Correction on projections on etextbook sales

Okay. A couple months ago there was the piece in Campus Technology entitled Can Tech Transcend the Textbook. A good article but it contains a line which has been quoted in a number of places, most recently in the technology section (page 8) of the May issue of the CACS newsletter. Here is the quote:

According to the National Association of College Stores (NACS), digital books currently account for less than 3 percent of textbook sales. NACS expects that percentage to reach 10 to 15 percent by 2012.

Here is the problem: statistics that are quoted out of context or incompletely -- which then tell a very different story. The odd one here is that as the lead digital content person for NACS, I am certain I was not interviewed or addressed as part of the original story, or for any of the many follow-ups. Thus a set of statistics have been attributed to me or us and I have yet to find the source. Here is probably the more accurate interpretation or reporting of these statistics...

Stat1: digital books currently account for less than 3 percent of textbook sales. This is true. What it should say though is:

In cases where digital is an option, typical sell-through (i.e., the percentage of students purchasing the digital option as compared to number of students in a class), is typically around 3%.

We do have some institutions where this number goes as high as 7% as an average. And there are a growing number of cases where adoption in a particular class goes much higher (even over 90%), but those larger percentages are still more the exception. However, from the institutions we have sampled, typically over 80% of the titles adopted are not available in a digital format. We expect this number to change, and quickly, but inventory access is still a challenge -- and why few schools could go "all digital" in the next two years.

Stat2: NACS expects that percentage to reach 10 to 15% by 2012. This is possible, and one scenario we have evaluated. I think the challenge here is the use of the word "expects." It would be more accurate to say that we anticipate that it COULD reach as much as 10-15% IN 2012. I think that it is unlikely that we will hit that level by the end of the year (i.e., by 2012) -- it is possible, but not probable.

Actual expectations are harder to pinpoint. It does seem realistic to expect that we will hit 20-25% penetration of digital in 2015, at which point the early majority is moving toward adoption and penetration rate will likely begin to climb very quickly. We saw this with online sale of books and now digital trade books. With the right set of factors in place, this COULD happen sooner. It is possible that by fall of 2012 we could start seeing average digital sell through nearing 10% or more.

Whether we are talking 2012, 2015, or some point later -- I think the point of interest is that the shift is coming. Retailers, publishers, and institutions that choose not to prepare or keep abreast of the changes and technologies will be at risk. I think the last paragraph of Kirk Jarvis's piece in the previously referenced CACS piece sums things up well:

The textbook industry is definitely at a crossroads. Where will it end up? Only time will tell. What I think will keep our industry from going completely digital right now is simply the confusion factor. There are just too many digital platforms and e-readers out there. We, as industry peers, must remain informed of new technologies and changes in the market.

Finally, kudos to CACS for creating an ad-hoc technology committee focused on investigating and reporting back on new textbook technologies that may affect our business. The more we as an industry engage in experimentation and widespread environmental scanning -- and share what we learn -- the better positioned the channel will be to evolve with the world around us.

A view from college stores...

The California Association of College Stores (CACS) newsletter always has some interesting pieces in it. In this month’s newsletter there are a couple of interesting pieces.

Tony Sanjume, the incoming president of CACS talks about “living in interesting times” and the truth behind this proverb, and other misperceptions we may have about things. He makes a great plea on behalf of the college stores – emphasizing one point that differentiates college stores from many of their competitors: that the college store is part of the academic mission of the institution and works hard to obtain lower prices for students. He writes:

I doubt that there is another business that struggles with this issue more than the College Bookstore. We are perceived by some to be price gougers, profiteers, and opportunists of the worst sort; you would think we were selling water to earthquake victims at $10 a half liter. When in reality, most of the people in the store side of the business spend most of their time trying to provide lowest cost alternatives.

So what is the truth?

The truth is that textbook people are out hustling for next semester adoptions early, as soon as the dust settles from the start of the current semester. Why? Well, to find used books, to build a buyback list to pay out top dollar to our students at the end of the semester.

The truth is that general merchandise people are always looking for bargains in the supply area, they are looking for the $9.99 t-shirt, the bargain general reading books because they know that students are on very limited budgets.

The truth is I have yet to meet a college bookstore employee who didn’t have the best interests of the student in mind.

The truth is that textbooks are expensive.

The truth is that college is expensive.

The truth is that publishing is a business and the major academic publishers are public companies that are responsible for providing a bottom line on a corporate statement.

The truth is that faculty demand the most up to date information provided in an attractive package that comes with test banks and additional multimedia course management systems.

If I can be so bold as to paraphrase (and Tony correct me if I am off too far), despite best efforts to reduce costs, students still believe the store is out there to rip them off.

One “truth” I think Tony forgot to add is that most college stores are non-profit organizations. What profit they do generate typically goes back to the institution to support financial aid, student activities, or capital budgets – so that students can afford the rising tuition to attend academic institutions, or that they have the activities on their campus that interest them and make it a great living environment.

Are textbooks crazy expensive – I do not think anyone would argue against that. But the next time you are buying your textbook from someplace else to save money, ask yourself what that place is giving back to your institution to help with financial aid or campus life. There are several other arguments that could be made here – but I will attempt to avoid standing on that soap box too long.

