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The All E-Book Diet

The All E-Book Diet
September 3, 2010

When it comes to saving money on textbooks, students can help themselves by renting their books or buying them used. Professors can help students by only upgrading to new editions when they have to. Federal regulators can help both groups make well-informed choices by requiring textbook publishers to give their customers the information they need to be frugal. But what can the colleges themselves do?

Daytona State College thinks it has the answer: eliminate the used-book and rental markets on campus and have all students buy e-books.

By doing so, the college could save its students as much as 80 percent on course materials, says Rand S. Spiwak, its chief financial officer.

Here is how it will work at Daytona State, beginning in January: Instead of having professors tell students what books to buy and then letting them try to find the cheapest option regardless of medium, Daytona State will buy a license from publishers to grant students access to electronic versions of the texts and charge them a “digital materials” fee. The college would require publishers to provide e-books that can be read by multiple types of e-reader, including regular computers; students would have to buy a device if they do not already have one, but the college says even then the new system would save them so much on course materials that they would still be paying 50 to 70 percent less than before (the college also owns 4,000 computers that students can use).

Since Daytona State is essentially guaranteeing the equivalent of one e-book sale per student, per course, per semester — and thus no more used textbook market, a perennial drag for publishers, which only see money on new book sales — the college has been able to negotiate huge discounts from the publishers; Spiwak says the digital materials fee will probably end up being less than $30 per textbook ("very few" courses at Daytona State use more than one, Spiwak says). That is less than half the retail price of many e-textbooks, and about quarter the price of many new print textbooks.

If the model seems familiar, it is because it is one the University of Phoenix and other for-profit institutions have been using for a while; buying licenses to digital content from publishers at a discounted price, then transferring the cost, and the savings, to every student as part of the price of the course. But nonprofits have been slower to adopt this model, perhaps reluctant to push students to use e-books instead of waiting for them to come around on their own terms.

It is easy to imagine why institutions, facing criticism for rising tuition fees, might feel pressure to intervene on the rising cost of textbooks. Despite being minimal compared to the tuition at most campuses, the average amount a student spends on books and supplies — $1,100 at four-year colleges, according to the College Board — has gotten a lot of attention in recent years. A 2004 report by the Student Public Interest Research Group found that textbook prices rose at four times the inflation rate between 1994 and 2004. Congress responded by passing a provision to the Higher Education Opportunity Act requiring greater transparency among textbook publishers.

Textbook costs actually make up about a third of the total cost of going to Daytona State, a former community college that several years ago began offering "workforce-centered" four-year degrees. Indeed, access-oriented colleges, where textbook costs make up a significant proportion of the total cost, have been particularly willing to experiment with new ways of helping students save on course materials. The Rio Salado Community College system has sought to cut the costs of print textbooks by buying them at a discount from a single publisher, Pearson. The college has cut the amount most students spend on texts in half, but its professors have no choice but to use Pearson textbooks (granted, Pearson's custom textbook program lets professors pipe in some content from other sources, and there has been no audible faculty outcry).

At Daytona State, the choice of what publisher to adopt, and for how long, would remain in the hands of each academic department, which is how the college currently does it. On top of that, the e-book licensing model is so much more favorable to the publishers that almost none of them mind sharing the territory, Spiwak says. In other words, the academic departments can still choose among multiple publishers. That answers the general concern in higher ed that the only way for a college to significantly reduce the textbook cost burden on students is to totally centralize buying decisions and remove book choice from faculty.

Nor does it force students to use e-books. The idea would be that students would want to use e-books, since they are the cheapest option under the new model (this has not always been true of e-books in general, which some experts say is a key reason they have not caught on yet). But students who prefer a bound textbook would be able to either print out their e-textbook as a PDF and put it in a three-ring binder or use the digital materials fee as a credit toward buying a new print version from the publisher, says Spiwak.

The only party that stands to lose in this model, Spiwak say, is Daytona State's campus bookstore — and Follett Higher Education, which operates it. Since there is no such thing as a used e-book, the bookstore would no longer be buying back or re-selling used copies — a very profitable practice for the bookstore and for the college, which takes a commission from Follett. But Spiwak says the college is prepared to take that hit (it makes about $1 million per year from the bookstore, though not all from textbook sales) in order to save students what it figures will be several thousand dollars each over the course of their college career. “The simplest conclusion would be we’ll have no bookstore,” he says. “What we’ll have is a store that sells t-shirts and backpacks, and things that go with e-readers.”

Elio Distaola, a Follett spokesman, said he applauds Daytona State for aiming to save its students money. But Distaola said he wonders how the college will be able to get buy-in from students for a universal changeover, since by every measure college students still overwhelmingly prefer print books over digital. E-books will eventually find their way into the mainstream, he says, but that change will be driven by student demand, not institutional mandates.

Still, Daytona State is not the only nonprofit exploring the idea of reducing textbook prices by going all digital. The California State University system announced this week that it is embarking on a pilot program that would have 32 courses switch to e-books, which would be licensed through the college at a substantial discount to students. It plans to survey the students in those courses extensively. Officials would not speculate about what the future could bring as far as broader deployment, but the fact that a major public university system is considering having courses that only use e-textbooks as a viable way to bring down college costs could prove portentous.

“The promise is that for the buy-in on the content you get the best price,” says Jack Gunther, manager of the digital marketplace project in the California State University chancellor’s office. “And if the pilot suggests that it is going to be viewed favorably within CSU, then that’s a business model that we’d want to keep developing.”

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