Andromeda Yelton

Across Divided Networks

textbook market fail ahoy

November 9th, 2010 · 5 Comments · Uncategorized

Hello, visitors from Marginal Revolution! In your honor, time to pull out that draft post about textbook pricing and actually finish it.

The Chronicle recently ran an article on the possible rise of electronic textbooks. Having discussed the various ways students skirt buying new print textbooks (surely one of the most valuable skills — literally — I learned in college), it suggests the following.

Here’s the new plan: Colleges require students to pay a course-materials fee, which would be used to buy e-books for all of them (whatever text the professor recommends, just as in the old model).

And then goes on to claim “[college officials] say they felt compelled to act after seeing students drop out because they could not afford textbooks.” And much of the article goes on in this cost-control vein. In fact, it’s even titled “To Save Students Money, Colleges May Force a Switch to E-Textbooks” (emphasis mine).

Now, feel free to pick holes in my logic here, but this is what it looks like to me:

  • Students get assessed a required textbook fee. As with tuition, there’s no way to dodge it.
  • And as with tuition, it will then proceed to rise to whatever level the federal grant and student-loan markets, and disproportionately deep pockets of college families, support.
  • Between rental (rather than ownership) models for electronic content and DRM, there will be no secondary market by which students can offset their textbook costs (bookstore buyback, used book sales online, trading with friends, etc.). Textbooks will no longer have to compete with older editions or printings of themselves, removing downward pressure on their costs.
  • Except, of course, the downward pressure exerted by the universities themselves in their pricing negotiations. We have seen how awesomely well this works with university libraries and journal prices. Maybe if we’re extra-lucky we could have all the transparency of pricing that that market has, too.

Basically, this idea looks to me like the complete removal of any downward pressure on textbook prices, coupled with any number of incentives for them to rise essentially unboundedly (decoupling the purchaser from the source of funds, total lack of price transparency, external subsidy…). Leaving aside the rent vs. own issues and the DRM (on which Tim Spalding has written passionately), and the sketchy support for annotations and video in a lot of readers, and the risks of locking people into a particular reading device (as well as the giant rapacity that will be ereader vendors realizing they can capture entire campuses) — all of which are, mind you, important issues rife with bad ideas of their own — is there any way this is not, economically speaking, just a horrendous idea?

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5 Comments so far ↓

  • Newt Sherwin

    Not that I see. I would love to see textbooks become available in e-book format as an additional option for students to consider — which could, if done properly, become a source of downward price pressure in its own right — but the model you describe sounds pretty heinous.

    If colleges really wanted to help lower-income kids with the cost of textbooks, couldn’t they simply place a few copies in the library, to be either treated like reference books or perhaps checked out for a few hours at a time (so that you could take them to a group homework session somewhere else but still solve the “lots of people need it frequently” sharing problem)? Then the college would be directly impacted by the horrific textbook prices, and perhaps even motivated to put pressure on the publishers regarding them, and the students without much money could put up with a little bit of hassle in exchange for genuinely saving some money. Professors might also then experience some institutional pressure to not change textbooks without cause, which would help those seeking to resell their books the next year. Seems like a much better system all around, to me.

    I have different ideas, of course, for what I’d like to see in the distant future. But we’re clearly not there yet, and I think the paper-books-in-library solution is a far better one in the immediate.

    • Andromeda

      Some libraries put copies of textbooks on reserve, either on request or as a matter of policy; some don’t, as a matter of policy. People see to have strong feelings both ways. I don’t understand it. (That is, I don’t understand why you would have a policy against helping your students, especially one that falls disproportionately on your impoverished students.)

  • Ted

    Creating a good market in textbooks is a difficult proposition. The current market is all-right with used and library reserve textbooks providing an option for those students who can’t afford new books. Also, there is value in an instructor specifying a specific book for a class.

    E-books can definitely bring costs down, irrespective of if they come through this Textbook Fee plan, although publishers may just charge the same amount and gather more profit.

    The only way I can see it working is if the students are involved in the fee setting, as they have an incentive to keep fees low. Of course, there’s still the problem of faculty specifying a book without considering the cost, but I don’t see much of a good solution to that problem any way you slice it.

    Do you have any ideas on that angle?

    • Andromeda

      You know, I’m skeptical of how much ebooks even bring textbooks down. My father-in-law has written a couple of textbooks, and I gather there are huge costs in authorship, rights acquisition, art and layout, copy editing, marketing…All of those costs pertain to ebooks just as much as print books. Yes, print books have higher marginal costs than ebooks, but I doubt they are really all THAT high, compared to what students ultimately pay.

      For students being involved in the fee setting, I don’t understand what you mean. I mean, in a market economics sense, students already *are* involved in setting textbook prices, because they’re the ones actually directly buying the textbooks, and if the first-sale prices are too high they opt out and find an alternate approach (secondary market, borrowing, not bothering).

      Or, hm, in terms of students setting the fee in the Chronicle scheme? I don’t quite see how that works either. Again, in theory that is already true of tuition prices; as with textbooks, students have ways to avoid paying full price (scholarships, going to other schools). But what this ends up with is a market where prices are all very vague, because the sticker price doesn’t represent the actual cost of your education, and many people don’t pay the full cost, which gets farmed out to subsidies of various sorts, and I note this system has not done wonders for keeping tuition down. I would think that students would be more highly incentivized to assert themselves in setting prices for tuition than they would for book fees, as tuition is orders of magnitude higher — and yet we have not seen that happen. So I don’t see any reason to expect students would have a say in setting textbook fees, nor any reason to believe it would work.

      With the faculty not considering the cost, Congress recently required there to be more transparency in textbook cost advertisement, but I forget exactly where it comes in (professors have to include that information in the stuff they give the bookstore? or is it somewhere else in the chain?) But this is recent so I have no idea what effects it’s been having. I could imagine putting incentives in place to professors to choose low-cost books or to allow students to choose from among alternatives, although any such incentives might cause the campus bookstore to cry foul. And I can imagine individual consciousness-raising for professors, via encounters with students for whom textbooks present a real economic hardship, but that’s not a scalable solution.

      And, of course, ultimately downward pressure on textbook prices runs up against all those actual costs of textbook production mentioned above. For one, my father-in-law’s publisher has simply not been able to offer him a bribe sufficient to get him to undertake a revision of either of his textbooks; it’s just too much work. (Crazy, epic amounts of work.) Run textbook point-of-sale prices too low and you will simply stop having textbooks (or textbooks that don’t totally suck). (I’ve seen some efforts toward open-source textbooks and I’m interested to see how those go, but also skeptical. I expect they’ll be much better at content than they are at things like layout, art and multimedia (due to rights issues), and pedagogical extras — premade tests, lesson plans, etc., and those things can be critical to professors.)

      So, yeah.

    • Andromeda

      I think what I was trying to say, in my roundabout babble, was this:

      I can think of two mechanisms by which students might be involved in the fee setting: the market and price-fixing. Students are already involved (with a lot of other parties) via the market in setting tuition; this has not gone well, and I don’t see any reason to presume that a book fee listed on the same bill would go better. And price-fixing — does that ever work? — has well-known failure modes.