardian status—empowered by academic freedom— to drive down unconscionable textbook costs.

Forbes’ David Whelan outlined this problem is his clever piece “Spending Other People’s Money: What Professors And Doctors Have In Common” constructing an illuminating comparison of faculty who unconsciously proscribe high priced textbooks in the same manner as medical doctors handing their trusting patients prescription slips to be filled at the local pharmacy (students call it a syllabus). This market once broken was reshaped by the creation of generic drugs allowing a doctor to gauge each patient’s financial situation followed with a prescription that would not force a to patient to chose between food, rent and the drugs needed to survive.

Student’s today are making similar choices as they are unable to fulfill the syllabus at their college bookstore. And, although professor’s have more choices in the “generic book” category, few prescribe their students a lower cost textbook alternative of high quality that gets the job done.

Bring on the Generics: Open Source Textbooks

The goal behind creating open textbooks is to make quality products that can serve as a “generic textbook” available for our faculty to prescribe as an alternative to expensive textbooks.

One group not intimated by the shock and awe strategy of textbook publishers is the Public Interest Research Group (PIRG) who suggested an “open textbook” solution that 20 Million Minds Foundation Founder Dr. Gary Michelson has pushed and accelerated through funding over the past two years. Both he and his wife Alya Michelson have been our nation’s most successful advocates and have involved other policymakers such as Governor Jerry Brown to join their efforts. Last year, California passed the nation’s first free open source textbooks law and underwrote that commitment with an add additional $10 million dollars of state funding.

The PIRG report noted the need to expand the market for “open textbooks.” These books are written by faculty and are peer-reviewed, just like traditional books, but they’re free online and downloadable. They’re typically available in print for under $20, however, these open source textbooks are in sore need of faculty buy-in, user friendly platforms that allow professors to reconfigure and personalize content, or add services such as test/question banks.

The most expensive textbooks for students and where the real money is for publishers lies in the top 50 enrolled courses that 80% of undergraduates are forced to take typically during the first 2 years of college. We know those courses as the 1A or 101 courses like psychology, physics, algebra, chemistry etc.

It’s also where the basic content hasn't changed much in the last 100 years and thus offers the best opportunity for open source textbooks to succeed.

Policymakers and a few enlightened universities have invested heavily on this approach. Government’s in California, British Columbia and other states have passed laws calling for the creation and dissemination of open textbooks. Most recently a new congressional bill is pushing federal funding to expand this movement.

These open textbook initiatives are aimed at creating a competitive market to produce the “generics” necessary for student’s to move through their education without the burden of high textbook costs which according to the PRIG report have resulted in: (a) 65% of college student deciding against buying a textbook because it was too expensive; (b) nearly half (48%) saying the cost of books had an impact on how many or which classes they took; and (c) 94% of the students who reported not buying the required book at all, despite saying they were concerned that doing this would hurt their grade in that course.

Dr. Gary Michelson and Alya Michelson have directed the 20 Million Minds Foundation, that I head, to push, along with our other foundation partners and fund efforts like OpenStax College, an open-source textbook publisher, that has doubled the number of professors adopting its open textbooks during the past four months, bringing the total to 319 at 297 colleges and universities. The program is expected to save 40,000 students more than $3.7-million in textbook costs during the 2013-14 academic year.

The goal of OpenStax is to get 10 million students free open source textbooks where content is written, peer-reviewed, and produced in-house by scholars and publishing-industry professionals. The texts are constructed in building-block like parts, so professors can tailor the material for their own courses—one OpenStax textbook has 50 variations.

In addition, British Columbia has produced a library of 20 open source textbooks with another 20 expected later this year. There are also 15 textbooks in total available on New York’s Open SUNY system this fall, including books in Anthropology, Business, Computer Science, Mathematics, Music Education, and Physics.

The faculty will make or break this promising open source textbook movement.

With just under 500 faculty members out of the 1.5 million professors in our post secondary institutions choosing an open source textbook there is significant room for growth.

