E-Textbooks for All

A pilot at the University of Texas at Austin will replace printed textbooks with electronic versions for all students in certain classes, free of charge.
October 7, 2008

Many observers, both in academe and in the publishing industry, believe it's only a matter of time before electronic textbooks become the norm in college. Some campuses in particular may already be getting a glimpse of the future through partnerships with individual publishers or with consortiums.

Such deals tend to offer students a choice in addition to their current options in the hope that they'll opt for the cheaper alternative. In contrast to that model, and through a partnership with the publisher John Wiley & Sons, an experiment soon to be underway at the University of Texas at Austin will shift certain classes entirely to e-textbooks.

Beginning next semester, for the initial pilot phase of one to two years, the university will cover the electronic materials for the approximately 1,000 students enrolled in a handful of courses in largely quantitative subjects such as biochemistry and accounting. By purchasing in bulk on a subscription model, the university initially hoped for a "per student per book" cost of $25 to $45. (Wiley hasn't publicized a final price range, so it's unclear whether it will be that low.) The idea of the "beta test," as the university dubs it, is to see how students and faculty respond to e-textbooks and to decide whether they could be deployed on a larger scale.

Most of the biggest textbook publishers already offer some or all of their catalogs in electronic form, but e-texts remain a relatively small portion of the overall market. What remains to be seen is how the publishing industry alters its business models -- which many readily admit will have to change -- and whether the companies are in for a shift along the lines of that seen in the music industry, as some have predicted.

"The industry knows that their model, their former model ... is changing, and changing before their eyes," said Kevin Hegarty, vice president and chief financial officer of UT-Austin, who is managing the partnership for the university.

Obstacles to widespread adoption range from technology concerns to questions about whether students or, perhaps more importantly, faculty members will warm to the idea of reading (and taking notes) on screens rather than on printed paper. The ubiquity of laptops hasn't ushered in an era of electronic-only textbooks, and a new generation of e-reader technologies may or may not encourage students to change their reading preferences.

At UT-Austin's campus book store this semester, for example, e-books were available for 198 courses representing an estimated enrollment of 15,531 students. About a month ago, when the numbers were calculated, only 55 were sold -- or about 0.35 percent of all potential e-textbook buyers.

So, to test-drive new models and observe students' preferences, campus-wide pilot programs have been cropping up over the past year. Most recently, the University System of Ohio, in a statewide program, is creating a partnership with the publishing consortium CourseSmart, which has deals in place with campuses across the country as part of its effort to jump-start an e-textbook market based on a subscription model. Unlike the Texas partnership, no courses are moving entirely over to e-textbooks, although professors will be eligible for financial incentives to reduce textbook costs for their students.

The UT-Austin pilot also differs in that it is currently with a single publisher, although if the beta test is a success, officials hope to sign deals with other companies as well. Like Ohio's initiative, the focus is mainly on cost reduction, so students in courses at UT that are part of the program will be able to opt out of the e-textbooks -- by paying a fee to have the campus store print a bound copy on demand. Hegarty estimated that students would have to pay somewhere between $20 and $40 out of pocket for that option. (Many of CourseSmart's prices run at least double that amount, but their e-books are mainly marketed to individual students, not whole classes or institutions.)

"This pilot aims to improve student outcomes, provide students with equity of access to the most current materials and increase faculty satisfaction and efficiency while respecting faculty independence and freedom of choice in the selection of course materials," Bonnie Lieberman, Wiley's senior vice president and general manager for higher education, said in a statement released Monday. "Our primary aim is to improve learning and teaching outcomes while significantly lowering the costs of learning materials for students."

She added: "Wiley has a longstanding relationship with the university through our UT system-wide license for our major portfolio of journals, our significant professional and trade book business and our traditional textbook sales. In moving aggressively into a digital model for learning materials, we see this as a logical and very welcome evolution of our relationship with UT."

Students in participating classes will have two ways (besides printing their own copies through the campus store) to access their textbooks electronically. They can download to their personal computer an e-book that will be usable for the duration of the license, or they can access the materials online through a service called Wiley Plus, which offers additional tools for students and faculty. The downloadable e-books have features like searching, note taking and highlighting; the online versions boast added functionality such as interactive tutorials, quizzes and grading tools for faculty.

