Kno-Cengage lawsuit highlights high stakes of digital migration
With dozens of technology companies competing to sell better and cheaper wares to college students and professors, the digitization of higher education can be exciting. It can also be chaotic.
Just ask Julie Ouska, the chief information officer for the Colorado Community College System and interim executive director of the system’s online branch. The system’s 13 colleges use one institutional learning management system (LMS), but its instructors assign textbooks by various publishers -- some of which offer digital extras, such as online tutorials and quiz generators with auto-grading functions.
The features that publishers often push alongside their e-textbooks often overlap with the LMS and with each other, says Ouska. With so many tools and platforms in play, it can be difficult to achieve continuity as instructors and students conduct the business of delivering, and receiving, an education in the digital realm.
“They’re all trying to stake out their turf,” she says. Even if the tools are useful, “It’s very, very frustrating when you’re trying to keep things very clear and simple for students.”
Mounting enthusiasm behind the idea of using technological innovation to make higher education more engaging, effective and efficient has turned campuses -- physical and virtual -- into crowded proving grounds, with well-funded companies jockeying for control of student habits, instructor loyalties and institutional purse strings.
And as one recent lawsuit shows, overlapping digital learning tools can cause headaches not only for confused students and traffic-directing faculty, but also for the companies themselves.
Kno, a company that makes an iPad and Web browser app designed to enhance the experience of reading other companies’ e-textbooks, in January sued one of its main partners, Cengage Learning, after Cengage tried to nix its content-licensing contract with Kno.
Before declaring the contract kaput, Cengage had claimed that at least one of Kno’s app features -- “Journal,” which “allows the user to create a digital notebook by recording notes and identifying for later reference what she considers to be important images and portions of texts she has purchased” -- overstepped the line on the publisher’s copyrights, according to the lawsuit.
Cengage alleged that two other Kno app features, including one that generates flash cards and quizzes based on the e-textbook content, violated the terms of the publisher’s contract with Kno. Kno made its app available free last August. In early September, Cengage raised concerns about the features, according to court filings. In December, the publisher told Kno it considered their licensing contract -- slated to run through next fall -- terminated. Kno sued for breach of contract shortly after New Year’s.
The spat has put Kno in a tricky position. Most immediately, the absence of Cengage e-textbooks would be a big blow to Kno’s revenue stream. The company’s bread and butter might be its free app, but as far as revenue goes, the app is a means to an end. Kno makes all its money selling e-textbooks to students and splitting the proceeds with the publishers. Because Cengage e-textbooks account for about a quarter of all of Kno’s sales, losing the publisher as a partner could cause “irreparable harm” to Kno’s bottom line, according to the company’s court filing.
Whether or not the judge makes Cengage honor its licensing agreement until next September, the lawsuit would seem to portend the end of the relationship between Kno and Cengage one way or another, says Phil Hill, executive vice president of the Delta Initiative, a higher ed consulting firm.
Long term, such a break-up could prove ominous for any companies looking to build their business on “enhancing” student interactions with publisher-owned content.
“Strategically, companies such as Kno have really made a deal with the devil,” Hill says. “They are heavily dependent on the publishers to provide the [e-textbook] content.” The Kno app may add value to e-textbooks, but it also derives all its value from them. “That is a major strategic issue for [Kno’s] business model,” says Hill. It suggests that publishers can dictate the terms of any licensing agreement -- and pull the plug if necessary, he says.
In background conversations with Inside Higher Ed, officials representing Kno said the company is hardly powerless in its relationship with publishers. Kno’s software has been instrumental in stoking e-textbook sales -- a shift that ultimately stands to benefit publishers, who theoretically can exercise their copyrights more extensively and lucratively in the digital realm. The Kno app has been downloaded “hundreds of thousands” of times, according to the company. As long as Kno’s software is good enough to keep driving the digital migration, publishers will want to have relationships with it, the officials said.
But what happens if Kno’s software gets too good, or too popular?
“My biggest concern about the dispute described in this complaint,” wrote Kevin Smith, the scholarly communications officer at Duke University, on his blog, “is the possibility that it shows us another publisher trying to disable the very possibilities that make e-books attractive to consumers because they do not understand how those features work and feel threatened by them.”
Smith, who holds a law degree and writes frequently on the subject of copyright, says Cengage’s alleged claim of copyright infringement -- as it is described in Kno’s court complaint -- is hardly a slam dunk. It is plausible, Smith told Inside Higher Ed, though not necessarily true, that Cengage wanted out of the contract because it was worried that Kno’s “enhancement” features might undermine similar software Cengage is developing around its e-textbook content.
Cengage last March unveiled MindTap, a suite of digital learning apps to go along with the publisher’s e-textbooks. Among other things, the MindTap apps (dubbed “MindApps,” naturally) are designed to help students “learn concepts through activities and interactive exercises, quizzes and assignable homework” and “access multimedia content such as videos, podcasts and images, … highlight, take notes, and link out to external sites directly within a reading or other learning activity,” according to a release.
The company, which is one of the largest education publishers in the world, declined to offer any comment, citing the pending litigation. It did, however, offer a statement. “Cengage Learning is a leader in the digital migration within our industry and we currently work with a wide variety of partners to develop and distribute the most innovative solutions focused on improving outcomes and increasing engagement for our customers,” the company said. “We will continue to leverage our partners to drive leading innovation while also maintaining the integrity of our content and pedagogy to uphold the strong brand quality that our customers expect from us.”
Cengage is not the only publisher to develop digital extras to go with its electronic texts. Such “extras” have become a new battleground for textbook publishers, with other major houses, including Pearson and McGraw-Hill, offering their own companion software. If Cengage is fleeing Kno because it feels threatened by the free features Kno is layering on to Cengage e-textbooks, it may be the only one: none of the company’s other 50 or so publishing partners have given any indication that they might leave, Kno officials said.
But at a time when new customer loyalties may be forming around technologies that purport to increase engagement and comprehension of textbook material, it makes sense that the companies that own the content would be careful about who is building on their property, says Hill.
“I think control is the big aspect,” he says. Cengage customers might like Kno’s app, but the publisher might still think it strategically foolish to “give up control over the process [by which] features are developed and who controls the user experience,” he says.
Textbook publishers have already been busy leveraging their control over content to expand into other areas of higher education technology. Pearson came out with a free learning management system last year in an attempt to shift the focal point of technology investment on digital content. McGraw-Hill now sells entire online courses built around its digital texts and tools. When Cengage announced MindTap last year, it touted its compatibility with various learning-management systems while suggesting that it could supplant certain key pieces of the LMS.
“Where do you draw the line between getting the e-text from a publisher, and getting everything from that publisher?” says Ouska, the Colorado Community College System administrator. “That is up to colleges and faculty to decide, but I do worry that we’ll confuse our students in the process.”
Simplicity and ease of use is in demand, she says. In such a market place, it seems natural that continuity would be a strong selling point -- and, potentially, a strong business strategy.
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