However, no matter how high the quality, the amount of peer review, and sustainable dollars provided from philanthropy to produce these publisher grade, tech friendly eBooks, the success of this movement lies with faculty.

A Tech Revolution Overwhelmed with Misconceptions

In a war over profits, there is always a lingering reality, but a reality distorted by misconception. Publishers have planted roots so deep, that it has left the industry unscathed, with legions of fully armed in-person sales forces capturing and cajoling professors to adopt the “new” 100th edition and thus pushed into the unwilling and helpless hands of buyers called students.

It seems like such an easy choice for faculty. The moral obligation of choosing a $150 dollar textbook over a comparable $20 dollar textbook to teach for example, nine chapters of basic statistics over 15 weeks is self-evident. In reality, students don’t need another edition of statistics, but rather a free or lower cost alternative that captures the same learning objectives and outcomes.

It’s no secret that according to the Bureau of Labor Statistics, the price of textbooks has risen more than 800% over the past 30 years, a rate faster than medical services (575%), new home prices (325%), and the consumer price index (250%). The average college student spends more than $1,200 a year on textbooks

So what will it take? Are we prepared for an incessant 800 percent increase in the cost of another single textbook conveniently scheduled for the next decade? Does anyone really want a $400 dollar Statistics 101 textbook 10 years from now?

For those in the Silicon Valley focused on the ed-tech higher education space, I hear the carefully placed doubts. Tough market. Large well funded publishers with aggressive sales forces. Captured faculty members. No room for alternatives. Impossible to scale. All realities, but clearly distorted to favor the large incumbent publishers.

Regrettably, publishers have overloaded the ed-tech world with apprehension and realigned understandings of events that has lead tech-upstarts down a dead end road with insurmountable obstacles.

There is also the assumption that faculty want to stay with their trusted publisher manufactured textbooks. The overbearing sales forces armed with priceless latest editions, invaluable test banks, effortless study guides and incentives that continue to keep faculty saying “out of my cold dead hands, do you take my Pearson textbook.”

Most in the ed-tech world take the Association of American Publishers mantra that millions of dollars have been invested by the textbook industry to create inimitable works word-for-word. They knock new entrants and their product uptake as “experimenting on our students” with lower cost, unsophisticated and indistinguishable content quality.

Really? Does McGraw Hill really own the periodic table? Does Pearson have a special and unique description of statistical regression?

These introductory courses are where the publishers are making their big money—banking on the upcoming 12th edition that has escalated 800% from it’s inception, yet 95% of the content remains the same.

There are a few driven ed-tech companies that have recognized these fallacies and are challenging publisher perceptions. For example, Boundless is an upstart that offers interactive textbooks, tweaked just like the top publishers, for $19.99. Another content provider FlatWorld Knowledge offers professors over 100 free commonly used texts and apps personalized to their syllabus. Each recognize the Goliath they are up against—but with David (our faculty) sauntering conjointly along a path of expensive textbooks, their trek is barbarous at best.

Where Have You Gone Ed-Tech?

Most see the future of student information belonging to playlists and correlative subject content served up on adaptive learning platforms able to meet each student exactly where they are in their learning cycle.

We also recognize that in today’s information age, student’s have access to immediate information from multiple sources with a single finger swipe or click.

In this era, it seems simply unethical to charge students $200 for single static content locked in bound paper textbooks to simply be updated with the next expensive edition.

In an age where technology is lowering the cost of every service, commodity and product exponentially, can we really afford to leave affordable textbook innovation to the big publishers?

With profit margins strong and a time tested model that produced a McGraw-Hill’s profit margin of 25%; Wiley’s 15%; and Pearson’s 10% and margins increasing on average by 2.5% between 2003 and 2012—do we really expect publishers to disrupt or even tamper with their current model?

Netflix for Textbooks

So are we left with a “if you can’t beat them, join them” textbook affordability strategy?

If professors lack the supply or goodwill to adopt generics (open-source textbooks), the question is: where is the contrasting distribution model that offers students an easy path to an affordable textbook?

