End of March 2008
What would be the situation of a $5 billion a year industry that had a product that hadnâ€™t substantially changed for decades, a product that over that same span had been increasing in price at twice the rate of inflation, and operated in a market where they could be almost completely deaf to the opinions of the primary consumers. Pretty dire, right?
Wrong. If itâ€™s the college textbook publishing industry, these problems have caused some discomfort, but they havenâ€™t changed the industry and they havenâ€™t affected the bottom line. Publishers have a captive, reliable and slightly growing audience from year to year. Consolidation into four corporate giants has reduced the overall level of competition. The industry is unique in that the consumer in not the adopter: students buy the increasingly expensive books that professors recommend, but the professors are immune from the pain of rising costs.
It gets worse. Used books sales, on the web and at college bookstores, have eaten into the publishersâ€™ profit. This has in turn spurred an arms race, where publishers put out editions every couple of years, and shrink-wrap the books with ancillaries like CDs and software, all to try and force the instructors to adopt only the most â€œrecentâ€ materials. There is little or no price pressure on publishers because they are marketing to the professors, and the professors either donâ€™t care, or they rationalize the situation by saying that students â€œhave to buy a book anyway.â€ Publishers also give professor adoption rewards like DVD sets of TV shows and expensive software. These amount to little more than bribes, but to get 100 adoptions of a $100 textbook generates $10,000 in revenue so a $100 bribe is just good business.
This situation has recently attracted the unwelcome attention from student groups and Congress. The average student spends about $900 per year on textbooks, which is about 20% of tuition and fees at a four-year public institution, so this is a substantial cost for students and their parents. The GAO investigated textbook prices in 2005, and politicians in nearly 30 states have conducted hearings or raised the issue for public debate. The grassroots Student Public Interest Groups have become vigorous critics of the textbook industry, pointing out that books are often much cheaper in Europe, noting that very few professors use the bundled extra materials, and that new editions are not needed on such a rapid timescale. At the GAO hearing, one congressman sardonically pointed out that new calculus texts were churned out every few years, but he â€œdidnâ€™t think that calculus had changed much since the time of Newton.â€
Where does the textbook dollar go? The Association of College Bookstores creates and updates a useful chart. Of every dollar a student spends, 11 cents goes to the authors, 66 cents goes to the publisher, and 23 cents goes to the college bookstore. The royalty rate for authors is standard and, after all, without the authors, there would be no authoritative material to help students study. The publishers gets 2/3, the lionâ€™s share, and 25 cents go for marketing and administrative costs, which seems like pure overhead. The bookstore only takes 1/4, but they are not blameless in this game. Bookstores buy back used copies at 25 cents on the dollar but then sell for half price so they can make a 25% margin by selling the same books over and over again. Thatâ€™s pure gravy, so their claim of altruism to students rings hollow since obviously they are acting as profit-skimming brokers and there would be no textbooks if only the bookstores sold them.
My perspective on this subject is as an insider and an outsider. I wrote textbook for a decade before leaving the game, and now I have college age kids myself so know from first-hand experience about the big bills. I quit writing textbooks because the industry was becoming steadily more impersonalâ€”small publishers with long-time editors were consumed by conglomerates that put the money into marketing. The authors were being increasingly treated like paid help rather than creators of content and pedagogy and full partners in the publishing process. For me, it became a grind and not much fun. Plus, I note that I still drive a 15-year-old car; very few instructors who write books do more than add a modest supplement to their income.
What does the future hold? It would seem that in the age of information and the Internet, printed books are an anachronism. People do like to read, and students still like to mark up their books with highlighting and notes, but they also all have laptops and could easily migrate to electronic alternatives. The textbook is still in rude health but it shows signs of terminal illness. Alternative and a glimpse at the future will be covered in a future post.