Another interesting point that Tony made in his article referred to the initiative at Daytona State College designed to move course materials completely to digital. In my opinion this move is premature compared to the state of technology, preferences of students, and for other reasons – but hey, a school has to market itself, right? Tony raised a great set of questions that reflect some of the value the college store brings to the table and some of the questions that academic institutions must think about in considering options like these. For example:

1. Who will monitor the aggregation of course materials from faculty to ensure timely submission?
2. Who will ensure that digital delivery of course materials to students occurs in a smooth fashion?
3. Who will create and maintain the server that will interface between the publisher and the college?
4. Who will build the program that will know that a student’s fees have been paid so that it will notify the student and enable the download of their appropriate course materials?
5. Who has heard of FERPA?
6. Who will match the authorized course materials to the appropriate class?
7. Who will decipher what the faculty really meant to order?
8. Who will tell the faculty that they are only able to use course materials from these approved sources?
9. Who will tell that faculty member that the guy in Berkeley who hand prints his book in his garage on hemp paper is not an approved vendor?
10. Who will tell students that they can only have their course materials for 180 or 360 days because of DRM requirements? And then they need to buy them again if they’d like to use them for future reference.
11. Who will ensure that every student has a digital book reader, i.e. computer?
12. Who will tell foreign publishers that they need to create digital course materials?
13. What will you do when the digital cost of course materials begins to approach the cost of printed course materials after print product no longer subsidizes the artificially low cost of digital materials?
14. What happens when new editions keep coming every 2-3 years even when used books are eliminated?
15. Who has a higher average salary, an IT professional or a bookstore professional?

Suzanne Donnelly’s piece on the “buffet model” in the college store in this month’s newsletter is also good. She talks about change – here and coming – and how the role of textbook managers is undergoing a fundamental transformation on college campuses. I like the upbeat and opportunity-oriented perspective her piece provides, and so recommend that article to college store readers of this blog as well.

CACS E-Book Performance Survey

The following posting is courtesy of Kathleen Kaser, Director North for the California Association of College Stores (CACS). We were very happy to learn that Kathleen recently led an informal performance survey for CACS regarding the availability and demand for e-books by higher education students in California. More about the survey and the results can be found below.

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CACS conducted an informal survey regarding the availability of E-books offered by higher education institutions and the demand for E-books by higher education students in California for the spring semester or winter quarter of 2009. It was compiled for Don Newton, who as CACS legislative liaison was asked for the information by Senator Elaine Alquist who sponsors SB 48 which “will be mandating that publishers provide both a print & full electronic version of a textbook along the following timeline; 50% of textbooks must have a full electronic version by 2015 and 100% by 2020."

The general comments are based on responses from seven California Universities and twenty Community Colleges. Universities responding were: SDSU, CSU Fresno, CSU Fullerton, UC Riverside, UC Davis, UCLA, and Cal Poly. Community Colleges responding were: Los Medanos, Ohlone, Santa Barbara, Fresno CC, Citrus, LATT, San Diego (3), Solano, San Mateo (3), Cabrillo, Foothill, Fullerton, Chaffey, Modesto, Coastline, and Chabot.

Respondents were asked three questions:
- How many E-books do you have available to sell (generally) this semester?
- How many are you selling?
- What is the student response to E-books?

Three of the seven Universities surveyed offer approximately two hundred titles, and two offer a hundred titles this term. One University offers nine titles this term, but usually has thirty. One University offers none citing no student requests. Sales results are mixed with SDSU reporting sales of a thousand E-books this term, CSU Fullerton and Cal Poly sold about two hundred, Fresno State sold thirty five, and UC Davis and UCLA sold less than ten.

Eight of the twenty Community Colleges surveyed offer more than twenty titles with no one offering more than sixty five titles. Two colleges offer ten titles this term, two colleges offer one title, and the remaining eight colleges offer none. Top sellers for E-books this term were SDCC and Coastline who each sold one hundred and fifty, Foothill sold seventy five, Chabot sold forty three, Chaffey sold twenty, Santa Barbara sold nine, with the remaining ten colleges reporting no sales.

Positive bookstore comments about E-books:
- 70% of students surveyed at a University would buy another E-book.
- 33% of students surveyed at different University would buy an E-book again, and 25% thought the E-book was better quality than the textbook.
- Demand is increasing as the supply increases.
- Students are satisfied and demand is growing.
- It is important to offer students many choices of course content.

Negative bookstore comments about E-books:
- Half of all the bookstores surveyed experience indifference to Ebooks or no demand yet from students or faculty, even if they offer E-books for sale.
- Cannot sell E-books due to district firewall connectivity problems.
- E-book prices may be too high. Students know that buying a used book and selling it back to the store at the end of the semester is less expensive than buying an E-book.
- There are some problems with downloads and refunds, but the technology is improving.
- Publisher representatives do not push E-books.
- Logistically carrying around a laptop instead of a book is cumbersome, and it is expensive to print out the book.
- Students and faculty are more interested in free, Open Educational Resources than E-books. (Comment from only one of the respondents.)

The sources of the E-books offered were Jumpbooks, MBS Universal Digital Titles, CourseSmart, and Follett. It does appear that the E-book market is a fledgling industry and that demand is increasing as the supply increases for students comfortable with technology. Fewer titles are available for Community Colleges at this time.

Don Newton added the following comments to the E-book survey results sent to Senator Alquist: “I think your goal of 50% availability by 2015 is certainly doable. However publishers are mostly moved by marketplace acceptance. Much work needs to be done to make electronic titles popular enough to warrant the investment required for publishers to make more electronic titles available.”

“The investment needed to make electronic books available is not in getting content in an electronic file. The problem is with securing the intellectual property from piracy and maintaining that security. In addition, as some of our comments show, publishers will need to make it more convenient and more reliable.”

“If publishers need to oppose your bill it will probably be for customer lack of demand, not for their inability or unwillingness to have the product in e-formats. In a few years we will see what direction customer demand leads e-book publishing availability. I am sure publishers will be speaking with you about this. Thanks for your time and please remember CACS members are ready to help with any information we have.”

Many thanks to all who responded so quickly to my request for information.