NOTE:  Please, after reading through here, share your thoughts to my question that I ask at the end of the post. I crave your inputs and your ideas on this topic of great significance to students, and parents, who buy textbooks)

Underlying my view on digital textbooks is the idea that publishing through a digital medium removes the costs of production, shipping, and other supply chain costs, and thus could significantly reduce the costs of the  texts, resulting in the possibility of a substantial reduction in price to the students.  In addition, I argue that by making the textbooks very reasonably priced students would be more likely to simply “buy new” rather than seek out ways to hack the protections and “steal” books.

Unfortunately it seems the publishers are seeking to do everything they can to dissuade students from making the shift to digital books while appearing to be progressive.

Let me explain:

I have a textbook that I use for my Introduction to Supply Chain and Production Operations course.  The text is Operations Management (10th Edition) by Jay Heizer and Barry Render.  According to Amazon, the text lists new for $198.67 but is available through Amazon for 162.98.  Amazon points out that this is a savings of 18%.  ²

So what would you expect the price to be for a digital version?  $30? $50?  $75?

Try $99.35 — and this isn’t a copy you OWN!  You are essentially leasing it (subscribing to it) for 6 months!

Don’t believe me?  Visit the link, and also check the graphic below (click to see larger image.)

This is just one example of the pricing schema.

So let me ask you this:

• Do you believe a 50% discount off the list price is enough to get you to “purchase” a digital 6 month subscription rather than purchase the text?
• What are your thoughts on the subscription idea versus owning an actual copy of the text?
• What would it take to move YOU to a digital textbook?

And what if that resource is required?

I had the privilege to speak with a representative from a textbook publisher about their new technological advance, designed to help students learn better, and even more, help faculty by automating the grading and evaluation process.  At first blush I was convinced we had a win-win here. Students would be able to learn at their own pace, seeking out knowledge to help them with their problems while simultaneously lifting some of the administrative burden that faculty like least–the grading of homework.  ¹  In the presentation, I was shown how students could not only work through their homework problems, but also click a link to take them directly to the section of the textbook that discusses the approaches needed to solve the homework problem.

While all these solutions are browser based and would work on a wide range of netbook, notebook and desktop computers (Mac, Windows and presumably LINUX based) I was beginning to see just how a digital device such as the Apple iPad could be perfect for such a solution.  The iPad could easily contain all the textbooks a student would have in a semester, could then also assist in the completion not only of the homework but could be instrumental in integrating their understanding of the material with their communications with their classmates and their professor and, given the right writing tools, could be the hub for their homework, email and writing assignments.

Then my thoughts came to a screeching halt when the representative started to talk about prices.

*SIGH*

Access to the homework tool (included in the purchase of a NEW textbook) would cost students $10 if they chose to instead by a book used.  Of course, that would only give them access to the homework assignments.  There was an additional fee ($30 I believe) if they wanted to have the “PLUS” features, including the hyperlinking to the appropriate section of the text.  Of course students could simply purchase the complete digital version, integrating the textbook with the online supplemental materials, and read the books on their computer ²

As I listened, I started hearing the dollar signs tally up quite quickly–and all because of decisions I would make concerning the structure of my class.  Would I require students to complete their homework online?  Would I choose to be considerate of their purse-strings and instead make the online homework an option–requiring me as a faculty member to not only NOT see a time savings but now instead have to manage two separate streams of assignment turn-ins, along with separate grading schema as well?

And what about the students who feel they learn best when they can sit, with a pencil and piece of paper, textbook open before them and their trusty calculator by their side, plugging and chugging their way through to the solutions each problem challenging, then leading to the epiphany they so richly enjoy?

So now I sit here, faced with the interesting challenge–Do I push forward into the technology of pedagogy, and require students to spend more money for digital learning, or do I resist, ironically clinging to paper texts with the twisted ideal of helping students more frugally achieve their learning objective?  Or do I try to chart a course, mandating neither, and potentially creating chaos in the wake? ³

This can make for a very interesting future.  I can imagine a very fluid world with digital books, using much of the technology already existing.  Let’s discuss briefly the existing tech (in the Kindle) and the look at how we can imagine a new reading world.

Ease of Delivery First, the Kindle allows the purchase of books through the Sprint cellular network (a service Amazon has called “Whispernet.“)  Books are delivered relatively quickly (in my experience in less than a minute) and are ready to read.  I actually ordered, and was reading, a book for our Sunday School class before the sign up sheet to order the hard copy of the book even made it to my row.  So here we have the first component to the future.

