e-Literate

Present is Prologue

Tag: Textbook

  • Cengage Unlimited – Marketing ploy or significant change in strategy?

    Cengage Unlimited – Marketing ploy or significant change in strategy?

    One week ago Cengage announced Unlimited, an all-you-can-read subscription for their digital course materials. For $120 per academic term, students get access to any and all of Cengage’s 20,000 digital titles with the ability to also get a print rental for $7.99 (shipping costs) per title. Once the subscription ends, students keep access to up to six digital textbooks for another year at no additional cost.

    When interviewed for an Inside Higher Ed article, I commented:

    Phil Hill, the co-publisher of the blog e-Literate and a partner at MindWires Consulting, said that he was “impressed” by the Cengage announcement. “It’s like someone at Cengage woke up and decided to take this digital content transformation seriously,” he said. “If you combine Cengage Unlimited with the OpenNow announcement, both of them really represent a rethinking of Cengage’s business model.” While Cengage and other publishers have dipped their toes into digital-first models, Cengage is “taking the lead,” he said.

    To me this is big news – a real change in business model from one of the big three academic publishers in higher education. Publishers have long suffered from their own historical success in two key areas. One is the restrictive content licensing terms that have restricted student and faculty to narrow usage while also restricting the publisher based on author rights. The other is the business model that treats content as a scarce resource, leading to high unit costs (the $300+ textbook) and a focus on top-line revenue. Both issues make it difficult for the publishers to rethink models and take advantage of digital content to address growing concerns on affordability, but Cengage Unlimited appears to represent a rethinking of how to get past these barriers and bet on future usage patterns.

    Initially, the main person who seemed to throw cold water on this interpretation was Cengage’s own CEO Michael Hansen from comments also at IHE.

    While Hansen said that the announcement of Cengage Unlimited was significant, he said he didn’t think it represented a big shift in strategy for the company.

    This comment confused me. Is Cengage Unlimited a marketing ploy rather than a significant change in strategy? The Netflix of Textbooks usage in national media certainly adds to the skepticism.

    Michael and I had the opportunity to interview CEO Hansen along with EVP and Chief Product Officer Fernando Bleichmar last week. Both Hansen and Bleichmar were quite direct in answering our questions, and I came away reassured that this move does represent a significant change in strategy that goes beyond what we have seen from academic publishers in the past.

    When asked about how to read interpret his comments, Hansen replied that “nothing changes and everything changes”. What doesn’t change is that the executive team believes digital experience is better experience for students. They have built products over five years that they believe serve this purpose, and Cengage have set a strategic goal of being 90 percent digital by 2019.

    What has changed is that Cengage executives now fully recognize that affordability is a barrier for students. According to Hansen, while faculty tend to appreciate the better learning experience possible through digital technology, “we in the industry have put our heads in the sand on affordability”, thinking students and faculty would ‘see the beauty’ of what publishers produce and be willing to pay higher prices. Yet Bleichmar pointed out that 70% of students are not using digital, largely due to affordability.

    From our perspective, publishers have in general recognized the problem of affordability and have made efforts to reduce prices particularly through digital offerings. Cengage Unlimited, however, is the first time a publisher has made affordability the centerpiece of their strategy -both in business model and in branding.

    There will be real implications to the changes due to Unlimited. One is that it will now be very difficult for Cengage to get more than a handful of students paying for $200 or $300 textbooks. The $120 price along with print rental option should place a cap on what it makes sense to spend on any one book, particularly for general education courses. Take the infamous Greg Mankiw’s Principle of Economics textbook. Currently the MindTap (digital platform) access for six months costs $130, and if you add the bound book it costs $355. If Cengage Unlimited is successful, the days are over when the publisher can get these unit prices. There will also be a cap on what Cengage can make with multiple digital offerings. Bleichmar acknowledged that Cengage would have to make up in volume what they are giving up in price-per-unit.

    A recent model that several publishers have been trying lately is ‘inclusive access’ as described by Inside Higher Ed just a month ago.

    Major education publishers — including Pearson, Cengage and McGraw-Hill Education — report that the number of colleges offering “inclusive-access” programs has grown rapidly in recent years. Where previously students might have been assigned textbooks individually, now many institutions are signing up whole classes of students to automatically receive digital course materials at a discounted rate, rather than purchasing individually. The “inclusive” aspect of the model means that every student has the same materials on the first day of class, with the charge included as part of their tuition.

    According to Hansen and Bleichmar, Unlimited is a much bigger deal than inclusive access, moving from à la carte to a all-you-can-eat model. Cengage will offer both, but they believe Unlimited will have a bigger impact on affordability.

    There is absolutely short-term risk involved in this move, but Hansen pointed out that this risk should be compared to that of the current trajectory. “The risk of doing nothing is much higher than what we’re facing right now” without a change.

    Cengage’s short video on YouTube actually plays to this idea that Unlimited represents a change from the past, no longer seeing previous boundaries as limitations to live within. Yes, it’s marketing material, but in this case I believe it represents the thinking of a company coming up with new strategies.

    Will this model work? That we do not know. One factor to consider is that college textbook adoption has never been a rational model. The consumer (student) has had limited ability to choose products based on affordability, even if that situation has changed somewhat with rental and used book options, piracy, and the choice to not acquire required course materials. In addition, the ability to find different options is typically tricky and requires time and know-how. It would be a mistake to think that even if Unlimited represents a rational better choice students will automatically jump at the chance. Furthermore, open educational resources (OER) have made real inroads recently and represent even lower-cost options (often free, often $25 per textbook when bundled in platform).

