Enticement for Graduating on Time

Many colleges and universities are working on ways to encourage students to graduate in four years. Marymount California University, Rancho Palos Verdes, has come up with a pretty unique enticement.

The school partnered with a local car dealership to allow incoming freshmen to purchase new Mini Cooper automobiles at fleet pricing. Students have to make the first four years of payments, but if they graduate on time, the university will make the fifth and final year of payments, up to $5,000.

“Our students will commute to and from our campuses, drive to their internships, and explore the abundance of beauty, culture, and fun that Southern California has to offer,” said Marymount President Lucas Lamadrid. “And our graduates who participate in the My Marymount Mini will have a reliable and ‘cool’ car that’s fully paid for to drive to their first job after college.”

Blog Studies Book Costs by Major

Most of the rants about the expense of college textbooks that appear at the beginning of every term focus on total costs. Priceonomics, a conservative think tank, took a look at individual majors and found the average class costs for some are four times the amount of the least expensive ones.

The site used data from the fall 2015 textbook list from the University of Virginia, Charlottesville. It also assumed students purchased new versions of every required and optional textbook listed for the more than 750 courses on the list.

Economics students would pay $317 for books per class, topping the list. Language majors were second to economics at $268 per class, but sciences/social sciences filled the next nine slots. African-American studies books cost just $80 per class.

The most expensive book was a biochemistry text at $406 each. While physics textbooks cost an average of $158 per book, engineering books were $124 per title. English and literature books were the least expensive, with an average of $19 per text. The best books at buyback were music titles, which retained 68% of their value.

“In order to avoid these costs, many students may choose to buy used books, rent books, or pray the library has a book when they need it,” wrote Dan Kopf, author of the Priceonomics blog post. “There are also advocates pushing professors to choose open textbooks (textbooks for which there is no copyright). Though it may limit your long-term earning potential, our analysis suggests another way to lower your textbook cost is to choose a major in the humanities.”

Students Paying More for College Costs

Spending on college expenses was roughly 16% higher for the 2014-15 school term than the year before, according to a new study. The average spent on college, including tuition, room and board, living costs and items such as textbooks and transportation, was $24,164—the most since 2010, when the average was $26,271 after adjustment for inflation.

The report, How America Pays for College 2015, also found that 88% of the respondents would “stretch” their budget to afford college for their kids. The study concluded that parents are increasingly positive about the chances of their children landing jobs and are hopeful about the economy, according to Inc. magazine.

The survey of 800 parents and 800 undergraduates found that economic conditions over the past five years left parents with less money to spend on college. This year’s study showed a surge in spending by high-income parents, while spending by lower-income families stayed nearly the same.

“Traditional economic concerns such as job loss, declining home values, and decreased value of savings are less worrying for parents this year, allowing families greater freedom to concentrate on college,” the author of the report said.

A Slower Year for Tablet Sales

This year is proving to be rather flat for tablet computers. A new International Data Corp. (IDC) report predicts growth in shipments of new tablets will fall to 7% in 2014, compared to 52.5% growth just a year ago.

The report said worldwide tablet shipments for 2014 will be 235.7 million units, with Android devices accounting for 67.7% of the total. The iPad comes in at 27.5% and 4.6% of the shipments will be Windows tablets.

“In the early stages of the tablet market, device lifecycles were expected to resemble those of smartphones, with replacement occurring every two or three years,” said Ryan Rieth, program director of the mobile-device trackers at IDC. “What has played out instead is that many tablet owners are holding onto their devices for more than three years and, in some instances, more than four years.”

The pace at which consumers replace their tablets is just one part of the slowdown. The iPad, which has been the industry standard, has seen its sales slip 14% because of competition from dozens of inexpensive Android models. In addition, Apple has failed to make the kinds of upgrades to the device that get people back into a buying mode, according to a report from C/Net.

IDC also reported that PC shipments continue to fall, but at a far slower rate than expected. Total shipments in 2014 will likely be around 306 million units.

“In the best case for PCs, we’d see a significant wave of replacement as users who spent on phones and tablets in recent years decide they really need to update their PC,” said Loren Loverde, vice president of Worldwide PC Trackers. “As younger generations become more mobile and web-oriented, and emerging regions in particular prioritize converged devices (or economy in number of devices to purchase), the PC market will continue to face tough competition and be more focused on replacements, with limited potential for growth.”

BISG Study Finds More Textbook Pirating

A new study from the Book Industry Study Group (BISG) found that downloading course materials from unauthorized web sites is on the rise. Student Attitudes Toward Content in Higher Education showed the percentage of students pirating course materials jumped from 20% in 2010 to 34% in the most recent survey.

