The public discussion over the continually rising costs of college is generally focused on tuition fees and sometimes room and board, but often neglects another significant cost –that of educational books and supplies – whose growth also adds to the financial burden of higher education. The price of educational books and supplies has increased at an average annual rate of 8.2 percent over the last decade. According to the National Association of College Stores, the average undergraduate student spent $702 on required course materials in 2007-08.416 Given the number of college students, this suggests that there is a $12.6 billion college course material market in the U.S.
Although new book sales accounted for the majority (68.5 percent) of textbook revenues in 2008, many students will buy used textbooks when available at a lower price. While the majority (64 percent) of course material sales occurred at campus bookstores in 2008, students are increasingly entrepreneurial in pursuing alternative means of procuring their course materials. For example, online stores accounted for a 24 percent market share, and the campus secondhand market in which students buy and sell books among one another and alumni amounted to 3 percent of sales.
Continual advances in technology present an opportunity to increase competition in the textbook market that will reduce the cost of study materials. Two particular technological developments – online marketplaces and electronic books – increasingly provide an alternative to the college bookstore for students to procure their course materials, and an opportunity to reduce the cost of college textbooks.
Online Textbook Markets Promote Competition
The proliferation of online markets has promoted greater competition among sellers. Students are no longer confined to purchase books at the local campus bookstore, which in the past were virtual monopolies. In 2008, college bookstores reported an average gross margin of 26.9 percent on book sales (22.7 on new books, 35.9 on used ones). Students now have an increasing number of options to obtain their books, including buying new from a number of online retailers, used from an online exchange, or even renting for a semester.
Online retailers such as Amazon.com, Half.com, CampusBooks.com and TextBooks.com have created a growing global marketplace for textbooks. Such websites often contract with publishers to sell new books at competitive rates, but also provide a secondary marketplace to buy and sell used textbooks. This allows cost-conscious students to shop around for the best value, which puts downward pressure on prices as sellers offering the same good compete for sales almost exclusively on price. A thriving online secondary textbook market contributes additional downward pressure on prices.
More recently, online textbook rental websites, such as BookRenter.com, Chegg.com and Skoobit.com, have emerged. These companies allow students to rent textbooks for a quarter or semester by ordering from their websites and returning when they are finished. The rental fees vary by title and provider, but are priced at a fraction of the suggested retail purchase price, allowing students to save on the cost of buying textbooks that they would have otherwise sold back at the end of the term, if a new edition was not released in the meantime.
Online marketplaces bring a huge number of buyers and sellers together, leading to a much more efficient and competitive market that has resulted in downward price pressure. The increased competition created by the emergence of online marketplaces not only provides students with a greater number of options to shop for their course materials, but also often translates into savings for those students who take advantage of the alternative online methods of procurement as opposed to resorting to their local campus bookstore.
Electronic Textbooks Can Reduce Costs
Most textbook publishers now offer their products in an electronic format, often at a fraction of the price of printed versions. This relatively new format gives students yet another alternative to obtain their course materials, promoting further competition for sales in the textbook market. Electronic textbooks are often a lower cost alternative, as the electronic format allows publishers to lower their production costs. Some costs, such as author fees, proofreading, copyediting and licensing, are likely to remain constant regardless of format; however, electronic publishing eliminates many of the variable costs associated with physical textbooks such as ink, paper, binding, printing press maintenance and the distribution of bulky products. The cost savings associated with the production of electronic textbooks can be passed on to students in the form of lower-priced textbooks.
Electronic publishing also provides the opportunity for content consolidation and customization. Textbooks are often bulky, containing hundreds of pages of material that are not relevant for a particular class, or may be missing recent information or opposing views that an instructor deems vital to the discourse of a particular topic. In the former case, students incur the costs of the excess material that is not relevant to their studies. In the latter case, instructors may need to assign multiple texts that students must purchase in order to cover the full range of topics. In both cases, the students (as well as the instructors) would benefit in the way of a reduction in costs from the opportunity to customize textbooks and/or consolidate material from various sources. Electronic textbooks ostensibly present an opportunity to more easily construct learning materials that best supplement course objectives, and thereby consolidate the information and number of texts required for a course into a single volume. This is the approach that publishers such as Flat World Knowledge and MacMillan are increasingly taking.
Case Study 17.1: Flat World Knowledge
Flat World Knowledge (FWK) is a relatively new textbook publisher that offers a unique product – free web-hosted, open-source textbooks. As of July 2009, FWK had signed on more than 50 authors419 and currently offers textbooks in accounting, communications, economics, finance, information systems, management, and marketing, with textbooks in humanities, science and mathematics forthcoming. As of this writing, more than 250 courses are currently using FWK textbooks, and FWK expects this to increase by 20 percent in the next year to 300 courses, with additional growth to follow due in part to advocacy from students – who are fond of the menu of low cost alternative options that FWK offers. David Wiley, Chief Openness Officer at FWK, estimated that 40,000 students used FWK textbooks in the fall of 2009, saving students an estimated $3 million423 over what they would have spent on traditional textbooks. This amounts to an average savings of $75 per student, per term.
