Friday, March 5, 2010

Time for eTextbooks?

This week I cancelled our subscription to The Columbus Dispatch. For whatever reason, the publishers of the Dispatch decided it was time to increase the annual subscription rate for 7-day home delivery from $181 to $337, up 86%. Frankly, I didn't even take the time to consider whether the Dispatch is actually worth $337 per year to me. The size of the increase was insulting.

The truth is that I'm a bit curious why the publishers of the Dispatch felt they needed to raise subscription prices so aggressively.

To an outsider, the business of a newspaper seems pretty straightforward. You get revenue from subscriptions, retail purchases, and advertisements. The costs include the editorial staff, subscriptions to national and international news feeds (e.g. Associated Press, comics), and the printing and distribution operation. I'm sure there's more detail when you peel the onion, but these seem like the major components. As long as revenue exceeds cost, and appropriate profit* is generated, all is well.

So what has changed to warrant such a large price increase?

I sense that the newspaper industry is going through the same gut-wrenching changes that blew up the music industry a few years ago. The music industry actually thought they were in the record business, and that their role was the manufacturing, distribution, and retail sale of plastic disks – first vinyl records, then CDs. Indeed, it was all but impossible for an artist to make it big without having a deal with one of the few record companies who had made the substantial investments required to manufacture, distribute and retail those plastic disks.

Then came the Internet. Suddenly the artist could be directly connected to the consumer. The record companies panicked. If the artists no longer needed their manufacturing and distribution networks, what role would the record companies have going forward? The more innovative record companies began to realize that they were in the music business, not the record business. Artists could benefit from the branding and promotion a music label can provide, and consumers could benefit from there being music labels that seek out new artists and package their material. The distribution and retailing of music has largely been ceded to companies like Apple, with iTunes, and Wal-Mart – companies that had virtually no presence in the music industry a decade ago. The major pain of reconfiguration is over, and we again have a viable music industry.

So what does all this have to do with schools?

I've spent a lot of space in this blog talking about the cost of personnel. It is, and will always be, the major cost associated with running a public school district, consuming nearly 90% of our operating budget. But guess what comes high on the list after that?


Just before the opening of Bradley, I had a chance, thanks to Principal Dave Stewart, to walk around the building with my brother-in-law, who is a public school Superintendent. When we came to the library, all the tables were piled high with textbooks. He made the comment that he wished they could figure out how to attack the cost of textbooks, because it was the primary non-staff cost in his district. That had never occurred to me before.

It seems like the answer is obvious: technology. Just as Apple has been successful establishing iTunes coupled with the iPod as the way music is distributed and listened to, Amazon is hoping to make their Kindle the way 'books' are read. The Kindle still needs to go through some evolution, as did the iPod, but they're on to something. Wouldn't it just have to be cheaper to give a kid a Kindle when they're in the 1st grade, and then simply load it each year with the textbooks required for that year's study?

Not necessarily.

A Kindle isn't cheap: today's retail price is $259. To equip every kid in our school district with a Kindle would cost nearly $4 million at that price. Presumably, we could negotiate a substantial discount for buying thousands of devices, but still we're talking millions of dollars.

Then there are the operational realities to think about. How often will they get broken, lost and stolen? What happens when a kid graduates, moves away, or drops out? Is that Kindle recycled to an incoming student? How much will it cost to get the 'ick' off of it?

Maybe we should just say that each kid has to come to school with his own Kindle, just like we have always expected kids to come equipped with pencils, paper and notebooks. It might make sense if we can show parents they'll save the cost of the Kindle or more in property taxes over time. This approach causes the responsibility to care for the device to be fully placed on the parents. However, we would also have to solve the problem of getting devices in the hands of kids whose families cannot afford to buy one.

Is that the end of the story? Of course not – we haven't addressed the cost of the intellectual material inside the textbook, or the cost of marketing the textbook to school districts.

