Carpe Diem

Hear that hissing sound? It’s the textbook bubble deflating

I’ve written frequently about the unsustainable “college textbook bubble,” which continues to inflate at rates that make the U.S. housing bubble seem relatively inconsequential by comparison, see chart above.  The cost of college textbooks has been rising at almost twice the rate of general CPI inflation for at least the last thirty years. As Glenn Reynolds reminds us, “a process that cannot go on forever, won’t,” and the college textbook bubble is certainly one of those processes.

In this post from last April, I predicted that the traditional, cartel-style textbook model won’t survive, and we might already be hearing the giant hissing sound of the “college textbook bubble” starting to deflate due to lower cost competition from alternative textbook providers like Flat World Knowledge.  As an alternative to a standard economics textbook like Greg Mankiw’s “Principles of Economics” for $179 from the publisher Cengage, students now have free online viewing access to a comparable economics textbook like “Principles of Economics” (by Libby Rittenberg and Timothy Tregarthen) from Flat World Knowledge.  To get an eTextbook option for an iPad, Kindle Fire or NOOK version that includes PDF downloads, students pay $35.  A black-and-white hard copy text costs only $45, and students can buy individual chapters of the textbook.

In another post, I linked to a post by Kevin “Angus” Grier, whose comment about high-priced textbooks from the traditional publishing cartel was “These days, given that you could make yourself a pretty good free principles text just by downloading relevant Wikipedia entries, I don’t see how these rents can be sustained over the long run.”

Looks like the free, Wikipedia-based principles textbook model envisioned by Angus has now arrived – those types of free textbooks are now available from Boundless Learning. The company is profiled in an MIT Technology Review article titled “Free Textbooks Spell Disruption for College Publishers,” here’s a slice:

In 2011, Ariel Diaz started Boundless Learning, a Boston company that has begun giving away free electronic textbooks covering college subjects like American history, anatomy and physiology, economics, and psychology.

What’s controversial is how Boundless creates these texts. The company trawls for public material on sites like Wikipedia and then crafts it into online books whose chapters track closely to those of top-selling college titles. In April, Boundless was sued by several large publishers who accused the startup of engaging in “the business model of theft.”

Once a student or professor creates a free account at Boundless Learning, they get free access to textbook materials that are organized to closely duplicate the material in a standard $180 textbook like Mankiw’s Principles of Macroeconomics on a chapter-by-chapter basis.  In Mankiw’s chapter on “The Monetary System” he covers these topics: The Meaning of Money, the Federal Reserve System, Banks and the Money Supply and the Fed’s Tools of Monetary Controls.  In the corresponding materials from Boundless Learning, they have comparable sections on Money, the Description and Purpose of Money, U.S. Central Banking, the Role of Banks in Money Creation and the Tools of the Federal Reserve.  The sources of the Boundless Learning materials are mostly Wikipedia entries and online resources from various Federal Reserve Banks.

As might be expected, the textbook publishing cartel isn’t taking this competition sitting down and they (Cengage Learning, Pearson Education, and MacMillan Higher Education) filed a lawsuit in March accusing Boundless of copyright infringement, false advertising, and unfair competition.  Boundless has denied all of the charges.

Bottom Line: Whether or not Boundless Learning prevails in the lawsuit, its open-source, Internet-based, free textbook model is more likely to be the textbook model of the future than the status quo model of the traditional publishing cartel.  And for that, students (consumers) of the future will be much better off, thanks to all of the “unfair” competition taking place today.  As the unsustainable college textbook bubble starts to deflate, we can thank publishing innovators and “cartel busters” like Flat World Knowledge and Boundless Learning.

15 thoughts on “Hear that hissing sound? It’s the textbook bubble deflating

  1. I applaud the evolution but there is also a lesson here and that is productivity with respect to older technologies.

    No one ever said that textbooks were not valuable and needed…. we paid the authors, the gatekeepers, the “agreements” with authors and schools and we did not see too much in the way of alternatives …. until the technology came along that disrupted the status quo.

    Now – a lot of folks are ultimately going to lose their jobs and what used to be a career job to aspire to -will dramatically downsize.

    we’ll need far fewer bugger whip craftsman…

    However, what was organically valuable has not changed and that is the “content”.

    whether the content is ink on a page or bits in a computer, it is the content that is the fuel and who is to
    say that once the “book” parts gets a lot cheaper that the content part gets more costly?

  2. … who is to say that once the “book” parts gets a lot cheaper that the content part gets more costly?

    It is now the content part that is expensive Larry, You don’t believe many people are paying $180 for a 2 inch stack of printed paper, do you?

