How to Disrupt Class: Throw the book out the window!

In a book published this summer, the business guru, Harvard professor and author of the best selling book, “The Innovator’s Dilemma” Clay Christensen, turns his analytical lens to the education sector and offers some compelling arguments about how best to reform it. His new book is called Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns (co-authored with Curtis Johnson and Michael Horn), and I strongly recommend it to anyone involved in educational technology. If you can’t get to it right away, an excellent summary of it, written by the authors,  appears in this Forbes article. More can be found on their website, www.disruptingclass.com. Publisher’s Weekly offers this commentary:

It’s no secret that people learn in different ways, so why, the authors of this book ask, “can’t schools customize their teaching?” The current system, “designed for standardization,” must by its nature ignore the individual needs of each student. The answer to this problem, the authors argue, is “disruptive innovation,” a principle introduced (and initially applied to business) by Harvard Business School professor Christensen in The Innovator’s Dilemma. The idea is that an audience in need will benefit from even a faulty opportunity to fulfill that need; in education, the demand for individual instruction could be met through infinitely customizable online computer-based instruction.

A reviewer on Amazon offers this summary of the book’s arguments:

Dr. Christensen argues that the traditional government-run education system will in the near future be “disrupted” by the innovation of computer-based learning. At first, online learning will compete against nonconsumption by offering classes in subjects where there isn’t enough demand in any given school to justify offering a traditional course (such as a very advanced math one or an unusual foreign language). But eventually, He believes that the technology will improve such that computer-based learning will render the traditional model of education obsolete. In “Disrupting Class”, he postulates that demand for computer-based high school classes will follow an S-curve that will start to “flip” (significantly accelerate) in the year 2012. In the years between 2012 and 2018, Dr. Christensen projects that the share of online courses will grow from 5% to 50% of all high school courses.

Professor Christensen’s influence on industries and large organizations should not be underestimated. Intel sent its top 2000 managers to his workshops in the early 1990s, when it was being attacked on the low end by innovators such as Cyrix and AMD. The Celeron chip emerged from this exercise, which helped Intel fend off the disruptive technology of the newcomers. However, he recognizes that the public school system is a very distinct animal from a profit-driven corporation, and the tools needed to effect change are quite different indeed.

One aspect of his analysis, I believe, is spot on regarding how one of the major players in the educational field will be affected by the predicted disruption, and that is the publishing industry. He characterizes the textbook industry as:

a scale-intensive value chain business, marked by high fixed costs, much like the pharmaceutical and commercial aircraft manufacturing industries. The costs of writing, editing and setting up to print and bind a book are roughly the same, whether 1000 or 1 million copies are sold. …These are blockbuster seeking businesses. A large monolithic market for a single best selling title is just as attractive to a textbook publisher as the blockbusters Zantac and Lipitor are to a drug company.

There is little dispute among textbook publishers that because individual students learn differently, they need differentiated learning options. But the textbook companies can’t get there from here. Were they to focus on developing different books for each type of intelligence, their volume per title  – and their profitability – would decline markedly. Because this is so disruptive to their business models, most of the intellectual and financial energy of this formidable industry focuses on creating and commercializing still more blockbuster books for large, undifferentiated masses of students.

But Christensen and his co-authors point to the enabling technology of such Web 2.0 innovations as User Generated Content as the solution to this dilemma. In other words, the disruptive innovation will come from the consumer side, as opposed to the producer side, since the producers have too much to lose to be the innovators. Like most disruptive technologies, these tools will initially be adopted on the margin, say for tutorial purposes, rather than be integrated into the mainstream system right off the bat. His prediction:

For several years, most teachers and students will still have conventional textbooks. But little by little, textbooks will give way to computer-based online courses – increasingly augmented by user-generated student centric learning tools. At some point, administrators, school committees, and teachers unions will recognize that even without explicit administrative decisions ever having been made, student-centric learning will have become mainstream.