Instructors assigning a FWK textbook can customize it to meet the needs of their course using FWK’s “build a book” platform. This includes the ability to mix and match chapters from various textbooks, add/delete content and insert current case studies, among other options. Aside from the free online version, students have a number of alternative options to purchase, such as bound and printed books (about $30 for black & white, $60 for full color, plus shipping), print-it-yourself books/chapters (about $2 each), audio books/chapters and study aids. FWK Founder Jeff Shelstad indicated that about 60 percent of students taking a course using a FWK textbook in 2009 purchased one of the alternative formats and that the majority of purchasers also bought the study aid subscription package for an additional $10. Shelstad indicated that the black and white printed book is by far the most popular item, but students also “really appreciate the print-it-yourself option.” FWK’s business model is still evolving, but is based on an author/publisher partnership, including performance incentives and options to invest in the company for contributing authors.
Case Study 17.2: DynamicBooks
MacMillan Publishers, one of the largest textbook publishers in the world, unveiled its latest contribution to the electronic textbook market in early 2010, a system called DynamicBooks. The system is an electronic textbook platform that was developed to encourage interaction on behalf of students, instructors and authors. Students are able to obtain lower cost e-textbooks (generally less than half the traditional printed book price) that are searchable and can be marked up. In addition, the DynamicBooks platform is compatible with course management software and Web 2.0 technology so that students can share ideas and notes, as well as form study groups, online. Instructors are able to customize the content to fit the needs of their course, including the ability to add content, include hyperlinks and embed videos, to enhance the learning opportunities. The system also presents authors with an incentive to contribute changes to e-texts by offering a royalty per unit of sale to those who made significant changes that are adopted.
At the time of this writing, there were approximately 20 different texts available in the DynamicBooks format, mainly in the physical and social sciences, as well as a few math titles. MacMillan intends to offer other publishers the opportunity to integrate their texts to the DynamicBooks format in exchange for a fee, but we can expect to see intense competition among the major publishers to become the dominant format provider for interactive e-textbooks.
Limitations and Challenges
While utilizing technology to transform the textbook market via online marketplaces and electronic books presents an opportunity to increase competition and significantly reduce the cost of textbooks for many students, there are challenges and limitations to overcome for both technologies. These include time constraints, resistance to change, technical issues, and legal and regulatory matters.
The major limitation to online marketplaces is related to the course structure at many colleges. Many students do not finalize their schedule until several weeks into the term, often adding or dropping classes at the last minute. In addition, many instructors do not announce the assigned texts well enough in advance to give students time to shop for them. Because of these phenomena, students often rely on campus bookstores due to the ability to obtain textbooks immediately and return them locally. When ordering texts online, students must allow extra time for delivery delays, and returning texts ordered online can be onerous. Until students are more proactive in finalizing their course schedule, and instructors in assigning texts, this will continue to be a challenge.
Resistance to Change
The use of electronic textbooks is sparse. This is despite the fact that the technology to fully digitize textbooks is available and that most publishers already offer electronic versions of their textbooks at a discount from the retail price. Colleges, instructors and students have yet to fully embrace the concept and take advantage of the opportunity to lower the cost of textbooks. According to the Campus Computing Project (CCP), approximately 3.2 percent of all classes made use of electronic books in 2008, with usage among 4-year public college courses being the highest (3.7 percent of classes). Table 17.1 shows the percent of courses making use of electronic books by institution type in 2008.
One reason for the limited use of e-texts may be the tradition of the printed book and the limited functionality of electronic texts. Currently, many students are accustomed to the format of physical textbooks and the ability to highlight and make notes in their margins. They may even prefer reading actual print as opposed to an electronic screen. Students may also resist etextbooks due to the fact that may not be able to resell them, as some publishers program their e-textbooks to self-destruct after a certain period of time. Some critics believe that the format will not completely transform the textbook market, predicting that “electronic textbooks will probably turn out to be just one option rather than a widespread replacement for printed textbooks…Some students will prefer the features of electronic versions, while others will be willing to pay a little more for hard copies.” As technology adapts to better serve students with improved note-taking functionality, this may become less of an issue, especially as new generations of college students arrive on campus well versed in the latest technological advancements.
Another problem preventing the faster spread of online textbooks is that at many institutions, faculty members have the responsibility of assigning the texts for a particular course. The low course usage rates indicated above suggest that faculty either have a strong bias towards the status quo, or they may not be aware of the availability of electronic texts and the potential savings they offer for students. In the latter case, publishers and college officials could do more to promote the use of electronic textbooks among faculty.
The digital format is gaining traction, at least among college information technology officers who are “bullish on the future of eBooks,” with 76.3 percent agreeing or strongly agreeing in 2009 with the statement that, “eBook content will be an important source for instructional resources in five years.”