The practice of students copying chapters of a required text owned by a peer is also on the upswing, rising from 21% to 31%. In addition, the survey found that 75% of faculty feel the overall coast of a college degree is too high (despite just 33% of the respondents saying the costs were too high at their own institution), and that they said both print and digital course materials were priced higher than their value to the class.

The information came as no surprise to blogger Nate Hoffelder of The Digital Reader.

“Students are pirating more textbooks because they can’t afford to buy them,” he wrote. “Do you think they would go through the hassle of photocopying a textbook if they had another choice?”

Hoffelder went on to claim that the rate of students pirating textbooks has been growing at least since the end of 2011. He provided statistics from March 2013 that showed the use of unauthorized text web sites had increased 40%, scanning course material was up 37%, illicit sharing between students was up 28%, and piracy was up 26%.

Higher Ed Is Not a Bubble Set to Burst

A recent MSN Money article lists the 10 colleges and universities with the highest out-of-pocket costs in the country. Pundits often point to this sort of list as proof that online education is the future of higher education.

College can certainly cost a fortune and tuition expenses continue to rise, but that doesn’t mean it’s creating an economic “bubble” that is ready to explode, according to a staff writer for Forbes magazine. In fact, John Tamny wrote that online education may be the entity that needs to be concerned.

After working through a list of high-profile individuals who succeeded without a college education, Tamny argued students don’t really attend college for the education. Students head to campus, and parents are willing to fork over small fortunes, because attending college opens doors in the real world.

That presents a problem for online learning. While it may be less expensive and even more efficient, Tamny said all employers really seem to care about is the imprimatur of a name school, rather than the actual knowledge a student gains.

“College tuition is the price paid by parents and ambitious teens to slot them for future employment,” he wrote. “Even without government subsidies, tuition for the name schools would still be high simply because parents and kids will pay enormous amounts for something scarce in the form of an elite degree that carries weight with employers. On the other hand, online education, precisely because it represents the opposite of scarce, means it brings with it very little job-attaining value.”

The price of e-books

The New York Times has a great article that compares the costs of producing print books to digital books. It is assumed that publishers save a large amount on digital books but as the article points out there are more costs associated with digital than most realize. Additionally, as digital sales start to replace print sales, publishers will still have the fixed costs associated with print but it will be spread among fewer copies. Other expenses, including marketing, royalties, and overhead in the form of editors and other skill sets, also persist even when the print costs vanish. Publishers argue that this may make it difficult to support new authors. The article also notes that if e-books are priced much lower than print editions, booksellers may be unable to compete. College stores may find themselves in a similar situation as digital sales of textbooks progress – trapped between having to maintain an infrastructure and staff skills designed to sell the old version of content, while transitioning to the new infrastructure and staff skills needed to be successful in a world with digital.

“Publishers also say consumers exaggerate the savings [of e-books over print] and have developed unrealistic expectations about how low the prices of e-books can go.” In the textbook space, some of that may be the fault of publishers themselves. Offering the digital at 50-70% of new in order to gain adoptions of the digital by students leads to false impressions of the cost of producing the textbook. Of course, if the cost of the print new continues to climb rapidly, then by the time a more significant transition occurs the cost of the digital could be equivalent to today's new price. We are already seeing some etextbooks with prices well over $100.

It is probably true that as part of the transition to digital the top line (not just the bottom line, but the top line) revenue will shrink for a period of time as markets and prices adjust. The article notes that this occurred in the music industry. Recent price wars on e-books by Amazon and others does not really produce any winners. If e-book prices go too low, there will be no margins left for booksellers – chains or independents. In the college store industry, those booksellers are committed to the academic mission and giving back to their respective institutions – typically to support tuition sustainability, financial aid, student services, and capital project budgets. Without the bookseller channel, publishers are left with a few giants who can more easily dictate price, and those giants have no beholding to academic institutions or their students to provide a return that improves educational affordability. The article does a fair job of describing in simple terms some of the economics of book production, and the potential unintended consequences of lower e-book prices.

The article ends with a quote from Author Anne Rice, which deserves repeating. She notes, “None of us know what books cost. None of us know what kind of profits hardcover or paperback publishers make.” Rice went on to say, “For all I know, a million books at $9.99 might be great for an author. The only thing I think is a mistake is people trying to hold back e-books or Kindle and trying to head off this revolution by building a dam. It’s not going to work.” And that is the thought for the day – regardless of where pricing goes with digital books, the revolution or transition from print to a new format has begun. Attempting to stick our fingers in the holes of the dyke is not going to save the day anymore. As Clay Shirky might put it, we can no longer convincingly tell ourselves such lies. The more we become educated on the economics of books, the better solutions we may identify to manage costs, or to produce business models that are economically sustainable and beneficial to all parties.

e-books and a blog...

