2014-04-08

Co.Labs

Why Can't E-Books Disrupt The Lucrative College Textbook Business?

The promise of electronic text has been largely unrealized in academia, where students still pay thousands for books that lose most of their value within months. Here's why.



College students today stream movies from Netflix, queue up music on Spotify, and order late-night snacks on Seamless. But when it comes to buying textbooks, many students are still doing things the old-fashioned way: buying pricy paper copies from the campus bookstore at the start of the semester, then selling them back for a fraction of the purchase price when classes are done.

E-books were supposed to be a panacea, but the Kindle and iPad went mainstream and still relief never came. Companies trying to disrupt the industry say it has evolved slower than other content fields because the market is more indirect.

You see, textbook publishers market to professors who pick the books, not students who pay for them--where Apple and Amazon have traditionally directed their marketing. The key to innovation, these companies say, is to not try to beat the big publishing houses at their own game.

“Their customer base is not the student,” says Nathan Schultz, the chief content officer at Chegg, which offers textbook rentals, e-textbooks and online study help. “Their customer base is the faculty member and, in some cases, the actual institution."

And every year brings a fresh batch of students looking to start college off right, making them wary of waiting for delivery of an online book, let alone experimenting with other ways of learning the material, says Texts.com CEO Peter Frank.

"Unlike with ordering dinner, students, especially younger students, are very unwilling to do what they perceive could put them at a disadvantage,” says Frank, whose company operates a combination textbook marketplace and price-comparison engine. "They really just want to get off on the right foot."

And for students shopping with a parent’s credit card, there’s little incentive to shop around.

When Disruption Doesn't Work

So what's the solution? Find ways to offer students what the existing marketplace isn’t delivering. "This has been attempted so many times, and the past is just riddled with failures," he says, even pointing to a list of “stupid fratboy business ideas” that includes the concept.

The problem, he says, is getting enough buyers and sellers onto a site so deals actually get made. Texts.com is attempting to get around that problem by offering buyers price comparison services for other merchants and making money off referral links as the marketplace grows.

But the students aren’t the only source of inertia in the system, says Frank. Professors, many of whom grew up exclusively with print books, are often reluctant to experiment with alternatives.

"The textbook sales cycle is kind of like the pharmaceutical sales cycle,” says Ariel Diaz, the CEO of Boundless, which develops interactive,cross-platform textbooks. “The one making the decision is not the one making the purchase."

And, says Chegg’s Schultz, traditional publishers developing e-textbooks often contribute their own institutional inertia and just aim to render the successful print version on a screen, not build a new, interactive product.

"In general, publishers are saying don't mess with my book -- I just want you to create a digital representation of that same thing I sell in print,” he says. “I'm losing the ability to create experiences for the student like ‘turn my book into a flash card set’ or ‘turn my book into an image gallery, so I can just use the images to study from.’"

The big publishers are developing online supplements to textbooks, like Pearson’s MyLab and Wiley’s WileyPlus, he says. But those platforms also focus on the needs of instructors, he says.

"It makes the life of the faculty member a lot easier,” Schultz acknowledges, offering features like online quizzes and reports on which students are at the top and bottom of the class. But those top-down tools might not match students’ study needs, he says.

For that reason, Chegg tries to build student-centric tools, offering online study aids and expert help that supplement what students get from traditional textbook makers.

"We don't see ourselves as designing to replace that kernel,” he says. “We see ourselves as an augmentation."

Considering The Professor As End User

Similarly, Boundless began by marketing its books directly to students as a low-cost supplement or alternative to their assigned textbooks, says Diaz. Boundless’ textbook content is generally available for free under a Creative Commons license, and for $20 per book, students get the full interactive package with additional study tools.

"I think the key is to find innovative ways to reach the market," he says, explaining some students use Boundless’ interactive books to study and then borrow a copy of an assigned textbook from a friend or the college library solely for the homework problems in the book.

"We started with a focus on students to make sure that we're building great products for them," he says. "In addition, along the way, we saw an increasing number of educators coming to Boundless to use the content in their classroom."

Now, the company’s piloting customizable versions of its textbooks that professors can easily tweak to create particular reading assignments or add quizzes. With no print revenue stream to worry about or rely upon, it can easier for Boundless to innovate than a larger publisher, he says.

"I think that everybody in the industry sees that this is the future,” says Diaz. "It's like any industry in transition: it's about figuring out what that transition looks like."

[Image via Shutterstock]




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5 Comments

  • So now we have a startup company (Boundless) that's figured out how to funnel VC money into the hands of consumers (students) by funding giving away the product for free while the startup company tries to think up a viable business model. This will work just great until the VC money runs out.

    Look, guys: the give-away-the-basic-product, try-to-sell-the-extras gambit was a miserable failure for the music industry. Why should it be any different here? Sure, tenured professors don't need textbook royalties anymore than indie musicians with day jobs. But while the latter can put their stuff up on Soundcloud or iTunes with little or no effort, you do need someone to produce a decent textbook product, and that someone is going to insist on getting paid. If there's no money left in the system because students were conditioned to expect free textbooks -- and they'll get 'em illegally if they can't get 'em legally -- then the long-term outcome looks pretty sad.

  • One other factor cited by some is the desire to allow students to use hard copy books in "open book" exams but policies prohibiting the use of "computers" during those same exams. Imagine you are the student who bought the e-book and then found out the final was an "open book" exam and you couldn't use your tablet.

  • Marc Sanders

    I'm not sure who wrote the headline, but they are confusing "lucrative" with "expensive". Textbooks are expensive, but they are not lucrative, at least not anymore. Many textbook publishers, textbook wholesalers/distributors and college stores have either gone out of business, are in or near bankruptcy. Few know how to make money in the college textbook market today, and even less are certain of doing that in the future.

  • Noh Namer

    I couldn't study of an ebook. The most I can read off a screen at any one time is about the length of a journal article.

  • Having just finished a master's degree, I would say my biggest hurdle, as a student, to buying textbooks online was a) lack of availability for tablet, b) no page numbering (location??) for citations and c) no difference in cost. These three factors made buying the print version a necessity. I would have LOVED to have gone all digital with my resources. It just wasn't feasible.