Textbooks, or, The Battle of Students vs Publishers

Hegel, Reason in History

We in the book industry should be well enough read to know the maxim: history repeats.

The Chronicle of Higher Education has an interesting story about a new movement among students to scan textbooks into PDFs to share across P2P (peer to peer) networks. Publishers are, of course, furious. They’ve enlisted outside legal agents to scour the internet for pirated copies. Sound familiar somehow? Try replacing “publisher” with “record label”.

Yep, they’re repeating, step-by-step, the debacle of the late 90’s and early 00’s as record labels practically knuckled themselves under trying to stave off piracy, and, more broadly, the whole threatening concept of digital media delivery. Finally, of course, they realized – almost too late – that they had been so crouched in a defensive posture that they had failed to recognize (or were in denial) that the world was changing and so was their industry. And, slowly, they’ve begun to accept this, and are learning, evolving.

I’ve always been amazed at the simplistic view that “loss prevention experts” take towards theft (let’s be realistic, that’s precisely what illegal P2P sharing is). They really seem unable to see the forest for the trees, and seem willing to spend more to prevent loss than than the potential loss would cost them. Years ago my wife worked for a place where her purse and person had to be searched each time she left (nope, it wasn’t Tiffany’s; it was a run-of-the-mill-suburban-mall-chain-clothing-store). I remember being incensed and amazed. All I could think to ask was, “If you’re that concerned about your employees stealing from you, perhaps you should be more concerned with your HR Department – who they’re hiring, how people feel about their jobs – than your Handbag Loss Prevention Department.”

Similarly, publishers need to ask some deeper questions of their businesses. Yes, scanning and distributing copyrighted works is wrong and illegal. We all agree on that, and publishers can stop pounding us on the head about that one. But, why do you suppose students feel compelled to turn to illegal means of acquiring their course material? Do they really just get a cheap thrill off of it?

Or maybe, just maybe, prices are out of control?

The Bureau of Labor Statistics Producer Price Index cites that textbook prices are increasing faster than inflation. At 4 times the rate of inflation, in fact.

In a report on the economics of textbooks written by Dr. James Koch (PDF) in 2006, the following astounding assertions are found:

Students coming from lower income families have suffered the most. As noted, textbooks now will constitute a $1,000 item annually for many full-time students and this is especially burdensome to low-income students.

and

The textbook market is remarkable because the primary individuals who choose college textbooks (faculty) are not the people that pay for those textbooks (students). Only a few other organized markets in the United States are similar in this regard. A comparable situation exists in medicine where doctors prescribe drugs for their patients, but do not pay for those drugs.

(and we know how well the healthcare system works for the economically disadvantaged in the U.S.)

As noted above, need-based financial aid formulas usually include textbook costs. When textbook prices increase, financial aid also increases. The result is that colleges and the federal government tend to facilitate textbook price increases by injecting additional need-based financial aid after textbook prices have increased. It’s worth noting that a roughly analogous situation exists in some medical care markets where rapid medical care price increases have been validated by insurance coverage that expands to meet the price increases. The effect in both cases (textbooks and medicine) is to encourage even more rapid price increases.

(there’s that healthcare analogy again)

Textbook publishing is oligopolistic—five firms dominate the college textbook publishing (Thomson, McGraw-Hill, Wiley, Houghton- Mifflin and Pearson) and account for about 80 percent of all college textbooks published.

(and, that, too is a model that’s always been successful for the consumer here in the U.S.) And, just one more:

Yet another distinctive characteristic of textbook markets is that nearly every institution of higher education has a financial stake in higher textbook prices. With a few exceptions, noted below, institutions of higher education either own and operate their own bookstores, or they contract that responsibility to an external vendor such as Follett or Barnes and Noble, in which case they usually receive a lump-sum payment plus a percentage of dollar value of sales at contracted on-campus stores

So, to return to our original question: why do students look for alternatives to purchasing the off-the-shelf retail product? Why do they scan and illegally share textbooks? Why do they buy used textbooks instead (which, of course, is perfectly legal, but equally hated by the publishing industry)? Why do they purchase international edition textbooks overseas at savings of 75% or more (also legal but hated)?

(Parenthetical note for those who doubt publisher’s feelings on these things: several years ago, I attended the annual BISG (Book Industry Study Group) conference. During a Q&A session, a VP from a major US publisher stood up and asked, “What is being done to study the effects of piracy on the publishing industry?” To which the speaker asked, “Could you please clarify what you mean?” The VP responded, “Piracy – like illegally scanned copies, the sale of advance copies, international edition textbooks, and used books.” In other words, anything that tightens the belt on their profits is, in effect, piracy – regardless of its legality. Incidentally, that inclusion of used books in the definition of piracy prompted us to buy a Jolly Roger to proudly – and sarcastically – fly in our office.)

Perhaps, as book people, they (the publishers) should be well enough read to also know the maxim: “Those who do not learn from history are doomed to repeat it.” — George Santayana.



This entry was written by and posted on July 9, 2008 at 4:45 pm, filed under Textbooks and tagged , , , , . Bookmark the permalink

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