Pay no attention to the man behind the curtain

Some hidden reasons why college textbooks are so expensive

The National Association of College Stores has a breakdown of where each dollar goes for a new textbook. A closer look at their logic, though, reveals enough slight-of-hand to make Penn and Teller genuflect in awe.

First, let’s take their categories for the non-bookstore portion. (Face it, no matter what the publisher charges the bookstore is going to make their cut – at least they aren’t shy about telling you that.)

32.8 (42%) -- Paper, Printing, Editorial Costs
15.6 (20%) -- Publisher Marketing Costs
11.8 (15%) -- Author Income
10.2 (13%) -- Publisher General and Admin
1.0 (1%) -- Freight Expenses
7.2 (9%) -- Publisher Income

After removing the bookstore parts, we find that 78.6 cents per dollar go to the publisher. If we divide each number by 78.6, we get the percentage of textbook dollars attributed to each category.

(FYI, I’ve spent almost twenty years working in various capacities within the college textbook publishing industry, so I have more than a passing familiarity with what goes on behind the curtain.)

OK, let’s talk about these categories now:

Paper, Printing, Editorial Costs – Paper and printing are such a small part of the cost of a book that it’s embarrassing. Called PP&B in the industry (the ‘B’ is binding), this can run from $2 or less for a typical study guide to $12 or so for a high-quality art or biology text. So, pulling back this particular curtain, we find that the lion’s share of this category is editorial costs. I won’t address the relative worth of these editorial costs, but they are incurred whether publishers print a physical book or create an e-book. It’s easy to see, then, that the idea of going the e-book route is not going to do much to reduce the cost of the textbook.

Publisher Marketing Costs – Publishers send their sales people to your professor’s office to convince her/him to use their textbook. How do they do this? Certainly not by striving to produce the highest quality, most useful book imaginable. No, they give the professor armfuls of “free” stuff to help them teach the class – copies of the student text, instructor manuals, answer books, powerpoints, etc. They also dangle “free” stuff for the student to use, like student websites, bundled CDs, etc. Who do you think pays for all that free stuff? That’s right, you do.

Author Income – 15% royalties… are these guys on crack? Twenty years ago major authors were getting a 15% royalty, but not anymore. Go ahead and ask any of your professors who have written textbooks, they’ll tell you. The trend over recent years is to get royalties down to 10-12%, putting more profits in the publishers’ pockets.

Publisher General and Admin – All big businesses try their damnedest to avoid paying taxes using whatever legal means are available. (We’ll give them the benefit of the doubt on this one.)

Freight Expenses – Can’t do much with this one, except that recently at least one major college textbook publisher has begun charging the bookstores a restocking fee for returned books. This will reduce some of the freight expenses, but shouldn’t have much impact on the bottom-line cost of the book (although it is pissing off a lot of bookstore managers).

Publisher Income – The chart says this is 9%, but that’s too low. At the very least it’s got to be 12% or more, based solely on the reduced royalties being paid nowadays.

By conservative estimates, then, around half the cost of a textbook is attributed to the business practices of the publishing industry (editorial and marketing costs). E-books is not the way to bring down these costs, revamping the business practices is.

…And now a word from our sponsor

Can textbook publishers learn from television’s history?

In the early days of television, broadcasters turned to vaudeville and theater producers to create their programming. These producers simply created vaudeville and theater shows, and stuck a camera in the audience as an afterthought. They didn’t understand the capabilities of the new medium, and so did a minimal job incorporating it into their more familiar works. Eventually, it took an outside industry – Hollywood – to produce shows specifically for television, introducing techniques familiar to today’s viewers that made for a more effective medium.

College textbook publishers are experiencing a similar situation regarding the Internet. Like the early TV producers, today’s publishers continue to make textbooks, and convert them in some fashion into Internet components as an afterthought – vaudeville and theater are replaced by E-books and web sites that offer static illustrations and text. None of these are specifically produced for the Internet, and deviate only slightly from the traditional publishing paradigm.

By its very nature, the Internet is capable of providing far better (and less expensive) learning tools than those currently provided. College students are clamoring for these tools, but the textbook publishers have been inadequate to this task. Clearly, it is up to someone else to deliver on the Internet’s promise.

The Smartacus Corporation of Fort Worth, Texas is one company that delivers the goods. Their website College-Cram.com features a library of study programs covering college-level math, business, science, and languages. In many ways, these study programs are more effective learning tools than traditional textbooks.

Lower cost – College students spend $120 or more on each new textbook. Publishers, who get no revenue from “used” book sales, regularly publish new editions every three years to force more “new” book purchases; often these new editions are little changed from the preceding edition. College-Cram.com offers its entire library of study programs for only $15 per month, with further discounts for longer subscriptions.

Focused learning – Every study program in College-Cram.com’s library focuses on a single concept, such as calculating sales tax or the structure of the human heart. Students know which concepts they need to study, and need a way to get to them quickly without slogging through other concepts in the chapter that they already understand.

Effective teaching techniques – Study programs in the College-Cram.com library are presented in ways that best convey the intended concept, often addressing multiple learning styles to ensure the best learning experience. For example, tab-tutor programs include a labeled illustration (for the visual learner), two different ways to work the formula (for the hands-on learner), and a glossary of terms (for reading-oriented learners).

In addition, resources that are typically static are presented more effectively in this library. The Periodic Table and Logarithm Tables, for instance, come with instructions on how to use them, while financial statements provide explanations for each line item that are usually buried within the textbook, if provided at all.

True interactivity – Unlike the E-books and such offered by textbook publishers, College-Cram.com’s study programs are truly interactive. Formula-solvers, for example, accept numbers from the student and walk them through the steps required to solve math and science problems. Similarly, financial ratio solvers show the steps and also where to find the proper values on financial statements.

Those early vaudeville and theater producers ended up being replaced by their more effective film producer counterparts, who went on to transform the industry. Will the textbook publishers learn from television’s early history, and change their ways before it’s too late? Tune in next week…

2004 baseball playoffs

OK, this has nothing to do with e-learning, except that by reading this on the internet you might learn something. (Is that too much of a stretch?)

Anyway, here goes. My name is Rudy, and I am a Yankee fan. Not one of those "hey these guys won a world series, I'd better start liking them" kind of fan. I've been a fan since I was a kid, back in the 70s when Horace Clarke was one of their better players. (If you don't know who he was, don't feel bad -- his own mother probably needed a scorecard to tell which player he was. Bad, bad, bad...)

There is nothing better in sports than a Yankee-Red Sox playoff. Period. It's like, every great hero needs a great villain. (You decide who's who.) Whoever wins this, they are going to roll all over the national league champs. Again.

OK, I got that out of my system.