Due to some expressions of interest -- here is a brief 1-page industry trends update I wrote recently for some internal documents. I have a pretty hectic travel schedule this month, so I will apologize in advance for having fewer postings to the blog throughout June. July onward is looking like far less travel so I should be able to do a little better then on regular and frequent postings. I will note that some of the stats below are ones that I have commented on in the past. I am posting the combined set here due to a couple recent requests.
The digital landscape is changing rapidly, however, digital book sales are still quite small as a percentage of unit sales and revenue. The industry emphasis when it comes to digital should be on providing choice for students and preserving market share for stores. There is plenty of evidence out there to suggest that now is the time for the industry to position itself within the digital landscape.
In the general book industry we are seeing a continued uptrend in e-book sales. At the recent D6 conference, Amazon announced that for the 125,000 titles sold on the Kindle, 6% of the unit sales for those titles were sold in digital rather than print. According to figures tracked by the International Digital Publishing Forum (IDPF), digital e-book sales for March, 2008 were up over 58% compared to the prior year. The IDPF figures are based on only trade e-book sales via wholesale channels for 12-15 trade publishers. The organization estimates that actual e-book sales could be as much as double their figures. The graphic below, provided by IDPF, shows the trend over the past five years.
For textbook adoption we are also seeing several data points that signify an uptick in e-book purchases. While 18 months ago the big concern was iChapters and direct to student sales, e-book sales were still very low, typically below 1% of units and revenue. This semester we saw multiple examples of e-textbook sales over that 1% threshold—examples that begin to move beyond the anecdotal. In one pilot involving six classes at one institution, average adoption was 10% of enrollment and anywhere from 3% to 45% of total units sold (any format) in a class. In another set of pilots at two institutions project coordinators were able to get over 90% of students enrolled in the course to select the digital textbook option. Recently, one institution found that when they offered first year students a digital option among pre-ordering choices prior to the start of the semester, 20% of those students selected the e-book when it was available. Another institution reported similar numbers with over 10% of students enrolled in courses selecting digital where available. Other anecdotal examples with adoptions over 30% of unit sales are becoming increasingly common. In a few studies we have seen that roughly 18% of students prefer digital textbooks to print textbooks, with another 7-8% of students expressing no preference. In the most recent StudentWatch study sponsored by the NACS Foundation roughly 18% of students bought or accessed digital course materials this year. These figures show a trend in adoption that is likely to continue growing over the next few years as incoming students become increasingly technically sophisticated and comfortable.
Interestingly, when students were asked where they acquired their digital course materials, 33% indicated the library, 30% the college store, 25% the campus course management system (e.g., Blackboard, WebCT, Angel, Moodle, etc.), and 10% indicated other direct sales sites (e.g., direct from publisher, Freeload Press, etc.). This number should be disconcerting to college stores as it suggests erosion in market share when it comes to digital course materials. Stores are not thought of as the first source for digital textbooks. Indeed, this is perhaps not surprising when only 46% of the Large Stores Group members report offering a digital option to students, and a comparable percentage of college stores in general report being unable to handle an online transaction. These figures and trends, coupled with many other industry developments make it imperative for the industry and NACS to find a solution that ensures the college store’s place in digital textbooks.
Stores that wait another 3 to 5 years before entering this market may find it too late to recover lost market share or declining profits from course materials. Indeed, in Ohio there is a mandate under review that would require all colleges and universities in the state of Ohio to reduce textbook costs to students by 50% within the next 1 to 2 years. Digital is expected to play a key role in the solutions that are adopted. IDC estimates that the e-learning materials market will continue to grow by roughly 25% or more in the U.S. for each of the next two years. The inability of the industry to credibly support the sale and distribution of digital textbooks is a contributing factor to the pursuit of other channels (such as direct institutional licensing) by publishers. It is also contributing to other new players entering the market, which may soon include companies like Apple and Microsoft. In a sense, by not pursuing digital options, stores are creating their own competition and encouraging both students and publishers to find other ways to exchange products and services.
Perhaps I have painted too glum a picture or been overly assertive in my position here for the college stores reading this blog, but perhaps tough love is sometimes a necessity. Consider it another of my ongoing wake-up calls. At NACS we are working on several initiatives to be unveiled later this summer that will address the concerns about market share and the trade infrastructure among college stores. Our aim is to provide an easy and affordable way for stores to become more actively involved in digital content sales and distribution. We have a number of pilots either in progress or in the design phase. We are still looking for partners in that process -- both on the content and interface sides of the equation. The signs appear to be getting clearer all of the time. If you are a college store reading this blog, what are some interesting or innovative ideas you have tried lately in the digital area? Please share.