A bit of historical perspective may be appropriate here. Anyone who studied engineering or science up to the early 1970s would recognize the name K + E (Keuffel & Esser), the premier manufacturer of slide rules for over a century. Their story may ring a bell:

K+E held patents for a wide range of slide rule features, including improved cursor indicators, functions and scales, and the adjustable body mechanism. Caught by the huge market shift created by electronic calculators, CAD systems and laser surveying systems, which displaced all of their strong markets, K+E shrank dramatically after 1972. K+E even sold some TI manufactured calculators for a brief period trying to capitalize on their existing customer base and industry knowledge. The final assets of K+E, mainly involving paper products, were sold to AZON in 1987, after several painful internal re-organizations.

There are some striking parallels between companies like K+E in the 1970s and the textbook publishers of today. A prime indicator of an industry in decline is rapid consolidation. Another is the introduction of “new” products whose main objective is to protect the existng franchise that the “old” products have built up over the years. One wonders if any publishing executives have ever heard of K+E. The authors may want to leave a couple of copies on the desks of their publisher, McGraw-Hill.

NY Times says textbook publishers are like drug companies: (Prozac with your Proust?)

Another article in the continuing odyssey of the nefarious publishing industry appears in today’s New York Times. It contains the usual litany of egregious behavior by the textbook oligarchy: double-digit price increases, crippled digital versions padded with empty caloric content, under-the table-kickbacks to faculty members, etc. But it also charges that the publishers are similar to drug companies in that they both benefit from the so-called “moral hazard” problem, as explained by Cal Tech economist and open source microeconomics textbook author R. Preston McAfee:

that is, the doctor who prescribes medication and the professor who requires a textbook don’t have to bear the cost and thus usually don’t think twice about it. “The person who pays for the book, the parent or the student, doesn’t choose it,” he said. “There is this sort of creep. It’s always O.K. to add $5.”

Hmm… Maybe MacMillan could throw in a free prescription for a semester’s supply of Paxil. Having been back on campus for a few weeks now and having to deal with higher tuition and outrageous textbook prices, the class of 2012 is coming to the painful realization that they can barely afford their case of Heineken, their daily Starbucks double iced frappacino, and their music downloads (oh, I forgot – they get that last one for free.)

Professor McAfee adds one more comment:

“This market is not working very well — except for the shareholders in the textbook publishers,” he said. “We have lots of knowledge, but we are not getting it out.”

This is a true but incomplete statement, at least as quoted in the article. It is accurate to point to the increasing returns to shareholders, although it is becoming increasingly difficult to track this data as the trend towards consolidation and private equity in the publishing field removes the need for public disclosure:

There is no doubt that major textbook publishers are big business. The college textbook market represents between $5 billion and $6 billion and the the last 18 months have seen the sale of two major publishers (Houghton Mifflin College and Thomson Learning) for $750 million and $7.75 billion respectively. The overall consolidation of the college textbook market has left four primary players (listed in order of size and market share): Pearson, Cengage Learning, McGraw-Hill, and Wiley.

There is little doubt that the M&A activity has resulted in the remaining publishers adding staggering amounts of debt to their balance sheets. A consequence of this new economic reality is a shift in attention from textbooks to those other books that the company produces: the ones that deal with assets, liabilities and net income. Accountants tend to focus on different assets than editorial directors do.

But another party is apparently complicit in this cozy arrangement of uncontrolled textbook price increases, according to a 2006 study by Dr. James Koch called

An Economic Analysis of Textbook Pricing and Textbook Markets.

Yet another distinctive characteristic of textbook markets is that nearly
every institution of higher education has a financial stake in higher
textbook prices.  With a few exceptions, noted below, institutions of
higher education either own and operate their own bookstores, or they
contract that responsibility to an external vendor such as Follett or Barnes
and Noble, in which case they usually receive a lump-sum payment plus a
percentage of dollar value of sales at contracted on-campus stores.

