e-Literate

Present is Prologue

Tag: digital textbooks

  • About the Diverging Textbook Prices and Student Expenditures

    This is part 3 in this series. Part 1 described the most reliable data on A) how much US college textbook prices are rising and B) how much students actually pay for textbooks, showing that the College Board data is not reliable for either measure. Part 2 provided additional detail on the data source (College Board, NCES, NACS, Student Monitor) and their methodologies. Note that the textbook market is moving into a required course materials market, and in the immediate series I use both terms somewhat interchangeably based on which source I’m quoting. They are largely equivalent, but not identical.

    Based on the most reliable data we have, the average college textbook prices are rising at three times the rate of inflation while average student expenditures on textbooks is remaining flat or even falling, in either case below the rate of inflation. Average student expenditures of approximately $600 per year is about half of what gets commonly reported in the national media. The combined chart comes from this GAO Report (using CPI data) and this NPR report (using Student Monitor data).

    Combined Chart

    Does this indicate a functioning market, and does this indicate that we don’t have a textbook pricing problem? No, and no. (more…)

  • Postscript on Student Textbook Expenditures: More details on data sources

    There has been a fair amount of discussion around my post two days ago about what US postsecondary students actually pay for textbooks.

    The shortest answer is that US college students spend an average of $600 per year on textbooks despite rising retail prices.

    I would not use College Board as a source on this subject, as they do not collect their own data on textbook pricing or expenditures, and they only use budget estimates.

    <wonk> I argued that the two best sources for rising average textbook price are the Bureau of Labor Statistics and the National Association of College Stores (NACS), and when you look at what students actually pay (including rental, non-consumption, etc) the best sources are NACS and Student Monitor. In this post I’ll share more information on the data sources and their methodologies. The purpose is to help people understand what these sources tell us and what they don’t tell us.

    College Board and NPSAS

    My going-in- argument was that the College Board is not a credible source on what students actually pay:

    The College Board is working to help people estimate the total cost of attendance; they are not providing actual source data on textbook costs, nor do they even claim to do so. Reporters and advocates just fail to read the footnotes.

    Both the College Board and National Postsecondary Student Aid Study (NPSAS, official data for the National Center for Education Statistics, or NCES) currently use cost of attendance data created by financial aid offices of each institution, using the category “Books and Supplies”. There is no precise guidance from DOE on the definition of this category, and financial aid offices use very idiosyncratic methods for this budget estimate. Some schools like to maximize the amount of financial aid available to students, so there is motivation to keep this category artificially high. (more…)

  • How Much Do College Students Actually Pay For Textbooks?

    With all of the talk about the unreasonably high price of college textbooks, the unfulfilled potential of open educational resources (OER), and student difficulty in paying for course materials, it is surprising how little is understood about student textbook expenses. The following two quotes illustrate the most common problem.

    Atlantic: “According to a recent College Board report, university students typically spend as much as $1,200 a year total on textbooks.”

    US News: “In a survey of more than 2,000 college students in 33 states and 156 different campuses, the U.S. Public Interest Research Group found the average student spends as much as $1,200 each year on textbooks and supplies alone.”

    While I am entirely sympathetic to the need and desire to lower textbook and course material prices for students, no one is served well by misleading information, and this information is misleading. Let’s look at the actual sources of data and what that data tells us, focusing on the aggregate measures of changes in average textbook pricing in the US and average student expenditures on textbooks. What the data tells us is that the answer is that students spend on average $600 per year on textbooks, not $1,200.

    First, however, let’s address the all-too-common College Board reference. (more…)

  • The Coming Digital Textbook Wave

    Xplana has published some interesting growth projections on digital textbooks in the U.S. higher education market. If you’ve been frustrated by the slow adoption rate, then you’ll like what they have to say. First of all, and unsurprisingly, they see the proliferation of mobile devices (e.g., the iPad and other tablets, netbooks, smart phones, etc.) as one of the drivers of the change. As I have written here before, I believe the lack of a ubiquitous form factor that works well for eBooks has been a very serious limiting factor on the growth of digital textbooks in general and OERs in particular. But here’s the passage of the report that really caught my eye:

    Current product publishing and finance forecasting within textbook publishing are based on traditional models of print textbooks sales. Viable textbook projects are generally required to have projected revenues of at least 6X plant costs in order to justify company investment. Within this traditional model, digital textbook sales are currently counted as incremental volume, or as added revenue (again, incremental to print), when bundled with a course cartridge or internal assessment solution.

    Once digital textbook sales reach 13%, however, the finance model breaks down significantly as digital textbooks are no longer incremental and, instead, actually begin to pirate print sales deeply (6.5% decrease in revenue on the average title). When digital textbooks sales reach 20% of new textbook sales, based on current production and revenue models, textbook publishers will see a 10% decrease in revenues and a 13% decrease in project margin. At this point, publishers will have little choice but to change product, production and distribution strategies in favor of digital versus print.

    Impact of Digital Text Sales on Print RevenuesTextbook publishers shoehorn their digital textbook sales into a pretty traditional revenue model. It’s an afterthought rather than a main driver, and it usually gets treated that way. But there is a tipping point. Once digital textbooks begin to cannibalize a surprisingly low percentage of traditional print sales (13%), then the traditional revenue model for textbooks starts to fall apart quickly. At that point (which the Xplana authors project to hit some time in 2014),  expect the textbook publishers to become a lot more aggressive about eTextbooks if they haven’t already. It will be life or death for them then.

    But that’s not the end of their worries:

    Currently, textbook publisher production models are based on print workflows. Digital textbooks are created at the end of the production cycle when compositors create final production-ready files. As sales of digital textbooks begin to cannibalize print sales, and as their inevitable future as the replacement of print textbooks becomes more apparent, publishers will be forced to alter current production workflows to favor a digital-first process with POD available from XML files and templates.

    Textbook publishers have production models that are optimized for producing—wait for it—textbooks. Many of them are going to have to retool their processes in order to make their costs manageable when their main product is digital.

    It’s not all bad news for them, though. Even though the costs of the digital textbooks will significantly lower than paper textbooks, the publishers may make up the revenues by “renting” the textbooks via some form of DRM. Basically, it will kill the used textbook market, which hurts their sales badly within a couple years of producing a book and forces them to invent reasons to create new editions in order to keep selling. Students, in turn get lower prices for assets that they usually don’t want to own after the end of the semester anyway. Prices will come down for this reason alone. Add to that the increased competition from new entrants, including but not limited to OERs, and there should be significant downward price pressure on college textbook costs in the next five years. Given that the U.S. Government Accountability Office has found that textbooks and supplies account for 72% of the cost of a 2-year college education, that’s a pretty important change.

    Update: You can find the GAO report here.