"This is the most advanced of our pilots," said Christopher McKenzie, vice president and director of institutional sales at Wiley. "We have discussions ongoing with a number of different universities, consortia and [institutions], but this is the most significant in terms of those that have been nailed down and agreed to."

The Root of All Prices?

The genesis of the beta test wasn't a corporate board meeting, but an academic with a theory.

Michael Granof is the Ernst & Young Professor of Accounting at the McCombs School of Business at UT-Austin, and himself a Wiley textbook author and chairman of the highly regarded campus book store, the University Co-op. He publicized his diagnosis of the textbook market's ills, at least as perceived by students who pay the steadily rising prices and faculty members who resent churning out new editions every few years, most recently last year in a New York Times op-ed.

"The basic theory is this: that textbooks are very expensive mainly because of the used book market," he said in an interview.

Rather than assume (correctly) that books will always be resold, in increasingly organized and sophisticated fashion, he argued, publishers should switch to a model based on licenses that expire, charging less for each license.

"Here’s how it would work: A teacher would pick a textbook, and the college would pay a negotiated fee to the publisher based on the number of students enrolled in the class. If there were 50 students in the class, for example, the fee might be $15 per student, or $750 for the semester. If the text were used for 10 semesters, the publisher would ultimately receive a total of $150 ($15 x 10) for each student enrolled in the course, or as much as $7,500," he wrote in the op-ed.

"In other words, the publisher would have a stream of revenue for as long as the text was in use. Presumably, the university would pass on this fee to the students, just as it does the cost of laboratory supplies and computer software. But the students would pay much less than the $900 a semester they now typically pay for textbooks."

According to that model, publishers would stop trying to recoup their costs for a book in a single semester and undermine the used book market by releasing frequent new editions and adding CDs with online and multimedia extras, Granof said. Instead, they'd get a steady stream of revenue from legitimately issued licenses, whether in e-book format or as print-on-demand copies.

"Every three years I got to come up with a new edition. What a waste of time," he added in the interview.

The Times article, especially, "caught people's attention," he recalled. Interested publishers, including Wiley and Pearson, contacted the university, and Granof helped bring the stakeholders to the table. The final pilot as announced by the university has significant support from the student leadership, which has backed cost-saving measures in the past, as well as key figures in the administration.

Looking Ahead

Granof doesn't pin the future of the textbook industry on e-textbooks per se; it's the structure of the market that's the problem, he said.

"The textbook market is changing. There's no question that textbook sales are going down throughout the country, and publishers [have] been surprisingly un-innovative. And the publishers think that electronic books are going to solve all of their problems."

Instead, Granof predicts that switching to e-textbooks en masse could lead to the kinds of intellectual property issues and widespread piracy seen in the music industry. "So far, students don't like electronic books. My scheme doesn't depend on the use of electronic books. They can get a hard copy," he said.

Frank Lyman, the executive vice president for marketing at CourseSmart, said the benefit of this kind of model is that when institutions commit to purchasing materials for 100 percent of students enrolled in a course, they can get good prices from publishers. There are a "number of institutions kind of looking at the model, and they're going to try and see how students react," he said.

While he said CourseSmart has some smaller-scale pilots in a similar vein at for-profit institutions, the consortium mainly focuses on partnerships in which college students are provided with e-textbooks as another, cheaper, option. Noting the 80 percent satisfaction rate among students who use e-textbooks from CourseSmart, he said, "I think if you required 100 percent of students in any course to take digital, it could be more students [will be] dissatisfied."

Added Wiley's McKenzie, "The pilot phase is really proving the concept, and that's why the mutual work we're doing together to evaluate its efficacy is really important, because we have our own internal surveys that show very, very high satisfaction for example with Wiley Plus, and this is really validating that with a major prestigious university.... Beyond that, what we're looking at doing is turning this into a new business model for our relaionship with the University of Texas ... looking at this as a way for the future for learning materials and how they're [provided] and paid for on a campus.

"I think it's inevitable that it's going in this direction."


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