What this market structure leads to is ever increasing pressure on the producers to raise prices, which works well for as long as there are few supply alternatives for the consumers (students). As thought leaders such as Preston McAfee, enabled by disruptive innovators like Lulu and Flatworld Knowledge, (which I have blogged about frequently this year) begin to offer a viable alternative to the two extremes currently faced by most students – price gouging or illegal file sharing sites – the publishing cartel may soon find itself cozying up to the drug makers, if only to get their own supply of Prozac.

PIRG claims e-textbooks are due for “Course Correction”

In a stinging critique of its recent foray into the field of digital textbooks, the publishing industry was taken to task in a report released this week  by the Student Public Interest Research Group. The study, entitled, “Course Correction: How Digital Textbooks Are Off Track, and How to Set Them Straight”, outlines the findings of a survey conducted on two different college campuses last spring, and presents the following findings:

1. Digital textbooks must meet three criteria – affordable, printable and accessible:

In order to be a solution to high costs, digital textbooks must cost less than traditional books. That means digital textbooks must be priced lower than the net cost of buying a textbook – the purchase price minus the amount the student can expect to receive for selling it back to the bookstore.

2. Digital textbooks done wrong: e-textbooks fail to meet the criteria:

The first type of digital text we reviewed was e-textbooks, the digital book format offered by the major publishers through CourseSmart.  We found that they fall short on each of the three criteria we found digital textbooks must meet.

E-textbooks are too expensive
* The e-textbooks we surveyed cost on average exactly the same as a new hard copy of the same title bought and sold back to the bookstore.
* The e-textbooks we surveyed cost on average 39% more than a used hard copy of the same title bought and sold back online.

Printing is costly and difficult
* Printing was limited to 10 pages per session for each of the e-textbooks we surveyed.
* Buying and printing half of an e-textbook was three times the cost of buying a used hard copy and selling it back to the bookstore, for the books we surveyed.

E-textbooks are difficult to access
* Students have to choose between using the book online or using it offline – they cannot do both.
* Most (75%) of the e-textbooks we surveyed expired after 180 days, so students do not have the option to access their books in the future.

3. Digital textbooks done right: open textbooks meet all of the criteria

Open textbooks are textbooks distributed free digitally under an open license.  The key feature of an open license is that it permits users to make copies of the textbook and translate it into different formats.  So, open textbooks start as digital textbooks but can be printed in a variety of formats. We found that open textbooks accomplish what e-textbooks do not: low prices, printing options and accessibility.

Open textbooks are affordable. Open textbooks are free digitally, and students can purchase other formats at a low cost.

Open textbooks are easy and inexpensive to print. Students can print digital textbooks anytime, anywhere and in a variety of formats.  They can print individual pages at home, order a print-on-demand bound copy, or anything in between.

Open textbooks are accessible. Students can access open textbooks anytime, from any computer, without the book expiring.

The authors of the study urge faculty and institutions to do everything they can to encourage adoption of open textbooks:

For faculty, this means giving preference to open textbooks whenever pedagogically appropriate.  For institutions, this means providing incentives to faculty authors and pooling resources to develop a viable infrastructure to support open textbooks.

This report seems to be getting noticed, as it’s been quoted by most of the major tech and publishing blogs. If nothing else, it will most likely lead to a spike in hits on a couple of sites: Coursesmart (which PIRG ranks slightly below the IRS in its contribution to society), and on Flatworld Knowledge, which receives high praise for its approach to open textbooks. (Another site Connexions, offers open source educational content as well.) There will also quite possibly be a lot more traffic to file sharing sites like Textbook Torrents, which didn’t let pesky conventions such as copyright laws interfere with its users’ access to every textbook that has been scanned and uploaded by disgruntled students. (Although the site is currently not accepting any more registrations, which suggests that their legal bills may be exceeding their server costs.)

