When the textbook industry goes the way of the music industry

Over the fold is a picture guaranteed to strike fear in the heart of anyone hoping to make money in the textbook industry:

The screenshot shows a popular site for illegal downloads, with the results of a search for James Stewart's calculus textbook. 

A simple economic model of crime suggests that people will choose illegal downloads over legitimate purchases if they're cheaper. The cost of downloading is the probability of getting caught times the fine if caught, plus any psychic costs of illegal activity. When a new textbook costs $150 or $200, the maximum fine for downloading copyright material is $5,000, and the probability of being caught and convicted is fairly low (especially for those who know how to take appropriate precautions), it is surprising that anyone actually buys textbooks. 

It's impossible to know precisely how textbook publishers will respond to the threat posed by on-line downloads, and how the overall nature of the publishing industry will change, but it is already possible to spot a few trends:

Students do not have to read the textbook to pass courses. Students do have to take exams and complete assignments to pass courses. The first trend, already well underway, is that publishers will move into the assessment business, creating on-line assignments, exams, and so on. Aplia is a good example.

The Ontario government has prevented instructors from requiring students to pay extra for assessment materials such as Aplia, arguing that this is, effectively, an unauthorized tuition increase. Yet publishers will continue to develop such products, and market them to universities. For a university administrator faced with external pressure to demonstrate that students are learning X, Y or Z in university, and frustrated with his or her complete inability to control what or how faculty teach, the siren song of textbook publishers - "we will ensure that your students are achieving key learning outcomes" - might have some appeal.

If students cannot be relied upon to cough up the cash, textbook publishers will start looking to raise more money from instructors and universities. Right now textbooks are paid for by students, but marketed to instructors, who choose the required text for their courses. Companies compete by providing instructors with complementary copies of textbooks, powerpoint slides, test banks, study guides, solution manuals, and so on. If the student market collapses, companies may decide to start charging for all of those beautifully prepared powerpoints.

Third, if publishing a textbook through a major publishing house becomes less profitable, professors - who are the ones who actually write the books, after all - may decide to bypass publishers altogether, e-publishing their own books. 

Finally - and this is of particular concern for people who are interested in Canadian public policy - there are some texts that simply may not get written. The market for specialized textbooks, such as Public Finance in Canada, is already small. If it is further reduced by on-line downloads, publishing such texts may no longer be worthwhile. 

Comments

[Bob Smith]

I think you're right that the book industry will go the way of the music industry, though that's probably a good thing for all concerned.

For example, the big change in the music industry was the death of the album. Gone are the days when you dropped $20 bucks for a CD that had a couple of songs that you liked, now you just buy the songs for $1 or $2 a piece. I expect we'll see the same thing with the 500 page textbook of which you never actually read 300 or so pages. Expect to see textbook publishers either breaking texts down into smaller publications or even offering them chapter by chapter.

On the other hand, lower cost (legal) e-books don't necessarily mean lower profits. I have no idea what the cost structure of the book industry's like, but you'd think the ability to cut out paper costs, transportation, storage, to say nothing of unsold inventory would mean lower costs. People will pay to buy books legally (just as they'll pay to buy music legally) at the right price. Certainly, I buy a lot more e-books than I used to buy hard copies (which was a lot), because they're cheaper and more accessible. Presumably the same logic applies to textbooks.

Finally, while I hear your point about specialize textbooks, that works both ways. If costs are falling, otherwise unpublishable books may now become publishable. I've noticed that, in the fiction space, Amazon.com seems to be filled with books targeted a niche audiences (say historical fiction relating to the Roman empire) that I suspect would never have been published in paper format (and that I wouldn't have paid $10-$15 for if they had been - to my detriment). If anything, the e-book revolution has the potential to be the biggest thing since the printing press in terms of making it easier to publish and disseminate books.

