Jan. 30 (Bloomberg) -- In his State of the Union address, Barack Obama called on colleges and universities to control their costs -- a message he reinforced in his speech a few days later at the University of Michigan. One good place to start would be to reduce the price that college students pay for textbooks.
If ever an industry were deserving of digital destruction, it would be the $10 billion textbook market. A handful of companies sell almost all primary, secondary and higher-education textbooks. At the college and university level, where 19 million students spent $4.5 billion in 2010 on texts that they were all but compelled to buy, many schools own bookstores and get a cut of the sales.
The rationale for pricing can be opaque: You can buy Paul Krugman’s economics textbook for $166 at Barnes & Noble in the U.S., or you can purchase it from Blackwell’s in the U.K. for less than half that. The federal government helps to underwrite annual textbook price increases by baking their cost into financial-aid calculations.
No wonder textbook prices rose 186 percent in the U.S. from 1986 to 2004. That’s slightly more than 6 percent a year, versus an overall inflation rate of 3 percent. Although students at four-year private institutions might not blink at spending well over $700 a year on books and supplies, for students at public two-year schools, who account for roughly 40 percent of all post-secondary students, that can represent more than half their academic costs.
Enter Apple Inc., the Great Disruptor, which recently announced with great fanfare that its iBooks 2 and iBooks Author software would “reinvent” textbooks by offering richer, truly interactive texts at a more affordable price. More importantly, new software tools will democratize textbook creation by allowing users to easily combine video, music and text, and to create new course materials.
We don’t yet know Apple’s plans to enter the college textbook market, much less its potential pricing framework. The K-12 textbooks that Apple is offering through partnerships with big textbook producers such as Pearson Plc, McGraw-Hill Cos. and Houghton-Mifflin Harcourt Publishing seem like a multimedia bargain at $14.99.
But that price doesn’t really offer big savings to strapped school systems: It covers just one student for one course year, not the three to five years that you would get out of a $65 ink-and-paper version. For college students to save money buying digital textbooks, the pricing would have to reflect both the fractional cost of the device they would need to buy and the money that they can get back by selling the textbook to another student -- something they can’t do with e-textbooks.
To our eyes, Apple seems less intent on disrupting the textbook cartel than on joining it. Its iBooks 2 format is only truly functional on Apple machines. And anyone who wants to sell a textbook made with Author must do so through Apple and give the company a 30 percent cut. Big publishers are happy because digital textbooks not only lower their production and distribution costs -- it’s not cheap to ship textbooks weighing several pounds -- but also provide a platform for introducing speedy updates while destroying the market for cheaper used textbooks.
Given the strict proprietary restrictions that Apple has put in place, we also see another odd wrinkle: your tax dollars fattening Apple’s ample bottom line. In 2008, almost half of all full-time, full-year undergraduates got some kind of federal aid, to the tune of roughly $100 billion. If a professor wants to assign a text accessible only on $500 iPads -- well, you get the point. There is one straightforward way to help students realize the full cost benefits of digital texts. The Department of Education could require that digital texts at institutions that receive federal financing be platform-neutral, readable on whatever device a student chooses to use.
Another promising approach to reducing costs would be to push the spread of Open Educational Resources: texts and curriculum materials that will be accessible to all, free, under a Creative Commons license. This approach underlies the program that Obama touted in his State of the Union and Michigan speeches, under which community colleges and businesses team up to provide students with education and training. The state of Utah just announced that it will develop and support open textbooks for the study of secondary languages, arts, science and mathematics; earlier pilot programs provided the state’s high-school science students with texts at $5 a book, compared with an average cost of $80 for a typical text.
E-learning, though, still has a long way to go before it is widely adopted: Digital textbooks accounted for less than 5 percent of textbook sales last year. In the meantime, to put the print-textbook industry on notice, how about asking the Federal Trade Commission and the Department of Justice to look into publishers’ efforts to block the re-importation of textbooks from foreign countries, and the existence of huge international disparities in the prices of identical textbooks? Education, after all, begins with open books.
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