Fluid Movement Between Devices For those readers that are unaware, Amazon has released a Kindle app for the iPhone that lets users read Kindle books on their phone.  As with any book that you read, when one goes from one device to another (or pick up a different copy of the same book) one must search for where they left off.  A different copy means no obvious book marks.  Amazon makes this simple–they synchronize where you were in one device when you pick up the other.  It tells you that you have read further ahead, and asks if you want to move to that spot.  Pretty “cool” in my book.

Devices for Different Settings As noted above, the Kindle is no longer just the “device” but it is the operating and reading application.  One can not only read on the “Kindle” that you purchase through Amazon (see the link on the right column of this page) but you can choose two different size Kindles.  In addition, you can also read using the free application for the iPhone.   As you move through the day, you can read using the devices that best fit your lifstyle at that time.

Currently books, magazines and papers are sent to “Devices” and are thus tied to the device.  You can move easily between those devices, but cannot pick up a different device.  But imagine a different world.

Imagine a world where the books,magazines and papers are associated with the person rather than the device.  As you move through the day, you pick up a “Whispernet capable” device (iPhone, Kindle, or something new) and “log in” to the Kindle.  You are presented with a list of items you have purchased, and you select which one you want to read.  Quietly, and quickly, the book or paper is downloaded to that device, and it picks up right where you left off when you were last reading.  In this way, you are able to read your books, without being tied to a device.

But what could this mean?

• Libraries can have “digital reading rooms” where people (especially students) can sign out a device, log on, and read their books simply, and easily.
• One could have several devices in the house and work place, shared between family members or co-workers.  Just grab the closest device, log on, and start reading.
• With the digital voice technology (available in the Kindle2) we can even imagine a device that, when we log on, will read to us as we drive.  Satellite Radio replaced by books!

Reading can become what we do, when we want to, not when we remember to bring our books, or our devices.

The possibilities seem almost endless.  How could you imagine this world?

Part of my argument hinged on the elimination of the resale market in large part due to the robust DRM (copy protection) afforded by the digital books.  Unfortunately, when I presented this argument a few weeks ago, someone pointed me to a site that shared the (convoluted) steps necessary to break the DRM on the Kindle.  So much for secure. ¹

This forced me to think a bit further.

In this post, I hope to make a case for reasonably priced digital textbooks in an era of “cracked DRM” that can still result in a win-win.

If students can copy textbooks and share them, will they?  Perhaps I have a more optimistic view of the world, but I think that, when given a choice to do the right thing, students will.  That is, if they think they are being treated as adults, and not being unjustly charged.  Let me explain.

I believe that students will buy the textbooks rather than steal them, if the books are affordable.  and by affordable I mean, as one student put it when asked on Twitter “@ steep discount.”  Probably $30 for a textbook that in print sells for $150.  Remember from my previous post that publishers aren’t selling to every student as it is.  Capturing a significantly larger piece of the market, semester over semester, will result in significant revenue increases–without any additional overhead or variable costs.

I also believe that students will buy a reasonably priced textbook if, along with the book, they receive other types of “digital” support.  That support will be available, but may require them to have a “licensed” copy of the book.  Simple enough.  Your digital reader has a serial number/PID, so the licensed copy can access additional licensed material.   The additional materials could include podcasts, video lectures, or video/audio tutorials on working through homework problems.

I also believe students will pay for books, because the system supports the buying of books.  Loans cover tuition and expenses, to include books. Parents buy books.  My students have reminded me that there is a significant amount of “outside” money that comes their way for book purchases.  But that alone won’t be enough to get them to buy the books. What will?

How about providing a way for students to continue to “resell” their books?  Another common criticism from students is that they get pennies on the dollar when they go back to resell the book.  They are more incensed when they see the mark-up the bookstore then places on the book they sold back!² Students currently fight back by selling (and buying) their used books on sites such as half.com, a used book online marketplace.

I think that a technological solution to book resales, that allows the students to transfer digital ownership to another student, will result in more students buying legitimate copies.  Why? In the paragraph above I mention that students get “outside” money for book purchases.  More than a few students pointed out to me that, at the end of the semester, they sell those book back and that money then becomes “theirs.”  A few call it “Beer money” but I am sure there are other uses as well.  Given that this is digital, this doesn’t have to be seen as a competitor to the publisher, but rather as another opportunity for the publisher to “add value.”

Imagine this:  the publisher, who controls the DRM accounts, sets up a clearing house where the student who purchased the book can make the book (and the license to read/use that book) available for resale, setting the sale price themselves.  At the end of the sale, the seller essentially will turn over the digital rights to the book to the new purchaser.  This is half.com made simpler.  There are no shipping costs.  The transfer can be automatic and nearly instantaneous.  And if the publisher manages the site, the publisher can charge a “reasonable” handling fee, just like half.com.  And we know students are willing to pay it–because they already do!