[Patrick]

I suppose we'll end-up with ebooks with ads. Probably very intrusive ads (e.g. click/tap the ad to see the next exercise). Or maybe licenses that let them listen in on your phone calls and read your texts in exchange for using the book.

Weird to see that Stewart's book are still in use. I used Stewart's books in all three calculus classes I took in CEGEP. Seems like a thousand years ago now.

[Neil]

The university textbook industry is a good example of a market where the people who decide which goods will be purchased (professors) are not the people who pay for them (students). As in other industries where this phenomenon exists (the prescription drug industry is a good example) this inflate costs. If you look at a typical university textbook, it is very expensively made, with glossy paper, multicolor printing, and a hard cover. Yet the target market for textbooks are students, who are usually not wealthy and will only need the book for a short period of time. Logically, in such a case, textbooks should be made cheaply to suit the target market.

I have taken courses at work given by commercial companies where the person who decides what course to take is also the person who pays for the textbook. In this case, the textbook is usually a downloadable PDF. This would make sense for university courses as well. The cost of the textbooks could be included with the cost of the course to prevent piracy.

[Linda]

One of my pet peeves about expensive texts is that students sell them after completing the course - and then do not have them available for subsequent courses, when they would be useful references. E-books that one "rents" for a term have the same problem. BC appears to be trying to deal with this for some courses by providing a standard text - I know intro econ is one of the courses, but am not sure how far the process has gone. I'm surprised Aplia and the like are not allowed - last time I used it, students seemed to like it.

[FS]

An even more peculiar phenomenon can be seen here in Germany. Certain textbook providers, particularly Springer and its affiliate publishers, now host downloadable ebook versions of their textbooks and other scientific books openly in nearly every university library. Since most university libraries here in Germany are accessible for everybody - some are conjoint university and state libraries - there is no problem of illegality connected to download these books in the library. At the time I did my undergraduate studies some years ago, I remember that students had to invest hefty sums into their textbooks, though still not comparable to what I hear of US prices. Now you can get nearly all those books for free right from your library.

I must say that I can't still quite make up my mind at what's behind those publisher's strategy.

[FR Woolley]

Linda - the issue with Aplia is only a "who pays for it" one. Aplia is allowed if universities adopt the model suggested by Neil - the cost of the materials is included in the cost of the course.

Neil - the issue that I have with the textbook-included-in-cost-of-the-course model is that I strongly suspect it would be one more thing nudging universities in the direction of being more like high schools. University administrators would choose the text, or negotiate with a particular publisher to get campus-wide licences for a suite of texts, and instructors would no longer have freedom to choose which text to assign to their students. This then starts to nibble away at the edges of academic freedom.

I personally prefer the British model, where instructors say "here is a list of acceptable texts, these are the topics we will be covering, here are the chapter numbers in the corresponding texts, choose a text on your own and work it out." In the UK, "international" versions of leading textbooks - which are identical except for being printed on much cheaper paper and being paper back editions - sell for a fraction of the price of US or Canadian copies.

[Doug M]

Is textbook writing a profitable endeavor? I was under the impression that it was not, with the exception of small number of texts.

[FR Woolley]

Doug M - For me, textbook writing wouldn't be profitable, though it is for some people. I've thought about doing an e-text, incorporating old exams, materials from WCI, etc, but that won't happen until my term as Associate Dean is over.

[W. Peden]

This would seriously complicate the task of historians of economics, but what about moving to online PPV videos, with access options and headphones in university libraries?

An added bonus of this approach would be to force students to learn to take their own notes, which is the single most useful skill they can acquire in most university courses.

[Pseudonymous]

I've seen worse--in our department, a zip file is passed down to each successive new first-year grad cohort, containing all the first-year textbooks as PDFs and then some. No need to even bother going to The Pirate Bay.

[Jacques René Giguère]

Frances: I am also thinking about writing a book. Mostly for fun as it would probably be too iconoclastic to servea as an orthodox textbook. Things like have ever thought about the nature and origins of property right? Why is the labor code not part of contract law but essentially a mollified version of slave code?etc.

