Rethinking The Textbook Sales Marketspace
By admin In Uncategorized Posted September 9, 2014 0 Comments

Recently a new battlefront has opened in the textbook wars: the battle between online booksellers and the on-campus bookstore. As the online resellers (Amazon.com, Chegg, andhalf.com to name but three) aggressively market on campus, the bookstores are beginning to press their “rights” under the “exclusivity clauses” of their contracts with the Universities.  

The alternative booksellers are arguing that they are providing competition, and competitive pricing, for textbooks and giving students real “choice.”  The on-campus bookstore is arguing that they base their pricing model on an expected rate of sales, and that they need to have the exclusivity (the captive market, if you will) to ensure profitability.  Students are co-opted into the argument since they feel the immediate pressures of the extremely high prices for textbooks.

These sorts of discussions are very interesting from a supply chain perspective since each new marketing channel results in a new supply chain channel as well.  Shipping in bulk to on-campus bookstores is different from shipping in individualized boxes for each student through UPS or FedEx.  Certainly the used book markets are even different with Chegg seeking to collect and aggregate the used books as the purchase them from around the country ship them to centralized locations and the again meet the demand through individualized shipments.

This debate misses the mark however.  It’s time for a fundamental tectonic shift in the way we produce, and deliver, textbooks.  The debate shouldn’t be around the best way to move paper, and whether used paper should be allowed to be sold in secondary markets, but whether paper should be made, moved, sold, re-bought, and resold, in the first place.  Digital books can, and should, truly transform this market — for the betterment of all. 

In a paper I wrote and presented at the Western DSI conference in 2010, “eTextbook Pricing in the Digital Age:  Leveling Sales”  I discussed the reasons for the high costs of textbooks.  The production and logistics (supply chain) ones are obvious.  Certainly there is a cost to print, and distribute the books.  There also exists significant overhead associated with the production, distribution, and sale of these books. But this overlooks another significant driver of cost of textbooks–the need for publishers to compete with the used book market.  Students will of necessity gravitate to the lower cost books to save money.  In fact, some will actually photocopy a paper textbook if the costs of photocopying are less than purchasing a book.  (The digital textbook  analog to that is someone copying a book, perhaps even “breaking” the digital rights management encryption in the process.)

The challenge then is to find a way to realize the cost savings of digital, remove the incentives to steal the books, and ensure stable income for publishers beyond the current 2 or 3 year decay cycle discussed in the paper.

I propose here a new model.  Imagine the Universities contracting with the publishers directly to provide digital textbooks at a fraction of the current print price for the printed copy.  Perhaps 10-15% of the current price.  And those same Universities make the cost of the textbooks simply part of the tuition cost, or as a fee associated with the class (not unlike current lab fees).  This ensures a couple things.

  1. The costs for the students will be significantly reduced, if not eliminated if factored in to the tuition costs.
  2. Students will no longer have the incentive to “steal” books, or seek out a used market, since the books will be provided as a part of the course
  3. Since every student will be “paying” for the book for every class, there is no decay curve to the demand for the books.  Publishers can more easily plan and price their books.

There are, as with any plan, details that will need to be worked through.  What if a professor wants a book that isn’t yet available?  What if a textbook is platform specific? (Only works on an iPad? Not a good solution).  But these can be worked through, and it would be best to move with deliberation and diligence rather than wait for the markets to “shake things out.” THAT is how we ended up with VHS and not Beta.

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