Will Apple's recent attempt to break into the textbook market, and other rapidly evolving e-book distribution models, help to moderate soaring textbook prices? From what I've seen so far, it could do just the opposite.
Our family just spent hundreds of dollars on college textbooks for the Spring semester. Will Apple's recent attempt to break into the textbook market, and other rapidly evolving e-book distribution models, help to moderate soaring textbook prices? From what I've seen so far, it could do just the opposite.
Theoretically, e-book prices should be cheaper, since publishers don't incur the costs of printing and distributing physical books. In effect, the e-book distribution model shifts those costs from the publisher to the school or student, which must pay for a device on which to read the content.
But the e-book distribution model is shaping up to be inherently less consumer friendly. Unlike the distribution channel for paper books, publishers have been able to set the prices that channel partners charge for e-books. The implications of this model first became obvious during the 2011 holiday season, when retail discounts on some paper titles more than made up for lower list prices of e-books. In some cases e-books cost more than you would pay for the paper version in your local bookstore.
Apple is a pioneer behind this new model. As a recent Wall Street Journal story notes, "Under Mr. Jobs's direction, Apple persuaded five of the biggest publishers to abandon the wholesale model, by which retailers were free to discount the recommended retail price. Under the new pricing arrangement, publishers set the price of e-books." And the distributor -- Apple in this case -- gets 30% off the top.
Today, students can comparison shop for new text books, and retailers are free to set their own prices, which vary substantially. They can save even more by buying used copies or renting them online. And students can sell their textbooks into the used market when they're done with them, further reducing their bottom-line costs.
In a world in which paper textbooks go the way of Kodachrome, the current competitive ecosystem falls apart. Students will find it much harder to find discounts on new college e-textbooks, and it is unlikely that they will be able to resell "used" e-books. If they can't, their net cost to purchase a textbook will go up.
In some situations students will need to buy e-textbooks outright as a reference. For example, a health science major might want a permanent copy of an anatomy reference manual.
In most cases, however, students will be encouraged to rent an e-textbook. That's the idea behind the publisher-lead CourseSmart program, which allows publishers to carefully control what the student can and cannot do with the text, then erase it when the rental contract expires.
That neat, tidy solution would virtually eliminate the secondary market for used textbooks and textbook rentals. And with retail prices for new textbooks tightly controlled, comparison shopping sites like textbooks.com and ehalf.com would lose their raison d'être.
That limits choice. Fewer choices means less competition. The current model, then, if it succeeds, seems destined to lead to higher costs for college students.