[Evan]

@Pseudonymous. I would imagine that the zip file would also contain solutions to problem sets (and, less likely, exams) going back a few years...

[Benn Proctor]

I am not sure I buy France's argument that "There are some texts that simply may not get written. The market for specialized textbooks, such as Public Finance in Canada, is already small. If it is further reduced by downloads, publishing such texts may no longer be worthwhile."

I can imagine a market that is even smaller than "Public Finance in Canada", where publishing textbooks has never been worthwhile. Technology advancements which lower the cost of self-publishing are actually a good thing because it may induce experts in obscure fields to self-publisha text even if the reult is nothing more than an E-text which incorporates old exams, and materials from blog posts, etc. ;)

Also, I imagine the decision to write a text book to be influenced by factors outside of, "what type of advance + royalties will I get on my text book?"

Writing a text book is probably a good way to signal that you're a good choice for tenure, it also establishes your expertise in the field, and engenders respect from peers. Also lets not discount the that writing a textbook is a labour of love too. I don't see those incentives changing as result of illegal downloads.

Anyway, as always thank you for your thoughtful post.

p.s., as s student I found Applia to be useful learning tool.

[Donald A. Coffin]

Benn--Where I have taught--and, believe me, not at major research universities, textbooks have had baiscally no value in tenure and promotion decisions. I suspect that at research institutions--even public universities that are research universities--textbooks would have even less value than where I have taught. Everyone I know of who has written a textbook (or, as in my case, a textbook supplement) has done so for one of two reasons: (1) The money or (2) the personal satisfaction. I know of no one who has done it as a means of supporting a promotion or tenure decision--or even as the basis of a better annual performance evaluation.

As a broader point, over the past 50 years (I entered college in 1965), textbooks have evolved in very interesting ways. The textbooks I used as an undergraduate were strictly black-and-white, with few graphs (I was an evon major) and even few tables (find, if you wish, an early edition of Richard Musgrave's public finance text, which was cutting-edge for a textbook then, and you will see what I mean). Most had rudimentary (if any) study guides, and little in the way of supporting mateirals for instructors. (Even test banks were hard to come by in the 1970s.) If any of those changes add value, then it's not necessarily surprising that textbook prices have risen dramatically...and, even with the general cost-reducing effects of technological change, moving from b&w to full-color, from almost text-only to charts, graphs, and illustrations, it is likely that the costs of producing textbooks have fallen little in real terms.

This does leave aside what the real value of a textbook is. Late in my career, I confess to having begun to wonder about that.

[Benn Proctor]

Donald interesting information. Thank you. I admit to knowing nothing about how publishing a textbook effects tenure decisions, annual evaluations etc. I had surmised it did, but i guess that turns out not to be true. I'll defer to you on this.

More generally, yes I can certainly imagine a world where a good textbook does not get written because the authors/publishers cannot find away to make a return on it due to downloads. But I can also imagine a world where lower costs of e-textbooks, self-publishing options, etc encourages more people to write textbooks on a variety of subjects. In general I think the E-text trend is positive, albeit with some potential downsides. But hey that's why do ecoonomics on the margin right?

[Sanchit Kumar]

This... is textbook economics.

Before I see myself out, let me add that while individual textbooks can be easy to procure online, textbooks as a part of bundles can be much more difficult to find, especially if you're looking to get the whole bundle (e.g. a French Language Text + Workbook). This may be because supply of textbook bundles is low compared to standalone so there have been fewer opportunities to load them online, or it could be the difficulty of even the most tech-savvy student to find each bundled book online because the download links are not organized clearly and so are difficult to search for. Some textbook manufacturers may find splitting existing textbooks into multiple volumes or packaging similar textbooks into one bundle can create enough frustration for students trying to find each text online that they end up purchasing the bundle instead.