    What I do feel confident about is that Cengage is making a big bet with a new model that is more significant than ‘inclusive access’ or previous attempts from publishers to go digital. This is not just a marketing ploy, it’s a change in strategy driven by new understanding of affordability concerns.

    Update: Cengage no longer goes by Cengage Learning. Post edited accordingly.

  • Reprise: How Much Do Community College Students Actually Pay For Textbooks?

    [ed. The basic arguments in this post were covered here at e-Literate in 2015 and in The Chronicle more recently. The data has been updated into a new post based on recent news events.]

    Last month the nonprofit advocacy group Achieving the Dream announced a new initiative to fund 38 community colleges who are willing to build entire programs with open educational resources. While this is a noble effort aimed at reducing financial barriers for students to get two-year degrees, the group perpetuated the same myth that has plagued higher education for years.

    The annual costs of textbooks are about $1,300 per year for a full-time community college student and amount to about a third of the cost of an Associate’s degree.

    In the Washington Post’s coverage, they add this description.

    A community college reform group has selected a handful of schools in Virginia and Maryland to develop degree programs using open-source materials in place of textbooks, an initiative that could save students as much as $1,300 a year.

    Are they right? Do community college textbooks cost “about $1,300 per year,” and is there a chance to help them save this amount? The short answer is no. Community college students actually spend just over half this amount — approximately $700 per year — despite the rising list prices of textbooks. (more…)

  • Data To Back Up Concerns Of Textbook Expenditures By First-Generation Students

    David Wiley has added to the conversation ((My initial post, Mike Caulfield response, Bracken Mosbacker, my response to Mike, Mike follow-up)) over use of data on college textbook pricing and student spending patterns with “The Practical Cost of Textbooks”. The key argument is to go beyond prices and spending and look at the most direct measure of asking students themselves how textbooks costs have impacted them. He then looks at the Florida Virtual Campus surveys (also included in my post), concluding:

    What impact does the cost of textbooks have on students? Textbook costs cause students to occasionally or frequently take fewer courses (35% of students), to drop or withdraw from courses (24%), and to earn either poor or failing grades (26%). Regardless of whether you have historically preferred the College Board number or the student survey number, a third fact that is beyond dispute is that surveys of students indicate that the cost of textbooks negatively impacts their learning (grades) and negatively impacts their time to graduation (drops, withdraws, and credits).

    And yes, we need to do something about it.

    Amen. Surveying over 18,000 students, the FVC surveys are quite important and should be on everyone’s radar.

    More Out Of Data

    (more…)

  • Asking What Students Spend On Textbooks Is Very Important, But Insufficient

    Mike Caulfield responded to my post on data usage to understand college textbook expenditures. The core of my argument is a critique of commonly cited College Board data. That data originating from financial aid offices leads to the conclusion that students on average either spend or budget $1,200 per year with that number rising, while there is more reliable data originating from students showing the number to be half that amount and dropping.

    In Mike’s response post yesterday, he generally agreed with the observation but is concerned that “readers of that piece are likely to take away the wrong conclusion from Phil’s figures (even if Phil himself does not)”. There is a risk that people see the lower numbers and conclude the “crisis is overblown”, leading to this observation:

    If we’re looking to find out if prices for some set of goods are too high, then by definition we cannot look at what people are spending as a reliable gauge, because one of the big effects of “prices too high” is that people can’t afford what they need.

    If you don’t pay attention to this you get in all sorts of tautologies.

    In the specific world of textbooks, Mike considers the lower-cost method of renting used textbooks, noting:

    So which figure do we use here? The chances of getting everything you need as a rental are low. Sure, you could be the super-prepared student who knows how to work the system and get them *all* as rentals — but not every student can be first in line at the bookstore. And the ones at the back of the line — guess their socio-economic class and first generation status?

    This is an important issue, and I appreciate Mike’s understanding that I am not arguing that college textbook pricing is an overblown crisis. I agree that the crisis is real and that the hardest-hit are likely low socio-economic class and first generation students.

    But let’s move past these agreements and drop the gloves. (more…)

  • Bad Data Can Lead To Bad Policy: College students don’t spend $1,200+ on textbooks

    The average US college student does not spend or budget more than $1,200 for textbooks, with that number rising each year, as commonly reported in the national media. The best data available continues to show that students spend roughly half of that amount, and that number is going down over time, not up.

    Last spring I wrote a post documenting that the College Board is not a reliable source for college textbook expenditures. With last week’s release of College Board data, it is worth repeating that data for their “Books and Supplies” category are:

    average amounts allotted in determining total cost of attendance and do not necessarily reflect actual student expenditures.

    Much more reliable data from the National Association of College Stores (NACS) and the Student Monitor consistently show that students on average spend between $530 – $640 per year for textbooks or “required course materials”. ((Read the spring post and a a postscript if you’d like to see the details.))

    There is also fairly clear data from NACS and Student Monitor showing that student expenditures on textbooks or “required course materials” is going down ((Note that NACS used to be a biannual study and does not have data for AY2009 and AY2011.)). (more…)

  • 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…)