Rick Anderson and I have been kicking around the possibility of working on a project to get college textbooks into academic libraries. Rick posted about that here, and my post is intended to complement his. I hasten to add that this post is not “the other half”; this is a big topic and the two posts together constitute only a small part of the many perspectives that ultimately have to be brought to bear on this subject. But you have to start somewhere. Rick notes that libraries may have a significant role to play in providing textbooks to (mostly) undergraduates. My view is that this could be a very good business opportunity for publishers, who are largely resistant to having classroom materials get into the hands of librarians. Among the perspectives not fully addressed here are those of students, instructors, administrators, and maybe even of parents, who stare in horror at the cost of putting a kid through college. Perhaps this is the second of what may become a string of posts.
The first thing we have to come to grips with is that there is no precise and inarguable definition of a college textbook. For that matter, even the lines that define “college” are blurry: Do we mean elite, private schools like Harvard and Stanford; four-year state institutions; community colleges; the world of the for-profits; and can we overlook the MOOCs? The “college textbook,” in other words, is a slippery concept, and it is important to know exactly what someone means when uttering it.
For my part, a college textbook refers to any required course material that consists primarily of words (text) for an accredited two- or four-year institution of higher education. That puts community colleges and the for-profits in the mix alongside the likes of The University of Chicago and Pomona College, and it also opens the door for books that not everyone would classify as a textbook. For example, most people would agree that a $200 hardcover book on organic chemistry qualifies as a textbook, but how about a paperback edition of the novels of Jane Austen? Both may be required reading for college-level courses.
Thus the first thing we need (yes, this would be an initial research project) is a taxonomy of classroom materials. We would then want to map that taxonomy against the actual books used in classrooms. That information (which books are used for courses) is hard to come by, but Joe Karaganis and Michael McClure are working on this at the Open Syllabus Project. Kitchen readers may recall that I gave a shout-out to this project before. Once we have that mapping in place, we will reach a decision point: Which segment of college texts should we begin with?
Let’s assume for the purpose of discussion that we decide to focus on the big, expensive texts used in freshman and sophomore courses. Purchased new, these books cost students $100 and more. (I just looked up the list price of Gregory Mankiw’s Principles of Economics: $300.) Now, a big chunk of that market has gone over to used books — about a third, by most estimates. Piracy takes a toll, too, on publishers’ sales, and then there is the growing and troubling case of the students who attempt to make do with no book at all. For publishers, the reasons to disrupt their own marketplace are growing. For example, a publisher may get an adoption (that is, the instructor puts a book on a list of required reading) for a class of 30 students, but after subtracting sales lost to used books, piracy, simple borrowing, rentals, and doing without, the publisher may sell only 10-15 books for that course. A publisher may say, Well, then, if I am losing all those sales despite my best marketing efforts, maybe I should raise the price to cover the lost business. The problem with that strategy is that higher prices simply encourage all the things — used books, piracy, etc. — that publishers want to prevent.
Why would publishers want to explore Rick’s proposal?
- Publishers sell books at a discount, so that $300 economics text probably nets the publisher something like $180. This is a guess on my part; I’m assuming publishers sell print with a 40% margin. Selling to libraries instead of bookstores has just saved students $140 without costing the publisher anything.
- Moves the business from print, with all its expense for printing and shipping, to digital. That should drop around 20% or more to the bottom line (of the $180 received for Mankiw). That brings the cost down to $144–without affecting the bottom line.
- Remember those students who buy used books or no books? Let’s put them at one-half of the market. This means that the availability of books from the library effectively doubles the publisher’s user base. So that $144 figure is now $72 — with no loss on the bottom line.
Of course, some costs do not go away and there will be some new costs. An example of the former is the need to put a sales force in the field to get instructors to adopt the titles (just putting a book in the library doesn’t mean anyone will use it; in business terms, a library is a back end, not a front end). An example of the latter is the technical infrastructure to have a fully digital offering; and we can add to that additional marketing costs to make presentations to libraries and library consortia. Despite these quibbles, though, publishers could make as much money selling textbooks to libraries as they do now.
To put such a program together is a lot of work. We need:
- A survey of all the kinds of books used in classrooms.
- A list by course title (suitably tagged and cross-indexed) of all books currently in use.
- A pricing methodology that is tied to classroom enrollment.
- A number of publishers to participate (though for the big, expensive texts, about 85% of the market is controlled by just 5 companies).
- Expertise on the library level. This is easy to overlook, and it will add to library overhead.
- Better technology for textbooks than we currently have.
Then there is the thorny matter of where the money is going to come from. This is not trivial. If the funding for textbooks were to come out of existing library budgets (something that elected officials are sure to advocate), the library as we know it today would cease to exist.
Let’s take a pencil to the back of an envelope. We begin with some broad assumptions. Through superior workflow and all-digital solutions, we are able to get the cost of materials per student per course down to $25, a figure that is intended to represent all students and all courses — so we have just mixed Harvard with Middlesex Community College and public domain literature (Dickens, Thackeray) with the Mankiw title referenced above. There are 17 million college students in the U.S. If they each take 4 courses each semester, with two semesters per year, the total comes to $200 per student per year or $3.4 billion. Where are we going to come up with the dough? Yes, yes, I know: If only we had not gone into Iraq; think of the money we would have saved! But face it, guys: There will always be an Iraq. Governments don’t operate like an old-fashioned Chinese menu, where you can take one item from column A and one item from column B. We have just seen this with Brexit, with the claims that the money saved from payments to the EU will now flow into the National Health Service. This will not happen. We should not look for a political solution for a market problem: the academy will have to fund this initiative itself. But keep your eyes on the prize: that $3.4 billion estimate is approximately one-third the size of the current market, and this program will put all students, rich and poor, on an equal footing when it comes to classroom materials.
I would like very much for people to provide hard figures for those I grossly estimated above.
If publishers won’t be losing by doing this, and assuming that the money can be found (solution: charge a student fee of $400 per year and then waive the fee for half the students), who would lose out?
- Printers and trucking companies, surely, and also the people who manage warehouse space.
- Used-book distributors. Note that the students who resell used books also lose out.
- College bookstores.
- Amazon (15% of the textbook market).
- Manufacturers of large backpacks.
- Orthopedic surgeons (an aspect of the large backpacks).
I don’t mean to be flip about this; there is real human cost in this disruption. After all, the trucker who is out of a job may be trying to put a kid through college; but the benefits are apparent, too, as the trucker’s kid, like all kids, will be paying less for school.
We can argue about how and where to get started. In my view, it is prudent to avoid the temptation of going after the big textbook companies (Pearson, McGraw-Hill, John Wiley, Cengage, and Macmillan) first. Better to learn the ropes with smaller segments- – say, all course adoption titles from university presses (an $80 million market) or the public domain literature used in English courses: impeccably edited by a new service and sold for $1 per title per student, about 10%-20% of what you would pay for these in inexpensive paperbacks. Once these niche services are brought on board, we can pursue the bigger fish.
And the winners?
- Libraries, which become closer and more valuable to their community.
- Students, who save money.
- Publishers, who maintain profits even as they steer their own companies through disruptive waters.
There may even be a little in this for the consultants who put it together.