As the report indicates, the textbook publishing industry is overdue for change. But for some insight into some factors that might keep the business from changing as quickly as the technology is, it’s worth reading a column posted by a writer with impressive credentials, as an author, college professor, and a publishing executive. His post is called Why the Kindle Won’t Have a Dramatic Impact on College Course Materials for at least Five Years and although it focuses largely on the barriers to the adoption of the Kindle in the college market, it provides a cogent and laconic account of the economics of the textbook publishing industry. Among his observations:

  • Within this context, e-books are budgeted as a small percentage of the overall budget. From the textbook publisher’s perspective the development costs are identical whether the content is being flowed into a print textbook or an e-book. This is because textbook publishers make most of their revenue of print textbooks and, consequently, most of the content development strategy is formulated around those print textbooks. E-books are simply “add-ons” or extra products that can be viewed as a by product of the core print development process.
  • Within the current content development workflow for textbook publishers, the plant investment remains the same regardless of whether the product is a print textbook or an e-book. And, since publishers sell far more print textbooks than e-books, there is no incentive to change production workflows to favor the creation of minimized or lower-cost e-books from which print textbooks could be created. This means that publishing e-books, without significant changes to current design and production workflow, does not reduce the publishers’ costs significantly. This is important because it means all current e-book solutions for textbook publishers take into consideration the print book production process and derives cost efficiencies from that process. There are neither sales incentive or cost efficiencies in the current workflow that would cause publishers to get excited about the Kindle.

One could surmise that the same might be said for ebooks in general, not only Kindle versions. Until the design and workflow process undergoes a radical transformation, thus reducing the cost curve by an order of magnitude, traditional publishers will not be in a position to offer their content in an open (free or nearly so) model. This is a clear symptom of an industry about to undergo a stage of disintermediation, which is usually accompanied by major sell-offs of assets, restructuring and layoffs of thousands of managers and editors. It may take a decade or so, but eventually the textbook industry may consist of hundreds of small, specialized content producers, and a handful of POD providers. Instead of going to Barnes & Noble to buy their textbooks, the freshmen of 2015 may be stopping by Kinko’s.

The new social: reading a book

It has been noted by some observers that Amazon has not really taken advantage of the Social Web in building a community of Kindle lovers and ebook readers. This failing was described in a particularly succinct post, in which the blogger describes a scenario in which she has just finished reading a great book, and feels compelled to share it with her friend on the west coast. She could call or email her friend about it, but since it’s 2 a.m, she just wants to go to sleep. She may or may not remember to tell her friend about the book.

Now imagine it’s 2am and I’ve read this book on my second-generation networked digital reader, maybe the Kindle 2.0.  As soon as I’ve finished the book, the device prompts me to rate it (4 stars!).  It also knows about my social connections.  It asks me if I’d recommend it to my friend, who has enjoyed similar books, and I say yes.
The next morning my friend wakes up and picks up his e-reader.  There’s a recommendation from me — and a 20% discount to purchase this book immediately. This $5 digital book is now just four bucks, and it’s instantly on his device.

This eloquent writer has just described the evolution of the book from a solitary, isolated pastime to the foundation of a social framework. Many voracious readers enjoy the solitude and isolation while lost in a great novel. Many others take an equal amount of pleasure in sharing their thoughts and reactions to a book they’ve just read with other readers. This need to share is what gave rise to book clubs in the 1950s. Fast forward a half century and you have virtual social networks for everything from  Andean beekeepers to computer aided Origami creators. Why not for book lovers too? In fact, you don’t have to look beyond Facebook to find them. Two of the most popular are Visual Bookshelf and Shelfari. They allow members of the network to post recommendations, write reviews, and check out what others in their network are reading. What a perfect marriage of old and new technology!

