Derek Newton called out in his Forbes column that a Cengage organic chemistry author is releasing the 10th edition of his book as OER via OpenStax. Newton is right to call this out as significant. That said, his column contains a lot of speculation about what this could mean or might mean. Fair enough. There’s a lot we don’t know.
In this post, I’m going to tease out some of the implications that Newton doesn’t talk about.
What we do and don’t know
Before I do that, though, it’s worth reiterating some of the basic facts and unknowns covered in Newton’s column. An author for Cengage whose book sold well enough to go through nine editions decided to take his tenth edition to OpenStax and publish it as OER. The author, John McMurry, characterized it as a tribute to his son who passed away. Cengage is outwardly supporting McMurry’s decision and is promoting the added value of WebAssign, which Cengage owns.
We don’t know the degree to which this decision was amicable and mutual. For reasons I’ll get into later in this post, it’s possible that both sides were comfortable with it. It’s also possible that McMurry’s contract came up for renewal and Cengage decided to make the best of his decision to bolt. We don’t know and probably never will. We also don’t know if other successful authors will follow suit. I mean no insult to McMurry when I observe that he profited from the first nine editions of his book before opening up the tenth. I don’t blame authors for wanting to be compensated for their hard work. That said, authors who have signed with a publisher more recently haven’t gotten anything like the kind of deal that McMurry likely had. So incentives are shifting.
The platform theory
Newton, following the cues from the press release, sees this as a movement of publishers selling their platforms as the underlying books commoditize. The problem with this theory is that publishers across the sector have been disinvesting in their platforms. WebAssign was built in 1997 and I don’t have reason to believe that it’s been significantly upgraded in quite some time. Cengage is far from alone in this. Pearson’s platforms are ancient too. I’m hearing and seeing that, by and large, all the publishers are backing off tech investment. Even McGraw-Hill and Wiley, which have been the most tech-forward of their cohort in recent years, appear to have slowed investment.
This is not to say that Newton is wrong or that Cengage is disingenuous about promoting the package. Rather, it should be considered a holding action. Cengage, like several of its peers, is owned by private equity. While these companies can support investment and acquisition, they tend to marshall their resources very carefully. Especially for assets that show a consistent trendline of shrinking businesses, like textbook publishers. By and large, the publishers are milking their aging platforms for as much revenue as possible while investing as little in new tech as possible. It is not a new strategy.
The economics
It’s worth noting that the PDF of McMurry’s ninth edition costs $40.99 to rent for one term.
A PDF. For one term.
Yes, it’s true that prices have come down a great deal on textbooks in recent years. But $41 to rent a PDF?
Of course, that’s not the option Cengage wants students to choose. The first option on that page is a subscription to Cengage Unlimited, which is $69.99 for a four-month all-you-can-eat subscription. They’re trying to move to a model where they don’t care if they lose pricing power on individual items because they can charge for the bundle.
This is a challenging model for a publisher to make worthwhile for students. Either they have to ensure that the students’ professors are adopting several Cengage products every term, which is challenging due to academic freedom, or they have to provide more products that are direct-to-student, in which case they’ll be competing with the likes of Quizlet and, increasingly, Course Hero.
The bottom line
Cengage has a courseware platform called MindTap. They could have invested in creating a more seamless experience with more context by building on that platform. But they didn’t. That tells us something about their strategy. For them, this is all about the economics of Cengage Unlimited.
Publishers are struggling. All of their moves right now are defensive. (By the way, I predict that Pearson will sell off its higher ed business—possibly including their OPM—to private equity within six months.) The problem is that, given the natural path that the industry is taking, the student experience is still terrible and the cost, while better than a few years ago, is still hard to justify given the quality of these tech-enabled products.
And as far as I can tell, the sector is not moving toward replacing them with something better.
Correction: An earlier version of this post included references to Aktiv Chemstry, which also is working with the McMurry book. Those references were removed due to inaccuracies.
Michael – I think the most interesting aspect of this will be to come back in a year and see if Derek makes more money or less money with the new strategy. My hypothesis is that this will lead to making *more money*. I think that more authors need to understand that just because something is *truly* OER – does not mean that a publisher can’t make money on it as well. OpenStax is one channel – Cengage is another channel – they serve different populations which are happy with their respective products. OER is not a zero-sum game as most think.
I think we may see more titles move in this direction. If an open organization is able to do the upkeep and tending to a book, that’s one less expense the traditional publisher doesn’t have to do. It may be better for them to completely ignore the market for the content rather than worry about how to claw back money on sales, resales… In an age where some textbook publishers are considering trying to use NFTs to capitalize on each resale of a book, Cengage might be smarter to throw in the towel and lean in to the ancillary market.
As an open advocate, the idea that Cengage might make more money in the new arrangement like Charles mentions above doesn’t concern me. What it does for me is open up the market on those ancillaries wide open. It wouldn’t surprise me in a few years if Carnegie Mellon, LibreText, Lumen Learning, and one of the better organized state systems had all built projects around this once commercial textbook.