The New York Times recently published a story on this topic. While the subject is retail books rather than school textbooks, the issues are similar. I thought the comments of author Anne Rice were particularly interesting – she had no idea who was making how much profit in this food chain. That probably means she has been leaving money on the table, but then I suspect she is more than satisfied with what she has been paid for writing a couple of successful books. Unpublished authors and would-be actors probably get paid about the same: whatever they pick up in tips waiting tables.

My brother-in-law says that in their school district, they're dialing back the technology in their quest for a viable e-textbook, using standard personal computers and the internet to access material. This presents some of the same problems as a Kindle approach, in that not every kid will have sufficient access to a computer to complete their assigned workload. Nor can you carry a personal computer around quite as easily as you can a Kindle. But this garners them some experience in an e-textbook environment.

The engineer in me wants to say that replacing hardbound textbooks with something like a Kindle is the obvious, elegant solution, and we should just make it happen in our school district as soon as possible, letting the economics sort themselves out later.

The business side of me says, no, the only reason to make the shift to e-textbooks is if the economics are so compelling that all those operational realities I've mentioned – and those we haven't thought of yet – can be handled and we still save money vs paper textbooks.

I think the way to reconcile these two perspectives is to ask our instructional technology team to design a trial that tests the feasibility of using both Kindles and online e-textbooks. It's worth the effort to understand these things now so we can shift gears when the technology and economics are better aligned.

NOTE: apparently some of our lawmakers believe the time is now for e-books at the college level. See this story in The Columbus Dispatch.

* I mean "appropriate profit" as seen in the eyes of the owners of the paper. In other words, sufficient economic incentive to continue to operate the business. How much profit that requires is their decision alone, however, the owners of any business have to figure out if its customers are willing to pay the price necessary to support the owners' desired level of profit. This price increase will give the Wolfe family, the owners of the Dispatch, some clear feedback in that regard.


  1. Paul,

    re. The Dispatch

    When did the rate change? How were you notified?

    I received nothing regarding a rate change from the paper. I just checked their site and I did get hit too.

  2. Jim:

    In the renewal noticed they sent via US Mail. Not sure when they started using this new rate.

    Here are more comments.


  3. How usable are e-textbooks? My impression of existing e-book readers (admittedly not having used the newest ones) is that they're oriented toward novels, where it's OK to see only one page, or part of a page, and you read sequentially.

    But that's not always helpful for textbooks, where you need to flip back and forth to an illustration or formula or footnote or sidebar, etc.

    Seems like technology could solve such issues, with big-enough screens, ability to pop-up a footnote, etc., but I didn't think such things existed yet.

    Also, wouldn't DRM be an issue? Since you're licensing the text rather than buying it, you probably wouldn't be able to re-use it year after year or sell it as used (especially in the scenario where the student has to buy a copy for his own e-reader).

  4. Interesting article on the subject of e-publishing.

    If applied to textbooks, prices may remain artificially high for some period of time.

    Of course, 20 years from now, the notion that kids will be carrying around heavy backpacks full of books will seem as antiquated as the brick sized car phones of 20 years ago. It's just a matter of how soon we get there.

  5. Gary:

    I agree re e-reader capabilities - that's one of the reasons that a stepping-stone may be to give our students access to online versions of textbooks first. Of course, we have to solve the problem of providing online access to kids who may not have computers or internet access at home.

    And you're right about the DRM. The textbook industry needs to figure out how they will make money in a world where physical media distribution dies and electronic distribution takes over. The music industry has largely completed this transition, and as I mention in this article, the newspaper/magazine industry is just beginning to deal the inevitable pain of change. Next will be book publishing.

    Textbook publishing is a special case because access to the material isn't optional for the 'customer' - the kids in school in this case. We have to make it as accessible and affordable as a paper book, or there's no reason to change.

    But the question is really "when" not "if" we do e-textbooks. When I was a kid in the early 1950s, we didn't have a phone in our home. It was simply a luxury we couldn't afford, and besides, my grandparents lived next door. Lots of my friends had 'party lines.'

    Today, we have all kinds of policies that presume every family has access to a telephone and a TV (e.g. how do you hear that school has been cancelled due to snow?).

    So that's really what I'm asking. Have we hit the tipping point yet? I think we're close, and need to start getting prepared.