[Martin]

I don't know what royalties someone such as Stewart receives - I know it was enough to build a house and then some - but self-publishing still seems like a pretty good option for any textbook author. As a student the decision between 20 Euros and book on paper and Free PDF is easy to make: I go for the book. Raise the price and my willingness to buy a book goes down rapidly. I would then more and more prefer to copy the relevant sections of the library book than to buy the original.

In my exchange to Italy I have even seen entire books being copied and bound at copy stores near the university. No doubt people have printed entire books (in the free copy room, you just needed to bring the paper, there was a sign forbidding the printing of entire books. This being Italy was of course scarcely enforced.)

[Matt S Trout]

I think I'd want to include cost-of-effort in the comparison as well.

Torrenting a book for my Sony PRS meant (for me - others may have had a more streamlined setup) - searching for a torrent, loading it into a client, waiting for the client to be done, loading the file into calibre and then syncing the reader from calibre over USB.

Buying a book from amazon to read on the kindle app on my Nexus 7 means search, click to buy, and then tapping the sync button on the app if I want to read it right now.

Basically, I appear to me a lot more aggravation sensitive than price sensitive, which is quite possibly not the case for most students but still strikes me as worthwhile as an explicit term in the model.

[oblivious]

I'm shocked no one has mentioned the move to Creative Commons textbooks in California and BC, or the Wikibooks project.

[Fran R Woolley]

Oblivious - we've discussed some of these issues before in this post http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/08/should-new-editions-of-intermediate-microeconomics-textbooks-be-banned.html on why new editions of intermediate micro texts should be banned.

There are some interesting issues around universities effectively trying to get into the publishing business with MOOCs etc. I'm waiting to see how that all shakes down.

I see wikibooks as being a special case of professors e-publishing their own texts, while licencing arrangements fall into the category of marketing to universities as opposed to marketing to students.

I suspect that wikibooks will have the same issues as wikipedia: the coverage will be much better in some areas than others, there will be issues of reliability, and and after a while the novelty will wear off, and people will get bored with updating it. But there might be enough people who are both knowledgeable and truly passionate about their subject area to make it work.

[Jon]

A big issue here is that the textbook companies rely on geographic pricing based on how poor the country ...

Because some very poor countries (India) have their instruction in English, this means cheap English copies are available to us students: caveat being that the pages are often renumbered.

Btw, Chinese students studying in he west usually do their illegal downloading at home in china. I would place the chance of a fine at zero.

In the US, no fine has successfully been levied for downloading. Everyone who was been caught downloading was actually pursued for uploading. The rules are the same as buying a knockoff or counterfeit DVD on the street. It's e distribution that makes the crime, everything else is marketing.

[david]

I suspect books which are obnoxious to scan - which are expensive, which are gigantic, which are printed in non-standard dimensions - would present the highest barrier to someone making an electronic copy and uploading it.

But then again, MWG's Microeconomics tome fits all of those criteria and is readily available, so that suspicion isn't quite reliable.

[Nathanael]

"Finally - and this is of particular concern for people who are interested in Canadian public policy - there are some texts that simply may not get written."

Nonsense. Absolute nonsense. Popular nonsense, but nonsense nonetheless.

Why? Because nobody writes books for the purpose of making money (with the possible exception of outright hucksters like L. Ron Hubbard and "self-help" book writers -- and you don't really WANT their books to be written).

You need to read the basic articles in https://www.techdirt.com/ on the economics of free. I'm surprised you haven't done so already.

Book writers can make money in a number of ways; perhaps most important is the pure gift economy, where people give money to the writer as thanks for the writer's previous work.

"Selling copies of the book" is not one of the ways writers make money, and *frankly it never has been*. (There were a few periods when *publishers* made money off book sales, but that is dead now.) Most books are bought by people who've already read them, or at least already read other works by the same author: book purchases are part of the gift economy, not part of the commodities economy.

Economists have spent way too much time studying commodities and seem to have a blind spot for how the rest of the world functions.