So why hasn’t Amazon, the king of books on the Internet, embraced this aspect of Web 2.0? What better way to promote the viral nature of a great book than to let avid readers send it to their friends? Well, it probably has something to do with these three letters: AZW, which is Amazon’s proprietary DRM format for e-books. This format can only be read by the Kindle, and that’s what keeps us all shopping at the Kindle store. But it’s not a huge leap to envision the capability of sending a file from one Kindle owner to another, in AZW format, to leverage the instant gratification and impulse purchase trends common among digital consumers.

The blogger quoted above suggests that DRM’d books hinder this adoption process:

And let’s suppose that people did send around free digital books.  If I didn’t have an e-ink reader, what would I do with them?  After I got a few freebies from friends I’d probably go buy a Kindle, and then that seductive “share this book” button would take hold.  The existence of some free books is an incentive to move up to a specialized device.  They create the necessary ecosystem and will ultimately motivate, not destroy, publishing sales.

I think she has a point: Making it easier to share ultimately results in higher sales. This vision may be taking a step closer to reality with the announcement yesterday that Amazon is acquiring Shelfari:
Shelfari joins the Amazon.com family

It’s an exciting day here at Shelfari. The rain has stopped, the birds are chirping and the biggest news of all – we are being acquired by Amazon.com.

So maybe we’ll see Kindle 2.0 with recommendations and sharing capabilities…

Getting kids to read: Take them to the movies

Yesterday the New York Times ran a story headlined: “To Reach Children, Publisher Tries Films”. It starts off:

When the children’s book series “The Spiderwick Chronicles” became a popular Hollywood film, its publisher, Simon & Schuster, enjoyed a subsequent lift in book sales — and little else. But under a new deal with the Gotham Group, a Los Angeles-based management firm, the next time Simon & Schuster Children’s Publishing owns the film rights to a book — and that book is eventually turned into a movie — the publisher will be promised its own piece of the pie.

The article actually devotes more ink to the increasing number of tie-in deals being struck between publishers and film studios than it does to the effect movies have on kids’ reading habits. Nevertheless, there is a direct relationship between the release of a movie based on a book and subsequent sales of that book. Some books had aleady reached commercial success, such as the Harry Potter series, and the films only boosted their sales further. Other titles, though, had languished in obscurity for years, only to be rejuvinated by the release of a movie based on them. Sales of Philip Pullman’s Golden Compass, first published in 1995, saw a 500% increase even before the film of the same name was released last December. Similarly, when the movie Polar Express was released a few years ago, sales of the original book jumped 50%, even though it was first published two decades earlier (and had received the Caldecott Medal).

This is not a recent phenomenon. Even sales of the best selling book of all time, the Holy Bible, saw an uptick after the release of The Ten Commandments fifty years ago. Publishers nearly always see a jump in sales of their backlist titles if the movie builds any kind of an audience. In the past however, authors and their agents typically negotiated film rights separately from the book deal. With the advent of the alliance such as that between Gotham and Simon & Schuster described in the article, the publisher will share in the revenue generated when its children’s books are turned into video games, comic books, or other properties. This type of tying arrangement is likely to help prevent the oft-foretold demise of literary pursuits by 21st century teens. Studies have shown that given exposure to interesting content, kids will in fact read. If their interest is piqued through exposure to a character or plotline, be it through a movie, video game, or website, chances are they will take a chance on the book of the same title. That has to be good news for both publishers and booksellers.

Blood, Guts and Books: WSJ says boys prefer ghoulish, not girlish, lit

Today’s Wall Street Journal has an interesting Page One article about the lengths publishers are going to in order to interest pre-teen boys in reading. Citing an academic study that:

tracked boys’ reading habits for five years ending in 2005 and found that schools failed to meet their “motivational needs.” Teachers assigned novels about relationships, such as marriage, that appealed to girls but bored boys. His survey of academic research found boys more likely to read nonfiction, especially about sports and other activities they enjoy, as well as funny, edgy fiction. Boys’ literary depth is an abiding concern in educational circles. Boys have persistently lagged behind girls in reading on the National Assessment of Educational Progress, an influential federal test for gauging achievement. The gap widens by the time they reach 12th grade.