The current distribution models offered by Inkling, FlatWorld Knowledge, Chegg, Apple, CafeScribe, Cengage’s Mindtap, Blackboard, and Amazon have some cost saving variation, but all revolve around either rental or outright purchase of a single hardback or digital textbook.

At the same time, over the past year, we have witnessed the resurrection of the subscription model for trade books. In this month’s Atlantic, Peter Osnos discusses the sharing economy and how subscription models are hitting bookshelves noting that “The Book-of-the-Month Club (BOMC) was founded in 1926. In the 1980s, it was one of publishing’s most formidable enterprises, with millions of members across the country. It had a panel of distinguished judges whose choice of main selections assured a book high visibility and a substantial payment to the author and publisher.”

“Student’s need a Book-of-the-Semester Club.”

A platform that gives a student the ability to discover thousands of high quality textbooks vetted by faculty whose choice of main selections includes both open-source and publisher content, and offers many paths of information to enhance learning.

Why not mimic Netflix? where students have options and the technology could allow those choices to form around the subject at hand with a library of content that provides the necessary learning objectives yet is devoid of ownership or closed proprietary walls.

Why not look at an ed-tech solution modeled and offered in trade books by Oyster, Scribd, and Entitle’s eBook subscription platforms which provide access to 100,000 books for as long as you keep a subscription, much like Netflix or Hulu. It seems that as long as you are a student at a university you should have similar access to an educational platform that let’s you access all the textbooks you need and refer back to them as you proceed through your education.

Or as an alternative path, textbooks could be offered to students, much like Entitle where you pay a subscription fee and can download a set amount of books a month, but also get to keep them after you cancel your subscription.

The bigger problem for these trade book start-ups? You guessed it: publisher participation. Without Macmillan, Penguin Random House, and Simon & Schuster these innovative platforms will lack deep penetration with so many missing books. Will textbooks publishers participate?

Seems they are making a insidious attempt. In textbook publishing, the big four publishers have created Coursemart, a digital arm with textbooks 3 deep in most subjects.

Four publishers control nearly 80% of the entire textbook industry and have more than enough content and a steady flow of student customers to make a Netflix like subscription a real winner to students and probably make a reasonable profit.

This cartel like entity, recently announced Coursemart Subscription Pack and now offers students a limited, will expire in 150 days, subscription of no more than 6 books—for those that qualify. But is this the model for the future?

Imagine Oyster, Scribd, and Entitle asking their readers to pay $200 dollars every 150 days to access only 6 books? Or Netflix telling customers that they can pay nearly $500 dollars per year to access 12 movies that conclusively expire? Yet the new announced textbook publisher subscription model offers this solution to struggling students who would probably have to work nearly 20 hours part-time per month to pay for it.

It’s time for a new approach to benefit students. We are counting on those those in the tech world to engage, get dirty, fight in the trenches and move along the lines of Uber, AirBnb, and other disruptors who didn't wait for permission and built consumer friendly overlays on top of entrenched outdated industry models.

We need similar tech warriors to push textbooks along the path of innovative subscription models and services—to offer educational content at a low cost “all-you-can-read” subscription rate of some close to $9.99 per month which is available to all students without all the qualifications and disappearing content offered by Coursemart.

This approach clearly is built on the premise of open education. It’s heavy on sharing knowledge (and isn't that the point of education anyway?) and destroys the notion that educational information can be locked away in some expiring eBook code.

The pioneering Netflix Textbook subscription model I envision would distance itself away from forcing students to pay irrational prices for limited content.

The new subscription textbook model would support what student’s already intuitively experience on their iPads and laptops which are filled with thousands of content choices like video, movies or music but at a fraction of the cost—why should textbooks be any different?

In the higher education sector, with a continual textbook demand of over 20 million students, all required to purchase 3 to 4 textbooks per semester —there certainly is a market and clearly enough scale to entice inspired ed-tech entrepreneurs into the uncompromising trenches of affordable textbooks.

My only request is that they drop the anchor soon, armed with disruptive tools and primed for a long over-due tussle with the titans of the textbook publishing industry.