Apple and Textbooks, Part 1: The War on Paper

Unsurprisingly, there has been a lot of good coverage of the Apple announcements already. I’m partial to Phil Hill’s pre- and post-announcement write-ups here at e-Literate as well as Audrey Watters’ analysis at Hack Education. Nevertheless, I do think there are a few more things that can be said about the announcement.

From a functional perspective, there really isn’t anything new about the e-textbooks that Apple is touting. Pretty much all of the functionality can be found in one, several, or even all of the entrants in the product category that I have occasionally referred to as “nextbooks,” e.g., Inkling, Kno, MIYO, DynamicBooks, and my own employer’s MindTap product. In fact, as I’ll go into in a later post, Apple’s entrants are missing some features that are critical to this product category. But the facts of the product announcement alone don’t tell the whole story. I don’t think you can really tease out the full impact without understanding the company’s commercial goals—particularly when the company is Apple, which has a history of moving markets in ways that other companies can only dream of. In the next couple of posts, I’m going to tease out what I believe Apple is trying to accomplish for itself, and then use that context to explore where their efforts are likely to have progressive effects on education and where there are gaps or problems.

Let’s start with Apple’s prime motivation. They want to kill paper.

In the oft-quoted passage from Walter Isaacson’s biography of Steve Jobs, it is clear that Jobs wanted to displace textbooks with digital content on an iPad:

“In fact Jobs had his sights set on textbooks as the next business he wanted to transform. He believed it was an $8 billion a year industry ripe for digital destruction. He was also struck by the fact that many schools, for security reasons, don’t have lockers, so kids have to lug a heavy backpack around. ‘The iPad would solve that,’ he said. His idea was to hire great textbook writers to create digital versions, and make them a feature of the iPad. In addition, he held meetings with the major publishers, such as Pearson Education, about partnering with Apple. ‘The process by which states certify textbooks is corrupt,’ he said. ‘But if we can make the textbooks free, and they come with the iPad, then they don’t have to be certified. The crappy economy at the state level will last for a decade, and we can give them an opportunity to circumvent that whole process and save money.’ “

Let’s be clear about what this vision does and does not encompass. This isn’t about radically changing the way our education system works. It isn’t about improving teaching and learning. Not directly, anyway. It’s about freeing children from the weight of the backpack and freeing teachers and schools from the prescriptions of state textbook selection boards. Above all, it’s about selling iPads. Apple wants every child to be required to have an iPad for school, and the way they will attempt to accomplish that is by making the iPad the source of all curricular content, displacing the paper textbook in the process.

But there’s a problem. Every couple of months, another study or article comes out saying students don’t like e-textbooks. If you read a couple of these pieces, you’ll quickly see there are two common themes: loss of functionality and cost. Students want to be able to do what they can do in their print books, such as highlighting and making margin notes. The e-textbooks the students in these studies are getting, by and large, are inferior copies of print. Think PDF. And, of course, the number one affordance that college kids miss about their physical textbook is the ability to resell it to recoup some of their costs. So if Apple wants to displace paper, it has to close the functionality gap, lower the price, and add some unique features that make the product attractive. They have certainly narrowed or closed the functionality gap and demonstrated some compelling digital-only features. (Cost is more complicated; I’ll get to that shortly.) But again, none of these features are new to digital textbooks. So what is Apple attempting to accomplish by weighing in this way?

Textbook publishers have a chicken-and-egg problem. While they are building out some “born digital” textbook replacement products, there’s a limit to the size of the bet they can make as long as they have to address the needs of students who don’t have the right device, i.e., a decent tablet. Right now, that’s most of them. As long as that is the case, publishers are going to be inclined to stay with their current (cumbersome) print-optimized production processes and try to add digital features as they can. The publishers don’t feel they have the clout to drive the transition to digital, so they are constrained by whatever the market mix is at the moment.

Apple is different. First of all, unlike the textbook publishers, they get zero revenues from analog print products and have no installed base of textbook users to support. They can drive hard toward tablets and it’s all upside for them. Second, Apple is a taste maker like no other technology company in human history. They can raise the profile of these innovations. They can drive demand. They can make digital textbooks cool.

Just stop for second. Think about that.

Also, by releasing the authoring tools, Apple is trying to get around the whole print-first production apparatus at traditional publishers. They’re supplying a tool that makes it easy to create born-digital textbooks. And by releasing the tool for free, the implicit threat is that if the traditional publishers don’t come on board, others will.  Apple is attempting to accelerate the creation of these (relatively) higher-value eBooks by stimulating demand and lowering barriers to entry on the production side.

But even that is not enough. That is why I expect several announcements to follow this one.

What’s Next?

Apple hasn’t yet cracked the affordability problem with these textbook offerings. Remember, the pricing is for K12 books. Typically, those books will sell to schools for around $75 and will be used for about five years. Do the math. That’s $15/year, or roughly what these iTextbooks are being sold for on a per-student basis. Apple needs to make this more affordable. As a first step in that direction, I think we can count on an announcement of a significantly cheaper iPad some time between now and September. This strategy just doesn’t make sense at a $500 price point. But if Apple were able to get the price down to Kindle Fire territory, that would change the dynamic considerably. Since these books take heavy advantage of multimedia and really want a larger screen, I don’t expect Apple to save money by coming to market with a smaller screen. They are much more likely to take the same strategy that they have with the iPhone, i.e., drop the price substantially on the current model when the new one comes out.

Then there’s the challenge of administering all these iPads in a school environment. Remember, Apple is targeting K12 first. It’s not really clear whether Apple’s strategy is to get schools or parents to purchase the devices. If the former, then the company will have to release administrative software that lets schools find the iPads, control what’s been installed on them, monitor what students are doing on them, and so on.

But all of this still doesn’t get us to Steve Jobs’ original vision. Remember what he said:

 ‘The process by which states certify textbooks is corrupt,’ he said. ‘But if we can make the textbooks free, and they come with the iPad, then they don’t have to be certified. The crappy economy at the state level will last for a decade, and we can give them an opportunity to circumvent that whole process and save money.’

Let’s say that Apple is successful at creating a market and, in a few years, has a rich selection of textbooks in Bookstore that span the entire K12 curriculum. What’s their next move? Think Netflix. The school pays a flat subscription in order for the students to access whatever textbooks they need. If done right, it is possible that this structure could circumvent the textbook approval boards, since the schools are not specifically buying any particular textbooks. (I have a feeling that state boards won’t give up control so easily, but that’s another post for another day.) And Apple controls pricing.

There is no question that Apple wants to control the revenue stream from the textbooks in addition to selling the iPads. Much has been made of the fact that iBooks Author doesn’t quite publish to the EPUB standard and has a EULA that requires authors sell any products that were created with the tool through Apple and give Apple a cut of the revenues. They could have charged $5 or $10 for the tool and sold it straight up without the restrictions as part of iWork. But from Apple’s commercial perspective, this isn’t fundamentally about capturing the revenue from unleashing creativity for the creation of educational content. It’s about capturing the revenue stream from the consumption of educational content. That’s a very different business driver that will result in very different product development plans, both now and down the road.

Obviously, there’s a lot to unpack here regarding the implications for education. In my next post, I’ll write about how this approach shapes and limits the vision for what textbooks (or their digital replacements) can be.