    • re: ” who is to say that once the “book” parts gets a lot cheaper that the content part gets more costly?”:

      Ron – did you understand the “MORE” in MORE COSTLY boy?

      • Look. Your original comment is incoherent even for you. What the eff are you trying to say? Maybe you could rewrite the whole thing so it comes closer to making sense.

        The price you pay for a textbook is the price of a license for the content. The cost of delivering it to you in a printed book is a small part of the price.

        Currently, a cartel of book publishers , textbook writers and instructors have students by the nuts. Frequent updating of content requires the frequent purchase of a whole new textbook for a given course, although only a small amount of the content has changed.

        Competition from online content providers has done what it always does in a free markets, and that is to lower prices, in this case dramatically.

        The cost of delivery is now negligible, updating is cheap and easy, and even printing is now reasonable. I can’t imagine why you think content cost will ever cost what it did in the past.

        • content itself is similar to intellectual property – and my view is now that we’re evolving to online that the QUALITY of the content will become even more important.

          It’s one thing to have to buy a physical textbook that is also a bad textbook. All of us have run into this.

          But now with textbooks converted to online – and the ability to easily dump “bad” textbooks – the quest for good content is going to increase ….IMHO.

          the people that are really good at providing content that enables people to learn are going to be better rewarded through increased sales but also they’ll be in a better bargaining position if their content is recognized as superior.

          It’s a GOOD THING.

          do you follow ?

          • I’m sure you believe there is a point there, but you haven’t made it clear what it is, except that competition is always a good thing as it provides more choices and lower prices, which are always good things. Is that what you mean?

            By the way “content itself” is always “content itself”, and may or may not be intellectual property.

  3. I applaud all of it. Hooray! Just for fun, I recently watched a youtube lecture on basic calculus taped at MIT in the 1960′s and available through MR University (banned in Minnesota, naturally). I had some great math teachers, but this guy was fantastic.

    No amount of lawsuits can really fight this happy trend.

    • Hooray for more choices! Hooray for lower prices! Hooray for easier access!

      And, we can thank the textbook cartel for causing its own demise.

      • it’s good that we’re moving from paper to digital but the value and quality of the content – no matter whether paper or digital is paramount.

        any/all online content is not necessarily good.

        the idea that is a “textbook” is “online” automatically means it’s a good thing is not necessarily true.

        as important to HOW you learn is an assessment of what you have learned – and if your learned knowledge actually qualifies you to produce something that someone will pay for.

        You can take all the online courses you want to “learn” how to be a Doctor – but how will you be allowed to practice – by saying you read all the online textbooks?

        • And this is as it should be, and has always been true.

          Other than the difference in delivery and the resulting lower price, nothing has changed. All the concerns and questions you have had about hardcopy textbooks will also be true of online books.

          How one gets to be a doctor hasn’t changed in any way, and isn’t part of the subject of this post.

          • re: ” nothing has changed. All the concerns and questions you have had about hardcopy textbooks will also be true of online books”

            wrong. There used to be some serious hurdles in getting
            a textbook actually published and actually approved for use in a given college …you could not just pick the textbook you wanted to use.

            In the current reporting of “the paper textbook is dead”, we have no shortage of people talking about some video lecture they saw that “really explained something well”.

            The question is – what will professors do now – with “textbooks” and how will that effect the industry?

            Thinking ahead about some realities which you seem not as inclined to do – what will the relationship with be with professors, students and “online” textbooks?

            Specifically – will the professor say online is fine but you have to use certain ones – which just happen to cost out the wazoo even as online?

            bottom line – technology IS creative destruction and it often brings sought after changes – and other changes not anticipated.

            I do not think the world of online textbooks has finished it’s evolution – it’s just starting and it may well not go entirely the way we think.

            you, as a student, could STILL end up with an expensive and bad textbook unless other changes also take place.

          • re:wrong. There used to be some serious hurdles in getting a textbook actually published and actually approved for use in a given college …you could not just pick the textbook you wanted to use.

            Larry – ” nothing has changed. All the concerns and questions you have had about hardcopy textbooks will also be true of online books”

  4. And as Bernanke fights his mighty battle to inflate, competition and technological development will fight his efforts. At least for a while.

  5. Flatworld Knowledge provides “Principals of Economics” which:

    “… gives faculty the open license and tools to easily personalize textbooks online. Change words, move chapters — now a textbook by expert authors precisely fits your syllabus, all at a fair price for your students.

    Just wondering if anyone knows of instructors using this text or working on their own version via revisions? Maybe it could involve a team from a school department doing the revision work.

  6. Is there really a slowing of text-book price rises?

    Or is it primarily because they’re substituting lower-quality, cheaper to make and distribute e-books?

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>