A colleague of mine just pointed me to the blog for the "disruptive library technology jester." It is an interesting blog for those who read this blog. (There I go again, pointing potentially loyal readers to other locations for information.)

The blog has a half-dozen postings related to digital textbooks. There are also several interesting posts related to innovation and disruptive technology, but my comments today are more interested in some of the textbook posts.

In a first posting, from July 8th, Peter (aka the Jester) comments on the complexity of the college textbook marketplace. I am generally in agreement. When I first came over to the college store side three years ago from having been a faculty member, I was fascinated by how many subtleties and complexities exist in this marketplace. Disintermediation of stores by digital seemed like a reasonable thing at some level. However, as Alison Pendergast points out in a response on her blog, there are some important differences in the textbook market that make digital substitutes not such an easy thing.

From the store perspective, Peter touches on several important points -- the role of the store handling financial aid and campus-based forms of financial support, for example. Another example is the collection and verification process of the "correct" course materials required by a faculty member, and standing behind that verification process. These and other "localization" services provided by stores are "at least for now, for better or worse," the most efficient and effective methods for students to obtain the correct course materials for their classes. That does not mean that stores cannot or should not be looking for ways to reduce the cost of course materials. Many, if not most, do. What profit many stores do make goes back to the institution, to fund student activities and/or services. So there is often a social value gained from buying the textbooks from college stores rather than other sources. However (before I receive more student hate-mail), I will admit stores do need to consider the role we play in the complex textbook economic cycle. As do faculty. As do publishers.

I do find the assumption that digital necessarily equates to cheaper course materials somewhat vexing at times. Looking at how the move to digital journals from print journals and the subsequent effect on typical library journal subscription cost over the past 5-6 years should lead one to expect that digital is not necessarily a panacea. We have heard from students in focus groups that they do not like "linear - .pdf versions of textbooks." They expect interactivity. That interactivity (at least currently) can be more costly to produce than the traditional textbook or its all-too frequent updates. When it does evolve, then publishers and faculty will have a convincing value proposition in digital format that students will more readily adopt than their linear print or digital textbooks.

That aside, the mere transaction costs (direct and indirect) for each provider of content to provide content, outreach, and localized transaction services for each faculty member and each student would be prohibitive. Thus a digital equivalent of the local campus bookstore becomes necessary in order to reduce costs for everyone. That is why local stores emerged to begin with and why we do not buy all products directly from all product creators -- whether the product is digital or more traditional.

There is also something to be said for the editing and peer-review process traditional textbooks go through. I think open access and open source content has potential, but not necessarily as a miracle-cure for high-textbook prices. Most open-source textbooks seem to lack something on the quality side that comes from editing and the multiple perspective (peer-review) that the publishing process brings to it. Interesting counter-examples are models like Flat World Knowledge, which if successful will combine high-quality, edited and reviewed textbooks in a digital format for free, with revenue coming from other more convenient formats and tools to assist students achieve learning outcomes.

Before I am accused of "drinking too much of the kool-aid" let us all remember, the end goal is to help students acquire the course materials they need to be successful in gaining an education. We do not say that enough, but it is one of the common and most fundamental goals for most of us in the channel (from faculty to stores to publishers). Beyond that, those who add value along the chain still need to generate revenue and profit, and I believe as long as they do generate value, revenue (and hopefully profits) will continue (this has something to do with that capitalism concept). For stores, that means generating value for students, faculty, academic institutions, and yes, even publishers. The economics here are very complex, and every mouth at the trough increases costs. So if a mouth wants a place at the trough, it should be adding value to the pre-stated end goal.

Finally, Peter has a more recent post on the Colorado Community College agreement. It is an interesting post (with a good tracking down across other posts and leads). The responses he received to his inquires are among the most interesting. In particular -- the current digital options being provided are all "custom published," making them unique to the institution. such models can enable publishers and faculty (and stores) to reduce costs, particularly if the adoption will carry over multiple semesters. They have a more centralized or standardized approach to text selection for classes than other types of institutions might have. The textbooks are currently only being used for online classes -- suggesting students who are already comfortable and expecting an online experience. In other words, the value proposition and the unique nature of this deal are not yet fully transferrable to the typical textbook adoption at the typical classroom. That does not mean the model does not have adaptations that could be transferrable, just that the transferrability is likely somewhat limited at this point. Many other campuses gain similar benefits through custom course materials and arrangements with publishers for print editions. The question is one of scalability, I think.

I have gone on far longer than I intended here -- this might be my longest post yet. I am sure some of the points are controversial. Others probably could use some more thought and editing (where is a publisher when you need one?) Peter's blog is interesting and well researched -- what I would expect from a librarian (I mean that as a true compliment). If anything, it helps demonstrate how complex the course materials space is, and additional things we all (myself included) have to learn about the economics of course materials --both before, during, and after the transition to digital.