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EDU Publishing and LMS Business Models
July 5, 2011 - 9:30pm

"… we’ve discovered alignment in views about the importance of the shift from print to digital education content, and that Blackboard can catalyze this trend to the benefit of our clients."

--Ray Henderson on "Blackboard's Next Chapter" - 7/1/11

Will EDU publishers provide an important and growing alternative revenue stream for LMS platform companies?

Say you are a higher ed textbook publisher. McGraw-Hill, Pearson, Cengage etc. Your business model depends largely on professors adopting your textbook, and students then purchasing the textbook for class. The used textbook market is a killer, because you get no money from each used textbook sale, so the transition to digital textbooks (delivered via tablet, smart phone, or browser) could actually work in your favor.

But you need to get that adoption. Increasingly, an important channel for textbook adoption will be through the LMS (learning management system). The LMS owns the channel in which your content can be discovered, purchased and delivered. The LMS is the platform that can deliver the value added materials, such as animations and correlated assessments, that make your core textbook valuable and sticky. The LMS can aggregate and track statistics on content utilization, so you know where to invest in content development and acquisition.

If you are an EDU publisher, the LMS as channel is both an opportunity and a threat.

The LMS as EDU publishing channel is an opportunity because faculty adoption of textbook curriculum material can be done at scale, directly throughout the LMS, without the need for sales reps to visit and form relationships with each and every instructor and department.

Higher ed textbook adoptions are not like secondary or primary adoptions, they are mostly not done on the state or system level (I'm sure that exceptions exist). Sales are made one professor (and if you are lucky one department) at a time. If textbook content (including high-end media and animations, as well as lecture material and assessments), can be pre-loaded into the LMS then an instructor would be easily able to search and discover materials she would want to use during the course building phase.

All an instructor would have to do is select the materials, and the students would then be able to download/view/subscribe to the course materials directly in the LMS (no more going to the bookstore). Instructors could even unbundle the materials, choosing best of breed chapters (and correlated assessments and animations), allowing students to only purchase the materials they will really use, even if they are from a variety of publishers.

The LMS as EDU publishing channel is a threat because the LMS platform providers could privilege certain publishers, giving preferred and better access to their materials. If the licensing and partnership deals are not done, it is very possible to imagine that the textbook deals that had once been done by the rep and the instructor will never be completed, as instructors move to selecting materials and texts during the LMS course building process.

Publisher and LMS partnerships are in everyone's interest. The more rich content that is pre-loaded into the LMS, the more valuable the LMS becomes. The more publishers allow their content to be unbundled and sold through the LMS, the greater the opportunity to earn digital revenues on individual pieces of content. The more rich educational material available for teaching, seamlessly integrated into the course building process, the better classes will be.

Will the publishers and the LMS providers be able to come together to make the necessary deals?

With the technical and data back-ends be built that can intake all the of the publisher content (including assessments and animations, as well as discover and purchasing) be built in the LMS platforms?

Will the publishers be willing to disaggregate, unbundle, and tag all of their content - making it available free and easily for instructors building courses while building a business model around on the fly student purchases for smaller units of content?

Will the LMS providers realize that they need to have a universal store of publisher content, and work hard to bring as many publishers to the table rather than take the easy money of exclusive partnerships?


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