Boundless Is Totally #Winning

I was contacted by Boundless CEO Ariel Diaz regarding a concern he had with my blog post about the lawsuit outcome. This was not entirely surprising, and I was curious to see which aspects of the post concerned him. Was it my characterization of Boundless as not a content company? Was it my speculation that Boundless was really designed to ride on Chegg’s coattails with the VC community? No, none of those. It was my claim that Boundless lost the legal fight.

You may wonder, “How can a company that was required to pay $600,000 to the plaintiffs, destroy three of the products it had created, and accept a permanent injunction on how it does business going forward, have actually won?” I wondered that too.

Diaz’s argument was essentially that (1) Boundless is still in business (and growing!), and (2) they are still offering textbooks that are “aligned” with those of the publishers and marketing them direct to students. When I asked him how he could do the latter without violating the terms of the injunction, his response was that he could not comment on the details of the confidential settlement but urged me to look again and the details of the consent and injunction judgment.

Huh.

Rereading said document, we find the following clause:

7. Boundless, and its officers, agents, servants, employees, attorneys in fact, and all those in active concert or participation with them, are hereby PERMANENTLY ENJOINED from:

a. Aligning any of its products, services, or content to Plaintiffs’ Copyrighted Works without prior written permission of the Plaintiff whose work it is [emphasis added]

This suggests that the private settlement includes some sort of a licensing agreement by which Boundless pays the publishers in return for being able to “align” their books and advertise them as aligned. Why would the publishers go along with this? I can only speculate. One possibility is that it was worth it for them to give up a concession in return for getting a legal result that affirmed their copyright protection. e-Literate reader Don Gorges (who, it must be said, clearly does not think highly of Boundless) put me onto this article by the law firm Jones and Day describing the intricacies of the textbook publishers’ legal burden. The publishers had a pretty good case, but it wasn’t open and shut. (By the way, this article is also a good read for OER advocates who want to understand the broader implications and what the legal threat is and is not to the broader OER project. It is also something I truly hope that Boundless’ investors looked into before writing a check.)

But also, as long as the copyright issue was put to bed, allowing Boundless to publish knock-off texts isn’t giving up anything of great value to the publishers, particularly if they get a royalty in return. Remember, their legacy textbook business is falling off a cliff anyway. The publishers are looking to get out of it and into other products and services as quickly as possible. In the meantime, they are fighting a rear guard action by finding ways in which they can extract some small fee from students who otherwise might not pay them anything at all for their books. For example, on Amazon, Cengage offers a textbook rental price for Mankiw’s Principles of Economics for $39.35. How does the quality compare between the $39.35 rental option and the $20 Boundless option? Our Boundless critic Don Gorges has shared these helpful comparison links:

• The Cengage version
• The Boundless version

When thinking about the strength of Boundless’ business prospects, you need to look at the quality of the Boundless “aligned” version relative to the original and then think about the value, not of a $130 price difference, but of a $20 dollar price difference.

As an aside, for those of you who feel that you would commit to the product on principle to support a company that is developing OER, you might want to read the Boundless Terms of Service:

While much of the Content is Creative Commons Content, the rest of the Content available through our Website is not necessarily licensed under the Creative Commons license. For clarity and without limitation, the following are not licensed under the Creative Commons license:

I. THE NAMES, TRADEMARKS AND LOGOS OF BOUNDLESS LEARNING AND ANY OTHER THIRD PARTY LISTED ON THE WEBSITE ARE NOT INCLUDED IN THE CONTENT THAT IS LICENSED UNDER THE CREATIVE COMMONS TERMS; AND

II. ANY OTHER CONTENT ON THE WEBSITE THAT IS NOT IDENTIFIED ON THE WEBSITE AS COMING FROM A CREATIVE COMMONS SOURCE.

For Content of this Website that is not Creative Commons Content, users have a personal, non-transferable, non-exclusive right to access and use the Content solely for user’s personal, non-commercial use, subject to these Terms of Service.

The Website contains both Creative Commons Content, Content proprietary to Boundless as well as user-contributed Content (“Contributions”). Contributions, include, but are not limited to, educational content that you submit to us, your postings, messages, commentary, text, images, photographs, videos, audio files, or other materials whether submitted to us through our Services or otherwise. The Content may contain typographical errors, other inadvertent errors or inaccuracies. We reserve the right to make changes to document names and content, descriptions or specifications of products or services, or other information without obligation to issue any notice of such changes. We reserve the right to take down Content from our Website if we no longer offer or replace such Content with a different offering.

You may view, copy, and print Content that is available on this Website, subject to the following conditions:

I. THE CONTENT MAY BE USED SOLELY FOR INTERNAL INFORMATIONAL PURPOSES. NO PART OF THIS WEBSITE OR ITS CONTENT MAY BE REPRODUCED OR TRANSMITTED IN ANY FORM, BY ANY MEANS, ELECTRONIC OR MECHANICAL, INCLUDING PRINTING, PHOTOCOPYING AND RECORDING FOR ANY OTHER PURPOSE; PROVIDED THAT NO SUCH RESTRICTION APPLIES TO ANY CONTENT THAT IS CREATIVE COMMONS CONTENT.

II. THE CONTENT, OTHER THAN CREATIVE COMMONS CONTENT, MAY NOT BE MODIFIED. [Emphasis in original.]

Update: I see that some, but by no means all, Boundless titles are released in toto under a CC-BY-SA license. 

Anyway, to recap:

• Boundless paid $600,000, or approximately 6% of their venture funding, in penalty fees to the three publishers. (This doesn’t include their legal fees.)
• They had to destroy three of their products.
• They are permanently enjoined from marketing their products in the ways that they had previously.
• In return, they apparently won the privilege of selling knock-offs that compete against relatively competitively priced originals in a dying product category, provided that they get prior permission from the owners of said originals, and possibly with the requirement that they pay a license fee for each sale.

Look, I’m a utilitarian and an optimist when it comes to ed tech entrepreneurship. I believe that startups can genuinely contribute to goals of improving educational access and quality. But not because entrepreneurs have magical startup fairy dust and magic disruptive innovation wands. We have to be clear-eyed and honest about what these ventures do, as well as how they do it. Personally, when I read a puff piece in VentureFizz saying “Boundless might be THE pillar EdTech startup; not just in Boston, but anywhere,” it makes me want to puke. Nobody, including the investors, is going to get value from ed tech startups if we don’t apply some critical analysis of just what they are doing and what reason we have to believe that they will be successful or, for that matter, good for education.