One author, however, worries that if we view the iPad as the path that Apple would rise up and exert censorship over the content, giving us the Jobs view of the world (much as many criticize Disney for giving us Walt’s sanitized view of how the world is.)  I could see  Apple doing that not only to sanitize content, but also to further whatever political agendas they may have given their apparent arbitrary, capricious and vindictive approaches to what is and isn’t approved.  (political in this sense in the larger meaning, not simply political as in government affairs.)

I mentioned this is an email, and in reply, I was told that we shouldn’t worry about that.  That Apple has demonstrated a willingness to not interfere in educational issues as shown through iTunesU and that Apple would probably never get enough market share for that to happen.

Perhaps.  But that led me to ponder further what really would it take to get digital texts  (or as my brother calls them “educational applications” to move from obscurity to ubiquity–and will proprietary get in the way?

First I wanted to address the interesting  notion that  iTunesU is the model of an Open Apple.  That might be true, but the textbook/educational applications that we are seeing discussed are positioned to be sold through the AppStore model, and  the App Store is a model of a closed Apple.  At times, a VERY closed Apple.   Recently we have seeen Apple exerting control not only on content but the tools to be used in developing that content.But let’s set aside for a moment the problems of if Apple were to control the market, and look at what it would take to get there.
Perhaps my correspondent is correct that Apple cannot garner enough market share to make them (and their iPad) a viable contender and competitor in the textbook space, but then we are left wondering:

• If Apple doesn’t control a significant share of the textbook “space” then what are the options for students?
• What incentive will students have to drop $500+ on a device that only a small fraction of faculty will have as the platform for their texts/instructional materials?

Will Apple work towards open standards so that the books/media will be able to be hosted on a wide range of platforms, or will Apple insist on a proprietary standard, working towards exclusivity for the instructional material they “host” on their platform.  This isn’t simply a red herring tossed out to direct attention from some “Greater Good.”  The fact is that right now students are able to choose from a variety of sources to purchase their texts (and thus a wide range of service/price combinations) and even between new and used books.  Faculty can choose between various textbook publishers/providers, which allows the professor to not only choose the best content, but the best value package for the students.

All that can disappear if one source controls the access to the media, and if there exist competing exclusive and proprietary sources for access to media, then students will be required to purchase not one, but several expensive readers/devices depending on the choices of the faculty member.  Or, alternatively the faculty will be hamstrung, “encouraged” by students or administration to only focus on those source-materials available and the dominant device.

So here we go–what is the decision making process that leads a faculty member to assign a “multi-media resource” as the course “text” rather than a regular textbook? What do you when the students are told that for my ONE class the book is no longer that big expense at $100-200 but rather the iPad becomes the big expense–costing 2-5 times that amount. AND there is no guarantee that any other faculty members will commit to a similar path? And of course the publishers don’t want to reduce the price of the “text” below 50% of the current price AND don’t want to make the “book” available permanently. And don’t forget, most technology has a life of 2-3 years when used regularly. Heavy use, along with ever increasing complexity of the applications/software, may well shorten the lifespan of the product that students must purchase, shifting them from a 1 time outlay to 2, or 3 times in the span of a college career–assuming of course that enough faculty adopt these “books” to make it worth their while.

At a time when the pressures from students AND the federal government is to lower the costs of education (and specifically texts) what professor wants to be the one to step up and insist that students get a high priced device that is designed for obsolescence?

So we are faced with an interesting challenge.  At a time when technology is holding out such promise we find at least one company who has the technical ability to break down the cost walls while simultaneously catapulting the technology of learning well beyond anything we have experienced.  And we find that the same company is tighting the grips on their “ecosystem” arguing that they can control their own little corner of the world.

This is one of those pivotal moments–we can see proprietary walls go up, and little gardens of creative learning spread slowly.  Or we can encourage open architectures that will enable creativity and learning to spread quickly, and widely.

Ubiquity? Or Proprietary? Which way do you think things will go?

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?

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!