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Textbook Bonanza

Textbook Bonanza
August 11, 2009

When a weather pattern is unsettled, it can seemingly rain or thunder at any moment. In the business equivalent, when uncertainty clouds a particular industry, signs of change can come in a hurry.

Monday saw a flurry of news about the campus bookstore and textbook markets, which, like many industries related to information and publishing, are being buffeted by technological and other trends. It'd be overly grand to say that these developments, taken together, mean a great deal, other than the fact that they all happened on the same day. But the array of news -- Barnes & Noble's repurchase of its college bookstore arm, a venture capital investment in an online bookstore, and a big new grant supporting a community college open textbook initiative -- does suggest a lot of intensity and interest surrounding the transformation of the college textbook market.

The highest-profile transaction by far on Monday was Barnes & Noble's agreement to buy Barnes & Noble College Booksellers for a total of $596 million, which will amount to an actual net price of $460 million by the time of the October 1 closing date. It might surprise many people to learn that Barnes & Noble doesn't already own the college bookstore company, but that's primarily a quirk of history, as the college arm developed separately from the publicly traded main company that operated the trade bookstores that morphed into Barnes & Noble Superstores. The privately held college store company has been owned until now by Barnes & Noble's chairman, Leonard Riggio.

The decision to reunify the two companies is primarily a financial transaction designed to bolster the publicly held company's bottom line, Joe Lombardi, Barnes and Noble's chief financial officer, said in a telephone interview Monday. Barnes & Noble plans no changes in the management or fundamental operations of the college bookstore company, he said.

But the combination of the two companies, assuming it comes to pass, would have significant benefits for college bookstores and their student and faculty customers, Lombardi said. Foremost among those is the 750,000-title electronic bookstore that Barnes & Noble's publicly traded self has developed, to which customers of the college store arm would have full access once the companies are merged.

“Although both companies previously thrived as separate entities, owing to distinctions in their product offerings, the definition of textbooks and tradebooks has become increasingly blurred, Riggio, the CEO, said in a news release. "This trend will accelerate with eBook offerings. Thus, combining both businesses on a single branded platform will enable the combined company to cross-promote print and digital offerings to all of our customers.”

The digital textbook space is where Akademos operates; it creates and manages online bookstores and market places for colleges under their own names. And on Monday, the company announced that it had taken in $2.5 million in additional funding from Kohlberg Ventures, a California venture capital firm.

“The online bookstore landscape is rapidly changing as schools and students increasingly rely on technology to meet their needs,” Jim Kohlberg, managing director of the venture firm, said in a news release about the investment. “Academic institutions across the nation, as well as their students, need low cost and easy-to-use options to streamline the purchase of textbooks. Akademos brings an innovative and timely service to a growing market -- one that addresses a very real need for virtually every college, university and student body.”

The third and last of Monday's news developments also comes in the digital textbook arena -- but from the free, rather than for-profit, perspective. The Community College Collaborative for Open Educational Resources said the William and Flora Hewlett Foundation had given it $1.5 million in new funds to expand its work, which focuses on increasing the number of free, online textbooks and training community college instructors on how best to use such books. Its main resource, the Community College Open Textbook Project, has dozens of college members and seeks to significantly expand the number of freely available digital textbooks it makes available.

"This grant comes at an opportune time,'' said Mike Brandy, chancellor of the Foothill-De Anza Community College District, which leads the online collaborative. "It coincides with the growing interest in open educational resources, such as President Obama's proposal to invest $500 million over the next decade in developing free high school and college courses. Open textbooks are moving into the mainstream as financially distressed states such as California look to free digital textbooks to reduce the cost of public education.''

 

 

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