So, in summary, the hacking of the DRM doesn’t have to spell the doom of affordable digital textbooks.  Despite what RIAA and the MPAA may say, we aren’t all criminals.  When provided with affordable content, and a reasonable way to re-sell the content when the semester is over, students will continue to buy books from the publishers, and the publishers can continue to make revenue–even in the resale market!

Win! Win! Win!

¹ For the record, I tried it, and it works.  I broke the protection of a book I bought, and read it in another device that I own. After that, I deleted them.

² (For example, a $180 book was “bought back” at $15. Resold at $80. Yes, that is an extreme example, but it is a true one!)

• Text books have a limited audience, resulting in smaller volumes of sales and prin runs (10′s not 100s, of thousands).  Limited runs mean that the overhead and setup costs of printing a run are spread across a fewer number of books. Historically to make a book cheaper they either had to reduce the quality of the materials, automate the process, or produce larger production runs hoping to sell more of the books.
• The costs associated with distributing books are high (packaging, warehousing, and shipping to name a few key ones)
• The inability to accurately forecast demand for “new” editions at locations, because of the…
• Strong used  book market that publishers compete against

My support for digital textbooks has emphasized that digital textbooks drive out  out the costs associated with physical books, and thus allow for both a reduction in price, and an increased margin for the publisher.  This can be seen because:

1.  Publishers no longer need the overhead necessary to design the packaging (including the covers), presses to print the books, warehouses to store the books, or distribution systems to ship the books.   Oh, and they don’t need the management to manage all of that.  This drives costs out of the process. (hint–what could this do for prices?)

2.  Because the books are delivered, directly to the student through digital means, there is no need to keep safety stocks of book inventories to cover the sales of the books.  No physical inventory drives costs out because it means there is:

• No capital outlay for bookstores to buy a “forecasted” amount of books
• No shelves required for the books
• No possibility of stockouts (I had a class where there were only enough books for 10% of my students well into the second week of class!)
• No need to ship back the unsold books, because the forecast was “wrong” (due to used book sales, borrowed books, or just students “dropping” the class.)

3.  The digital rights management (DRM, or “copy protection”) of digital books appears to be rock solid, so students are not likely to “give” copies to their friends.  Publishers would be guaranteed sales², allowing them to lower prices. This would mean that:

• Publishers don’t compete with a ‘re-sale’ market. Think about this.  Part of the reason the costs are so high for the textbooks is that the publishers know that they will only “fully” sell out in the first semester the book is available.  Every semester after that they are competing with a (rather robust) resale market.
• Publishers won’t have to release new editions every two years “simply” to refresh the sales.  With strong DRM publishers can expect to make sales to nearly every student, every semester.
• New editions will be developed for the right reasons–new, improved content and new knowledge.

Given the above, my argument really focused on the need for publishers to pass on the savings to the consumer (the student) making textbook pricing reasonable again.   The major criticism of students (the high prices of textbooks) could all but disappear.

Affordable textbooks for students, and increased (and guaranteed) revenue for publishers!

One of the key points in my argument had been (yes, had) that the DRM on the Kindle and Sony readers was secure, and thus students wouldn’t hack the books and “share” (illegally give copies) to other students.  That is essential to keeping the revenue model moving forward for publishers and is why the RIAA and MPAA are working so hard to protect their intellectual property.  But alas, sometimes things change, and we know that if anyone can hack a DRM it will most likely be motivated college students.

Thus, I have been spending time thinking about how we can still achieve a win-win, even if students “crack” the DRM market.

Stay tuned! More on this to come!

¹ Unfortunately, there will be near term losers, including the people working at the printing presses, the local bookstores, and the supply chain partners that normally deliver, store, and reship textbooks. More on these folks later.

² Think about it. In a class of 30 students, in the first semester a new book is offered, all the students will buy the book. Let’s say the book costs $100. That is $3000 in sales for the publisher. (Not profit. Remember the high costs of physical books.) Now let’s assume that half of the students with new books decide to resell their books each semester. If in the next semester half of the next class purchases “used: books that reduces the revenue for the publisher to just $1500. If we follow this through, then the 3rd semester, 3/4^ths of the books in the class are used books cutting revenue to $750. by the end of the second academic year the publishers revenue is cut to about $400. In two years, with 120 students going through the class, the publisher would make $5650. If there was no used book market, the publisher could make the same revenue selling the books at $47/book. And that is assuming there was no savings in costs by shipping digitally!