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Fleeing From 'Free'

November 5, 2012

Flat World Knowledge blazed a trail several years ago by publishing free versions of its independently produced textbooks, in the process becoming a hero to student advocates and many in the open educational resources movement. But like many an early pioneer, the company is having to beat a retreat on that path; it now plans to eliminate the free versions of its books as of January 1, 2013.

Flat World will continue to try to disrupt the textbook publishing market by making its books available for $19.95 -- still well below the standard price for most textbooks -- continuing the company's "affordability and access mission" focused on students, Jeff Shelstad, Flat World's co-founder and chief executive, said in an interview Friday. But while Shelstad stopped short of conceding that making free versions of its textbooks was undercutting the revenue the company earns by charging students and institutions for iterations with more bells and whistles, he acknowledged that the change would "make our business healthier."

Shelstad insisted -- and advocates for open educational resources agreed -- that Flat World's pivot does not represent a major setback for the campaigns to make textbooks and other classroom content available at radically lower prices (and -- ideally, in the eyes of advocates -- free). Cable Green, director of global learning at Creative Commons and a leading advocate for disruption in the textbook industry, applauded Flat World for being an early mover in the move to free and open textbooks and said that "even after the free version goes away, Flat World will remain a very affordable textbook solution." 

Drawing a parallel to the state of the tablet market a few years ago, he characterized the company's change as a "minor bump in the road" to the widespread adoption of free and open educational content. Governments and foundations are increasing incentives and more companies will develop more sophisticated business models that charge for enhancements or services built around free content, he said. "Flat World doesn't seem to have gotten the balance quite right, but others will," Green said.

Traditional publishers saw the Flat World development a little differently, citing it as evidence of the wrongheadedness of the headlong rush to drive down the price of educational content, given the high cost of producing textbooks and other materials that not only provide facts and analysis, but that help students learn and capture data to help instructors.

"Carol Twigg got it right when she said recently that there's no free lunch," Bruce Hildebrand, executive director for higher education at the Association of American Publishers, said with what even over the telephone seemed like a Cheshire cat-style grin. "Producing top-quality textbooks that include all of the technologies demanded today is an incredibly costly, sophisticated process, and it appears that Flat World's business model was not sustainable."

Flat World's Arc

Flat World set out several years ago to challenge the traditional textbook publishers largely on their own turf. Like traditional publishers, it commissioned and paid authors to produce high-quality textbooks, and to market those textbooks to professors to assign in their courses. But unlike most other publishers, the company's textbooks were digital-first (though they could be printed on demand), and produced under a Creative Commons license so that the books could be customized as any individual professor wished. Most importantly, digital versions of the texts were made available to students free, with students (or their institutions) paying extra if they wanted either printed or souped-up digital versions of the materials.

As usage of Flat World’s materials increased (the company’s latest promotional materials assert that the texts are being used in more than 4,000 classrooms at 2,000 institutions), the company became a darling of supporters of open educational resources and critics of high textbook prices. A 2010 report commissioned by the Student PIRGs, for instance, heralded open textbooks as “the path to textbook affordability.”

But that’s only true if the providers of open textbooks can make their materials available sustainably, and the shift in gears by Flat World Knowledge (which was first reported by the National Association of College Stores' Campus Marketplace newsletter) suggests that, for one company at least, providing free and open textbooks is not a viable business plan. While company officials hoped that they’d be able to persuade many of the consumers of the basic, free versions of its textbooks to pay for printed copies or versions enhanced with study aids and other add-ons, “we don’t convert [from free to paid] as much as we used to,” said Shelstad, the Flat World co-founder.

Economic viability is not the only reason Flat World is dumping the free model, Shelstad said. So is fairness. Some of the company’s 15 current institutional partners pay a $20-$25 licensing fee for every student whose use of the materials they subsidize, and others pay less. Raising the minimum price for use of the materials to $19.95 (the company’s tab for its Study Pass product, which includes the full online textbook, note-taking, highlighting and study aids) is fairer and still affordable for students, Shelstad said.

The change would have more impact on Flat World's image and business if the company had staked its reputation entirely on its books being free, Shelstad said. "To the extent that all we did was scream 'free,' of course it changes things. But that's not what we've done," he said.

Flat World will remain an affordable textbook solution, said Green of Creative Commons, but what it would no longer be is “open.”

“If it isn’t both gratis and libre, it isn’t open,” Green said. “If Flat World doesn’t make a truly open version of its books available, then it’s really no longer an open-textbooks company.” The firm deserves a great deal of credit for “being an early leader in this space,” and for pushing the idea that high-quality textbooks can and should be made available free.

But “early adopters always take a risk in being in front of the market,” Green said, and it may be that the political changes that Green sees unfolding now – with governments like California’s and British Columbia’s promoting open textbook competitions – didn’t happen fast enough to fully sustain Flat World’s freemium model.

Other producers of free textbooks may benefit from the space Flat World has opened in the market, Green said, such as the nonprofit OpenStax and Boundless, which aims to pitch its materials directly to students as an alternative to the textbooks they are assigned.

Ariel Diaz, co-founder and CEO of Boundless, said he did not see Flat World’s strategy shift as a sign that “free and open” can’t work for anyone.

“This reinforces the notion that sustainable biz models are hard to find, and I don't think that's a surprise,” said Diaz. “We still see the opportunity to make the case that we’re better because we’re free and open, in that we can leverage the eyeballs and error-finding that we get from our community to lead to a better product as a result.”

Shelstad said it would be a mistake to assume that Flat World’s moves signal that its model won’t work. Most of the company’s institutional partners and faculty users have been very supportive of the change,  he said, and understand that Flat World needed to make the shift to ensure that it could continue to produce high-quality texts in a sustainable way.

To those who might be saying “I told you so” about Flat World, he warned: “We'll see who's still around in 5 years.”

 

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