Sunday, April 1, 2012

CT > The Price Is Right?

Dian Schaffhauser  > 04/01/12

Logically, e-textbooks should be much cheaper than the print options available to students--but they're not. CT looks at the rationale behind their pricing, and the market factors at play.


Many educators--as well as the feds and plenty of state governments--believe that the solution to high textbook costs lies with a shift to digital content. After all, if you eliminate the printing, the trucking, the warehousing, and all the other hassles related to physical inventory, you're left with only the writing, production, development, and marketing. Surely that will bring down the prices students have to pay for curriculum?

Given these conflicting claims and beliefs, CT set out to discover the true cost of e-textbooks, what's driving the pricing, and how these costs compare to those of traditional print products.

Crunching the Numbers

At first glance, e-texts do offer a significant discount over traditional print textbooks. An unscientific review of pricing on CourseSmart, an e-textbook clearinghouse, indicates that e-texts on average sell for 50 to 60 percent of the cost of equivalent new print textbooks. But discounts are dependent on the individual title and the area of study. Architecture e-texts, for example, are often as much as 70 percent of the cost of the new print textbook, while many law e-texts cost 40 percent of the print edition.

In considering these numbers, though, it's important to understand that a digital textbook is essentially a rental--students cannot sell their copies once they're finished with them. Instead, students pay to license the text for a certain amount of time, usually 180 or 360 days.

So what happens to the cost calculation when you factor in buyback of print textbooks? While a host of variables determines the ultimate resale value, students can probably expect to recoup 25 to 50 percent of the cost of the original new textbook. It's still cheaper to buy the digital edition, but the pricing difference is not nearly as extreme. And what of those students who buy secondhand textbooks from the get-go and then resell them at the end of the course? In many cases, their out-of-pocket costs might be less than for the digital version.


Ultimately, whether a student can do better by leasing an e-text, renting a print copy, or buying a secondhand version depends on many factors, not least the specific title. Overall, though, e-texts cannot be considered a slam-dunk pricing winner.

Can E-Text Prices Be Justified?


In evaluating student adoption of e-texts, it's also important to remember that e-texts are, for the most part, souped-up PDFs. While CourseSmart's Bookshelf platform allows students to annotate and highlight text, and digital publisher Kno's platform provides some basic multimedia, e-texts are essentially the same as the print product. There is no significant step up in functionality. [IMHO > Incorrect]


Prisoners of Print

Given such lukewarm performance, what is keeping e-text pricing so high? In a situation like this, shouldn't publishers drop their prices to make the platform more appealing? Unfortunately, e-textbooks are caught in a kind of industry limbo, and prices are unlikely to change until a variety of market factors shake out. In a nutshell, the pricing of e-textbooks is being held hostage to the print business model.

Indeed, the biggest factor affecting e-text pricing has nothing to do with digital media at all. Instead, it revolves around the resale market for print textbooks. [snip].


You would think that this inherent flaw in the print model would have textbook publishers flocking to digital in droves. After all, the advantage of the digital model for publishers is that it treats a book like software. "Each time that digital book is sold, the publisher will generate income," Straus points out. "In that model, the publisher no longer needs to price the first sale of that book higher." As a result, Straus predicts that at some point the price for digital versions of these survey-type texts will drop from their current levels.

Even so, Straus believes this year and next will be pivotal for the transition to digital textbooks. "Across the board--publishers, technology companies, the institutions--there's more energy on this than there was two or three years ago," he says. "I think everything is set up for success."

The Paradigm Shift

But is that optimism really justified? As long as e-texts are essentially digital copies of print products [IMHO: Incorrect], the same economic factors remain in play. It seems more likely that the pricing link between e-texts and print will be broken only when e-texts actually evolve into a completely different product--dynamic, multimedia learning tools that take full advantage of the technical features of the devices on which they operate. At that point, prices for traditional textbooks--whether print or digital--will probably collapse.


The transition to feature-rich e-titles is inevitable, though, and publishers are positioning themselves accordingly. Inkling's list of investors includes many of the same publishers that are covering their bets short-term with digital replicas of textbooks


Regardless of the format, however, publishers are unlikely to lower their prices out of the goodness of their hearts. They are businesses, not nonprofits. Indeed, the biggest brake on the high cost of learning materials might come from outside the publishing world--competition offered by open education resources (OERs).


At its core, higher education is powered by faculty and administrators who, like Long, are motivated by teaching and learning, not the money. The internet has now made it possible for these educators to share their work outside the framework of conventional publishers. And the availability of easy-to-use publishing tools makes it possible for them to create educational materials that are as compelling as anything put out by major publishers.


So what does the futures market for course materials look like? Unfortunately, students probably won't pay significantly less. Over time, however, they may well get a bigger bang for their buck. Think of the Macintosh computer--the cost per unit has not come down over the years relative to the actual cost of producing it, but the consumer gets a much more powerful and productive tool.


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