College Textbook Economics 101: Pay, or Pirate and Party?

With a new semester starting in a little over a month, the media is full of coverage of the cost of textbooks, and what publishers, colleges and students are doing about it. As you might expect, the solutions and strategies vary depending on which segment of the market they are coming from.

The first article comes from Wednesday’s Wall Street Journal, which describes a move by publishers and colleges to create custom editions of textbooks, that carry a higher retail price, along with some legally questionable restrictions:

The University of Alabama, for instance, requires freshman composition students at its main campus to buy a $59.35 writing textbook titled “A Writer’s Reference,” by Diana Hacker. The spiral-bound book is nearly identical to the same “A Writer’s Reference” that goes for $30 in the used-book market and costs about $54 new. The only difference in the Alabama version: a 32-page section describing the school’s writing program — which is available for free on the university’s Web site. This version also has the University of Alabama’s name printed across the top of the front cover, and a notice on the back that reads: “This book may not be bought or sold used.” Custom textbooks like this one are proliferating on U.S. college campuses, guaranteeing hefty sales for publishers — and payments to colleges that are generally undisclosed to students. For publishers, the custom market is a way to thwart used-book sales, which cut deeply into their profits. Though used books have been around for decades, they have become a much bigger industry threat in the Internet age. Web sites for used books, such as Amazon.com and eBay, have transformed fragmented, campus-by-campus dealings in old texts into a national market, where discounts of 50% off the new-book price are common. Because of their limited audience, custom books are difficult to resell — and they sometimes aren’t eligible for authorized campus book-buyback programs.

Whenever apparently nefarious and price-gouging business deals are exposed, one can usually predict two parallel backlash reactions. One is a rapid response, the other slow and bureaucratic. In this case, the first is a reaction by students, the primary consumers and victims of this so-called conspiracy. The other is by the government, which is compelled to at least appear to be doing something, despite the massive publishing industry’s lobbying efforts in the nation’s capital. (From the WSJ article: In recent years, 34 states have proposed or passed legislation to control textbook costs, including measures to prohibit inducements to professors for adopting textbooks, according to a May 2007 congressional study. A bill pending in Congress would require more disclosure of textbook pricing, in part by requiring publishers to sell textbooks separately from the bundles of extras with which they are now often packaged.)

Students, as might be expected when they are feeling exploited, are responding with typical home grown, grass roots solutions. There’s the website: www.maketexbooksaffordable.org, which purports to fight textbook ripoffs, and has apparently collected signatures from over 1200 faculty members supporting their efforts. There is also the predictable market response to this cozy and collusive cartel, which is leading to the growth of the “open textbook movement”, covered yesterday by USA Today. One of the early players in this market is Flatworld Knowledge, which was founded in 2007 by a couple of publishing industry veterans, who recognized that the world was ready for a new publishing paradigm, and that it wasn’t likely to emerge from the established players.

It will come as no surprise, that, if there is an opportunity to get something for free, students do not feel compelled to wait for either the government or the forces of creative destruction to come to their rescue. And just as the recording industry saw its fortunes begin to shift on college campuses a decade ago, the textbook business is beginning to experience a similar threat from file sharing sites. The primary obstacle to massive pirating is of course the difficulty of converting the content from the printed page to a digital format. This step was relatively straightforward with CDs; it’s considerably more complicated to rip a book. As Ars Technica puts it” In contrast to ripping an MP3, scanning a textbook is a major task that requires a significant personal involvement, placing it beyond the attention span of many college students.

The best known textbook filesharing site Textbook Torrents, (catchphrase: “because you can’t torrent beer”) and its administrators clearly view themselves as providing a public good. The site’s rules page exhorts users who’ve saved money by downloading texts there to go out and spend the equivalent money on a scanner. “Scan as many of your other textbooks as you can, and put them up here for others to benefit from,” it reads. “There aren’t very many scanned texts out there, so let’s change that.” Anyone who manages to find all their books through the site are encouraged to go out and buy a text simply to contribute it to TT’s collection. [As of this date’s posting, the site is “currently temporarily unavailable”].

I predict an outcome similar to Napster for sites like Textbook Torrent. Due to their blatant copyright infringement practices, they are low hanging fruit for the enforcement arm of the publishing industry, and they will be sued into oblivion. Given a choice between “Free and Illegal” or “Free and Legal” most students would opt for the latter. This is where sites like Flatworld Knowledge can take advantage of the rapidly evolving dynamics of the textbook publishing industry (both legal and financial). They will succeed if they can adapt their marketing strategies to the channels that are already part of students; DNA. That means Facebook, the most popular site on college campuses after the filesharing sites. A search on FB Apps Directory for “Textbook” yields over two dozen apps (including one called “Free the Textbook”, by, you guessed it, Flatworld Knowledge”), but none currently have more than a handful of users. That will likely change by Labor Day, as students begin to return to classes.

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