With electronic textbooks, there are several technical issues related to the electronic devices needed to access course materials. One is the learning curve required to become functional with an electronic reading device, as some users may struggle to understand the multitude of functions. Whether a student is using a personal computer, e-reader or other device to review his/her study materials, there is always the possibility that the device will malfunction in some way that results in a loss of data files containing the texts. Of course, this risk can be mitigated by backing up data files externally, but this requires that users know how to and actually do so.
There is also the issue of the often short product life cycles for electronic devices. Students may not be willing to invest in a device until it is a proven commodity. E-readers are relatively new to the market, and have yet to become as commonplace as cell phones or iPods. They may never achieve similar status, as other device manufacturers quickly develop applications to permit electronic reading. The uncertainty of their status makes investing in e-readers a costly endeavor; however, it seems that personal computers, laptops and other portable all-in-one devices are here to stay, so the electronic textbook is likely to endure, although the precise format is as yet undecided.
Legal and Regulatory Issues
Legal and regulatory issues are also a concern for electronic texts. While several colleges and universities have experimented with mobile reading devices in the classroom, they have run into some roadblocks including complaints purporting that the devices are discriminatory against the blind. The National Federation of the Blind and the American Council of the Blind filed a lawsuit against Arizona State University for its plan to deploy a pilot program for the Amazon Kindle reader in a single course to assess the usefulness of the device and e-textbooks in general. The plaintiffs claim that the university, as well as five others running pilot programs, were violating both the Americans with Disabilities Act and the Rehabilitation Act of 1973 because the menus of the device were at the time not accessible to blind persons. Although this was an early snag in the transition to electronic textbooks, it is likely that manufacturers will be able to overcome this limitation by integrating existing text-to-speech software into their devices. In fact, textbook publishers have already initiated a project, AccessText, intended to streamline the process by which institutions convert electronic textbooks into a specialized format for students with disabilities in an effort to help students get their textbooks more efficiently, help colleges save money and avoid lawsuits, and protect publishers’ content.
College officials should do more to encourage the use of electronic textbooks among their faculty as a means to lower the cost to students. They could also experiment with the use of mobile reading devices or interactive e-textbook formats to determine the plausibility of transitioning to an e-textbook campus. Some colleges, including Arizona State, Case Western Reserve and Princeton, have begun to experiment with the use of electronic reading devices. One school, Northwest Missouri State University (NMSU), has been particularly aggressive in pursuing campus-wide electronic textbook implementation.
Case Study 17.3: Northwest Missouri State University
Under the leadership of President Dean Hubbard, Northwest Missouri State University (NMSU) has historically been eager to embrace technological change on campus. NMSU has run a universal textbook rental program on campus since 1905, was one of the first colleges to install personal computers in all dorm rooms, and currently provides all students with a laptop computer. In 2008-09, it piloted a program to evaluate electronic textbooks. The e-textbook Initiative was tested on 240 students who were all provided with a Sony Reader mobile device in order to assess the concept of transitioning from a traditional, printed textbook medium to an electronic one.
While NMSU found the e-reader to be inadequate as a study device due to limited notetaking functionality, it did not abandon its hope to reduce the current $800,000 cost of the textbook rental program by as much as 50 percent with electronic textbooks. Instead, it expanded the trial to include about 4,000 students, using laptop computers pre-loaded with e-texts rather than an e-reading device. NMSU plans to eliminate all hard copy books from its curriculum by 2012, with the intention of transitioning to the exclusive use of e-textbooks on campus.
Harnessing the power of technology to transform the college textbook market has the potential to reduce the cost of college for most students by providing more alternatives for students to procure their course materials. In the past campus bookstores enjoyed near monopoly status by being the only game in town. This spurred the creation of online marketplaces that brings a much greater number of buyers and sellers together to form a more competitive and efficient market for textbooks. In addition to their local bookstore students now have many online options including retail, rental, and used book exchange sites.
More recently, electronic publishing has emerged as an increasingly valuable alternative for students, as most publishers now offer electronic versions of their texts at a fraction of the cost of the printed version. The electronic format also offers instructors the capability to consolidate and customize the content, and removes the inconvenience of hauling heavy textbooks around. In a world where textbooks are mostly in digital format, a student would only need to transport an electronic device of laptop proportions to access study materials. This would make it much more convenient for students to mobilize their study environments and is complimentary to a greater use of the online course format.
Although no specific format or device has emerged as the market leader, the widespread use of low cost software such as Adobe Reader and increasingly affordable personal computers are likely an indication that electronic textbooks will play an increasingly important role in higher education in the future. While time will tell whether the tradition of the hard copy textbook will dissipate entirely, one thing is certain: technology will continue to play an integral role in the textbook market that will ultimately lead to heightened competition, reduced costs and customizable course materials. Some colleges may choose to go the route of NMSU and fully transition to an electronic textbook campus, while others (especially large campuses) may find this a much less appealing approach; however, all college officials are advised to do their part to encourage the use of electronic textbooks by their faculty, as students would benefit by their doing so.