So to meet this challenge, publishers have started a genre that might be called “Gore for Guys”, with titles such as “Vlad the Impaler”, “Help! What’s Eating My Flesh?” and “Sir Fartsalot”. The article goes on to say that last year, U.S. publishers released 261 new works of juvenile fiction aimed at boys, more than twice the number put out in 2003, according to Bowker’s Books in Print database. There were 20 nonfiction entries for boys, compared with just four in 2003.

This trend is a positive devlopment. It’s disturbing to learn that boys begin to lag girls in reading ability around the age of ten, and the gap continues to widen into adulthood. Anything that generates interest in a subject usually leads a young person to become absorbed (even obsessed) with that topic. So if a movie about Dracula sparks an interest in all things ghoulish then that may well lead to greater consumption of the printed word.

Another site serves the needs of boys searching for books that would interest them. Called GuysRead, it was created by children’s author Jon Scieszka as a web-based literacy program to get boys interested in reading. It could be a great social networking site for teens to post and share reviews of books they like, but at this point it appears to contain a list of books that kids might find interesting, with a link to Amazon if you want to buy the book. (A random check of a few of the books listed resulted in further links to third party sellers, as Amazon did not seem to stock them. And while the books cited in the WSJ article were all available on Amazon, none were offered in the Kindle format. Maybe they’re too graphics intensive to present well as an e-book.)

Free the Textbook: The Revolution Marches on…

Now that Textbook Torrents seems to be offline, just as a new academic year is getting underway, what’s a poor struggling student to do when faced with exorbitant textbook prices? Well there’s a plethora of sites and services currently under development that have made it their mission to combat high textbook prices. One that’s been around for a couple of years, but that seems to be undergoing a rebirth, is Textbook Revolution. It appears to be a student-led organization that is close to launching a wiki.:

TBR’s mission is to drive the adoption of free textbooks by teachers and professors. We want to get these books into classrooms. Our approach is to bring all of the free textbooks we can find together in one place, review them, and let the best rise to the top and find their way into the hands of students in classrooms around the world. At Textbook Revolution, you’ll find links to textbooks and select educational resources of all kinds. Some of the books are PDF files, others are viewable only online as e-books. Most books are aimed at undergraduates, but there are at least a few resources at every level, from kindergarten to post-doc. All of the books are offered for free by their respective copyright holders for online viewing. Beyond that, each book is as individual as the author behind it.

This volunteer run strategy may or may not be sustainable in the long term. College students are among the most passionate soldiers in the movement against the mighty publishing cartel that puts profit before pupils, but they also tend to have a limited horizon – usually four years. No one every thought that Wikipedia would evolve to its current status, but it has taken more than four years to get there.

Textbook Revolution  summarizes it mission as follows on the site’s FAQ page:

The textbook industry today is run by a small group of very large corporations who care very little about education and very much about maximizing profits. The industry charges outrageous prices for new textbooks while simultaneously doing everything it can to make older versions unusable or obsolete. There is simply no reason that a new calculus textbook should cost $157. The study of calculus, at least the type of calculus that most of us need to study in high school or undergraduate programs, has not changed significantly in decades. For an in-depth review of all that is wrong with the textbook industry, please read RipOff 101, a study by CalPirg

At the other end of the ethical scale is Pirate Bay, which flagrantly violates global copyright laws, as described in this recent article in the NY Times:

The Pirate Bay, which is based in Sweden, presents a devilishly fearless challenge to American textbook publishers. It describes itself as an “anticopyright organization” and offers music, movies, television shows and software, as well as e-books like textbooks — not a single item of which, it boasts, has ever been removed at the request of a copyright owner.

As Randall Stross says in the article:

All forms of print publishing must contend with the digital transition, but college textbook publishing has a particularly nasty problem on its hands. College students may be the angriest group of captive customers to be found anywhere.