Carpe Diem

The era of the textbook cartel and $300 textbooks is ending, as the ‘college textbook bubble’ shows signs of deflating

booksThe chart above illustrates the “college textbook bubble” – the dramatic and unsustainable rise in the price of college textbooks.  Since 1998, the CPI for college textbooks has increased by 150%, compared to only a 44.8% rise in the CPI for all goods and services, and a negligible rise (only 0.05%) in the CPI for recreational books (non-educational books). The fact that the real price of recreational books has fallen significantly over the last 15 years would suggest that the rising cost of college textbooks can’t be justified by higher publishing costs, and has to be explained by other factors like the consolidation of publishers that has resulted in less competition and anti-consumer behavior.

A new report “Fixing the Broken Textbook Market: How Students Respond to High Textbook Costs and Demand Alternatives” from the Student Public Interest Research Groups explains why college textbook prices have risen so dramatically, offers some recommendations, and highlights some of the non-monetary costs of unaffordable textbooks: A survey of college students revealed that 65% of them decided against buying a textbook for at least one course because it was too expensive. The survey also found that 94% of those students who had foregone purchasing a textbook were concerned that doing so would hurt their grade in a course.

According to the report, here’s what’s behind the “college textbook bubble”:

The underlying cause for high prices comes from a fundamental market flaw in the publishing industry. In a typical market, there is a direct relationship between consumer and provider. The consumer exercises control over prices by choosing to purchase products that are a good value, and the competition forces producers to lower costs and meet demand. In the textbook industry, no such system of checks and balances exist. The professor chooses the book, but the student is forced to pay the price. Because of this, the student is, in essence, a captive market. Without the ability of the student to choose a more affordable option, publishers are able to drive prices higher without fear of repercussion.

It is also important to note that just five textbook companies control more than 80% of the $8.8 billion publishing market, giving them near market monopoly and protecting them from serious competition.

Publishers use a set of tactics that drive prices skyward by reducing student choice:

1. New editions: Publishers release new editions every 3-4 years regardless of changes in the subject, with prices that are 12% higher on average. [MP: From my experience, some publishers have gone to a 2-year cycle for new editions.] Once a new edition is released, that copy takes the place of older editions on stores shelves. That means the students are not only forced to buy the more expensive new edition, but are also unable to sell back their used book from the previous semester.

2. Costly bundles: Publishers also increase costs by packaging textbooks with online pass-codes or CDs that increase prices 10-50%. These pass-codes often expire after a limited time period, eliminating the viability of a textbook for selling back.

3. Resale sabotage: New “cost-saving” options like loose-leaf and custom editions are more affordable upfront, but often end up costing more because they have no resale value. Second, the sky high prices of new print books drives the prices in the rest of the marketplace.

What to do? Here are the report’s recommendations:

1. Students should directly advocate for open textbook use in their classrooms

2. Faculty should consider adopting open textbooks in their classrooms. They should check the University of Minnesota Open Textbook Library to see if there’s a book available for your class.

3. Campus administrators should consider creating an open textbook pilot program on their campus. They can see the University System of Maryland’s MOST Initiative as a sample.

4. State and federal legislatures should invest in the creation and development of more open textbooks. See Washington state’s Open Course Library as an example.

5. Publishers should develop new models that can produce high quality books without imposing excessive prices on students.

MP: I’ve written before on CD about some of the other textbook alternatives including:

1. Boundless — For only $19.99, students can purchase a “Full online text alternative with SmartNotes (that summarize long text into the key points and the terms students need to study effectively), quizzes and flashcards” that exactly matches the material in a standard college textbook that might cost $200-300.

2. OpenStax College is an initiative of Rice University that offers students “free textbooks that meet scope and sequence requirements for most courses. These are peer-reviewed texts written by professional content developers. Free online and low-cost in print, OpenStax College books are built for today’s student budgets.” OpenStax has an ambitious goal to provide free textbooks to 10 million students, and their free textbooks have already been adopted by more than 350 colleges and universities worldwide.

Bottom Line: The era of $300 college textbooks is ending. It might take awhile, but with all of the “creative destruction” from low-cost and free textbook alternatives, there may be no way for the traditional textbook publishers to survive – just like Encyclopedia Britannica couldn’t survive when free, superior alternatives like Wikipedia became available.

12 thoughts on “The era of the textbook cartel and $300 textbooks is ending, as the ‘college textbook bubble’ shows signs of deflating

  1. There is another factor at work here. Unlike recreational books you are compelled by a powerful authority to buy particular textbooks or suffer a penalty. Sort of like Obamacare.

    • Or, unlike recreational books, textbooks provide a value to the user other than recreation, and the value they provide has been increasing steadily over the years as the job market demands more knowledge specialists than before.

      Maybe ;)

  2. I still can’t believe this costs over $200, especially when there are many better books on the market. But that book is considered a classic, so I suspect it will be around for a few more decades.

  3. Question for Mark Perry – Do you use any of these alternative textbooks in your classrooms? What has been your experience with them?

  4. To boot I have seen stories that indicate the professors don’t always know what their textbook choices will cost students (it appears the publishers don’t always check). Of course one way to save at least a bit is to buy from the dreaded Amazon instead of the local bookstore. Professors could always check on Amazon before making a decision. An interesting question is what percentage of professors know the cost of their textbook selection.

  5. So you’re saying that college textbooks provide increasing levels of benefits to its customers than recreational books?

    Yep. Seems to make sense.

  6. It would be interesting to see a breakdown of the ‘costs’ involved in producing and selling the traditional hardcopy textbooks. What is paid to the authors (For original and updated books.), actual publishing costs, marketing costs, distribution costs; and then how much goes to the publisher as profit for each book.

    As a general rule, the (specialized) textbooks and manuals a former company I worked for produced for their products and classes were sold at 100 times the actual printing costs. We engineers and the trainers wrote the books as a small part of our regular jobs. A book that cost $2.50 to print and bind would sell for $250.00. They used to provide copies with each machine sold, but that became a paid-for option, even for the CD versions.

    In this day and age, I absolutely hated lugging monstrous-sized textbooks around, either to class or when traveling for work. An electronic version, either on a tablet or laptop is more than adequate for ANY class I’ve ever taken. They can also be updated or corrected instantly when mistakes are inevitably found or newer material becomes available.

    It makes more sense to me for the authors to self-publish electronically, with a group of other writers using some form of group textbook listings and peer review, cutting out most of the middlemen.

    Frankly, the only potentially useful job the major publishers used to be good for was editing to check for proper grammar and typos, and they aren’t even doing an acceptable job at that any more.

  7. Professors are major culprits in this textbook fiasco. They are the primary book buyers by virtue of controlling choice. I have yet to see any academic body (e.g. AAUP) stand up and be counted on this issue. Of course most textbooks are written by academics so any uprising may not serve the common interest. I applaud your efforts to raise the dialog here

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