Textbooks for Rent ... Everywhere
A college education may be a lifetime investment, but college textbooks may only see use for a semester or less. And with many students pinching pennies because of tuition and tightening family budgets, some don’t see buying textbooks as worth the cost, which is typically between $700 and $1,000 per year.
Textbook rental programs have been sprouting up and growing for some time, but this week there are signs of a market shift with large, traditional bookstore companies going further than they have in the past in embracing the rental concept. And at the same time, those already in the market see the interest from traditional textbook players as a sign that their model is taking off.
“It’s very early,” says Mehdi Maghsoodnia, CEO of BookRenter.com. The textbook industry does about a $7-9 billion in U.S. sales annually, Maghsoodnia says, but BookRenter and its competitors only sold about $200 million last year. “We are still a very small portion of the market,” he says.
With the market nowhere near saturation, a number of companies are looking to expand their textbook rental services, and fast.
Maghsoodnia says BookRenter has already seen more growth in the first half of January than it did all of last year.
Barnes and Noble, which operates 636 campus bookstores, announced yesterday that in light of a “tremendous response from students and faculty,” it was expanding a pilot rental program that it ran in three stores last semester to 25 stores this semester. Several other rental companies said that they are not so much intimidated by the bookselling giant’s presence in the market as they are encouraged that such a formidable brand has identified offering rental services as a necessary turn.
The Follett Higher Education Group is expanding its own pilot rental program from seven campus bookstores last fall to 22 this semester, and recently sent a letter to its 860 college partners emphasizing its commitment to expanding its rental services. Follett plans to spend $100 million to set up the rental option at a “large percentage” of its 860 campus bookstores by fall of this year, according to spokesman Elio Distoala.
Not to be outdone, the textbook publishing giant Cengage Learning, which got into the rental game in August, announced yesterday that it plans to more than double its rentable titles to 2,700 by July.
The Costs of Renting
Companies that rent textbooks to students probably don’t save students as much money as the 50 percent or more that they claim to, says Nicole Allen, textbooks advocate for the Student Public Interest Research Groups (PIRGs), since they measure the discount from what it would have cost a student to buy a book new, whereas many students would likely opt for cheaper used copies if renting weren't an option.
Still, some savings is better than no savings, Allen says — especially given the “stranglehold” textbook publishers traditionally have had on students’ wallets. “Being able to do something to provide a cheaper book to students in any way, shape, or form is a good thing,” she says.
This is particularly true in hard economic times, says Distoala, of Follett. “The theme right now is upfront savings and putting a magnifying glass on the costs of higher education,” Distoala says, “and rental does that.”
The algorithms different companies use to price rentals are complex, but they generally hinge on how many times a book can be reused. Basic-level textbooks in relatively settled subjects — mathematics, English, biology, accounting, etc. — therefore tend to make the cheapest rents, since new breakthroughs are not likely to disrupt the foundations of the discipline and necessitate new editions.
But textbooks for more rapidly evolving fields, such as medicine and technology, are often offered for rent at a much lower rate of discount, if at all. Follett, for example, only rents about a quarter of its titles (granted, they are often the most popular). Same with books that are not widely used; Maghsoodnia, of BookRenter, says that in the case of more obscure titles, he has to charge the same to rent as it would cost to buy used elsewhere.
On the other hand, Chegg.com, which claims to be the industry’s largest renter, says that because of its network of suppliers it can “guarantee that students get the textbooks they need,” even obscure ones.
And while companies that offered retail and renting options face the perennial concern of cannibalizing textbook sales, Distoala says offering a cheaper alternative might be the only way to lure back students who have long since abandoned the campus bookstore in favor of online resellers such as Amazon.com and Half.com.
Allen, the Student PIRGs advocate, says that while renting is a nice way to shave the costs of textbooks — which rose at twice the rate of inflation between 1986 and 2004 — textbook prices will continue to rise as long as publishers are answerable only to the faculty members who assign the texts, not the students who have to pay for them. “There’s no question that textbook rental programs are the best short-term way to reduce textbook costs,” she says, “but they’re not a long-term solution.”
E-Rentals on the Horizon?
Strangely enough, the rental companies don’t see their rental services as being a long-term solution, either — at least, not in their present incarnations.
The transition to electronic textbooks might not happen overnight; in a 2008 Student PIRGs survey, only 33 percent of students said they were comfortable reading off a screen, and 60 percent said they would buy a low-cost printed textbook rather than using an electronic one for free. CourseSmart, one of the leading e-textbook vendors, does not always charge less than it would cost students to rent, Allen says.
“Students overwhelmingly prefer print still,” she says. “And digital textbooks are not where students are at now; they want to be able to print — they want to be able to make their notes on paper.”
Still, just as Netflix has begun making more and more of its inventory available for users to stream instantly on their personal computers rather than sending away for the discs, a number of companies acknowledge that sometime in the not-so-distant future they probably will be renting access to digital e-textbooks instead of hard copies, and have been quietly preparing for such a shift.
Maghsoodnia, for example, purposely contracts out the warehousing and shipping services for BookRenter.com so that he won't have a lot of capital tied up in that infrastructure once it becomes necessary to switch over to digital. “It’s going to happen,” he says. “It’s a question of timing. Is that going to happen two years from now, four years from now” — or longer?
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