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A New Course
CourseSmart, the e-textbook provider backed by the academic publishing industry, is acquired by the platform Vital Source.
The e-textbook platform Vital Source on Monday acquired CourseSmart, the academic publishing industry’s door to the e-textbook market. The deal could signal a change in the publishers’ attitudes toward digital educational materials.
Founded in 2007, CourseSmart was a consortium of five major academic publishers -- Cengage Learning, John Wiley & Sons, Macmillan Higher Education, McGraw-Hill Education and Pearson -- forming a common front in the e-textbook market. The company now estimates it offers more than 90 percent of e-textbooks used in higher education, and its list of partners has grown to include more than 50 publishers.
CourseSmart recently expanded its rental options, rolled out user analytics and introduced interactive coursework elements. But even with publishers backing the company, industry analysts have for some time predicted CourseSmart was due for a course correction.
“[T]he e-textbook market in its current form has clearly not become self-sustaining and significant in the way that many people imagined,” higher education consultant Phil Hill said in an email. “Consider that Vital Source and CourseSmart combined appear to have less than 200 employees (based on LinkedIn), and these are two of the biggest players in the market. E-textbook platforms have typically involved tens of millions of dollars in investment and debt financing but still are run by small niche companies.”
Vital Source, the platform owned by the distributor Ingram Content Group, has more than 4 million faculty and student users -- a number that will be bolstered by CourseSmart’s more than 1.5 million faculty accounts. By acquiring CourseSmart, Vital Source also gains a deeper catalog of e-textbook titles. The terms of the deal were not disclosed.
Kent Freeman, the COO of Vital Source, said the majority of the CourseSmart team will join the company. “We can do more together,” he said. “There’s a lot of growth in the digital area, and it requires scale.”
The acquisition also means Vital Source will be better positioned to sell its products directly to consumers, which Joseph J. Esposito, a digital media, software and publishing consultant, said puts the company in direct competition with many of its customers, including college bookstores. “So Ingram has done what most people thought they would never do: migrate downstream to participate at retail,” he said.
In response, Freeman said Ingram is “not fundamentally a consumer-facing retailer,” and that the company is “mindful of competing” in that space.
Michael Feldstein, who along with Hill last year founded the firm MindWires Consulting, said the acquisition could be interpreted as the publishers backing away from the e-textbook industry to focus on other digital products.
“The sale provides some confirmation that the publishers see ebooks of the type published by CourseSmart and Vital Source as the low end of the market from a profitability perspective and are therefore not strategic for their respective efforts to get on better financial footing,” Feldstein said in an email. “The ebook market is important to them because it provides an alternative to the used textbook market that is less financially painful for them, but it’s not where their future revenue and profit growth will come from.”
Sean Devine, president and CEO of CourseSmart, said the acquisition is “in keeping with the original vision” of what the publishers founded CourseSmart to do.
“I think that the publishers have always felt that an industry platform that’s based on standards that serves all stakeholders in the industry ... was a good idea,” Devine said. “Combining CourseSmart and Vital Source into a common platform does take kind of a standards-based approach.”
Several publishers declined to comment on Monday, referring back to the joint announcement.
In 2012, three of the publishers behind CourseSmart -- Cengage, Macmillan and Pearson -- sued Boundless, an e-textbook company that creates “alternatives” of popular textbooks. The parties settled late last year. Ariel Diaz, CEO of Boundless, on Monday said the acquisition fits into the early stages of the “inevitable transition” of academic materials from print to digital.
“In this fully digital future, textbooks will go away as the dominant container for educational content, making way for more modular, personalized, and open information,” Diaz said. “It sounds like CourseSmart’s new owners are excited about that direction as well, and it will be interesting to see how things evolve over the next few years as we move into a post-textbook world.”
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