Rewriting Textbook Rules
I f there’s one common gripe you hear from college students and their parents, it’s that the cost of textbooks is going through the roof. According to the 2010 report, “A Cover to Cover Solution” by the Student PIRGs (Public Interest Research Groups), the average college student spends more than $900 annually on textbooks.
The American Association of Publishers estimated that the college textbook industry generated more than $4.5 billion in sales in 2010. This market is unlike any other: Unlike most retail, where consumers have the right to buy what they want at the price they want, students are mandated to buy certain textbooks by professors — and publishers typically tell professors what books they can choose from.
Whether or not those books can be rented, purchased new or purchased used depends on what is available on campus and in the market. And because publishers increasingly have to compete with students buying and selling each others’ used books, they’re constantly bringing updated editions to market.
It’s no surprise that in this environment, students and retailers are trying to find ways to make prices more affordable. While new books will never disappear, rentals are becoming one of the most popular options, according to Mehdi Maghsoodnia, CEO of BookRenter.
Founded in 2006, BookRenter partners with college bookstores to help them offer textbook rentals. BookRenter’s platform covers supply management, pricing, e-commerce and customer relationship management on a web-based software system that can be licensed to and branded by universities.
“What we offer is an end-to-end process from discovery to adoption,” Maghsoodnia says, “so professors can see all possible products and better supply their students at a better price.”
BookRenter “meets the needs of the students, empowers the school and informs the professor,” he says. “Basically, we are giving the schools access to a network where ... you can get good pricing on the content and get direct-to-customer fulfillment or local service.”
In February BookRenter created Rafter, a network of software services allowing administrators and educators to have a better handle on adoption patterns, prices and content of more than 11 million textbooks and other course materials. Rafter is currently partnered with more than 500 schools.
E-books not a game changer yet
Students are quickly adopting iPads, Kindles, Nooks and other e-readers, but the textbook industry has not been as swift. Simba Information senior analyst Kathy Micky said in a November 2011 New York Times article that digital textbooks were expected to be the biggest growth driver for the future of the textbook industry. Simba estimates that by 2013, digital textbooks will make up 11 percent of the textbook market revenues.
Derek Haake is president of Campus Shift, an online software platform for students to sell or swap books. He says many students still want the ability to put their hands on the paper, highlight text and make notes in the margins. While e-readers offer the opportunity to do that digitally, they still lack a lot of the flexibility and study worthiness of real books. In fact, studies have shown that students learn better by “cognitive mapping” through highlighting and writing in books. The Student PIRGs report found that 75 percent of those surveyed say print is their preferred format, while 47 percent say they would be comfortable using at least one digital textbook format.
Another obstacle is the fact that only a small portion of textbooks are currently offered electronically. According to the report, e-textbooks typically cost 52 percent less than new print books, and e-reader textbooks cost 39 percent less than new print books. Rentals, on the other hand, cost an average of 61 percent less than new print textbooks.
“In the long term I would imagine e-book prices are doing to go down dramatically, but as of now they don’t save students much money,” Haake says. “They are a game changer, but it’s not happening very fast.”
Maghsoodnia agrees. “E-books are still too costly. Students might take an e-book for $60 but then realize they can’t do anything with it afterwards. Even if you buy a new or used book, you can sell it off at the end of a semester.”
Large rental network
None of this makes the textbook publishing industry happy. In any case, they’re going to have to reduce costs and be more competitive as the market shakeup continues. Maghsoodnia says the “market disruption” is good for new businesses and students alike because it will ultimately lower costs. It will also give universities more flexibility and options in what they and their professors can use in the classroom. Maghsoodnia expects a mix of print books and digital teaching solutions will be the norm in the coming years.
“Institutions are gearing toward increasing enrollment and shrinking budgets and are trying to be creative in offering education at a more scalable and lower cost,” he says. “There are many new content and course materials coming on the market.”
The ability to tap into BookRenter’s huge rental network has also benefited retailers and bookstores. Rentals at the Chaffey College Bookstore in Rancho Cucamonga, Calif., have grown to constitute almost a quarter of the store’s business, says director of auxiliary services Jared Ceja. Bringing more students back into the store has proven to be a big bonus.
“We were able to pull back those students that were going to Amazon.com or online retailers,” Ceja says. “We’ve been able to bring bodies back in the store because they can come in and get the books at the cheapest price and not have to wait for shipping.”
Ceja says when shipping and other costs are factored in, there isn’t much of a difference in profit margin between renting books and selling them. What has changed is that bringing more students into the store is dramatically increasing sales in other areas.
“Our supply sales, beverage sales and clothing sales are up dramatically, even with the enrollment cuts that we’ve seen in the past few years,” he says. “I think students have a better perception that we’re trying to do what we can to offer lower prices.”