Indiana's Grand Textbook Compromise

Better service, lower prices, higher profits. Indiana U may have found a textbook acquisition model that makes everyone happy.

September 16, 2016
 
Indiana U

Indiana University’s eText initiative is rapidly becoming the go-to way for students there to buy textbooks and other course materials.

The initiative, which began as a pilot in 2009, has a simple goal: ensure all students have access to textbooks. To do so, IU has developed a model that it says balances benefits and compromises for all partners involved -- faculty members, publishers, students and the university.

“We don’t ask students to bring their own desk and chair to the classroom,” Bradley C. Wheeler, vice president for information technology, said in an interview. “Why do we ask them to waste their own time running around, playing games trying to find the book they need, when we can simplify the process electronically and have the university buy it wholesale?”

Essentially, the eTexts initiative treats textbook acquisition as software licensing. In course sections where faculty members opt in to the program, the university is able to negotiate discounted prices by promising publishers that virtually every student in the section will buy the textbook. The course materials are then delivered through an ereading platform controlled by IU, giving the university control over the data collected about how students interact with their textbooks. Students themselves are notified if a course section they wish to enroll in uses an eText, telling them up front how much they will be charged.

The program has over the last 12 months seen a surge in popularity. Last academic year, more than 40,000 students -- about one-third of the university’s total enrollment -- got at least one textbook through the program. This fall alone, more than 27,000 students did the same, suggesting another record-setting year ahead. Now the growth has experts wondering if IU has developed a model the higher education textbook industry has been searching for.

Wheeler said a combination of factors is behind the growth, including the maturation of the smartphone and tablet markets, as well as a growing sense that faculty members and students are more comfortable with digital course materials today than they were a few years ago.

The persistence of the used and rental book market also plays a major role, Wheeler said. While it serves as a convenient and affordable option for students, it represents a tantalizing missed revenue opportunity to publishers.

The life cycle of a traditional textbook goes something like this: student A pays up to several hundred dollars for a brand-new textbook. At the end of the semester, the student may decide to sell the book back to the bookstore, receiving slightly less than list price in return. The book then enters the used-book market, where a new student is able to purchase it for considerably less than the first student. That cycle of depreciation repeats until the publisher releases a new edition, after which the cycle restarts.

Publishers, of course, only make money on the first sale, and as a result they have made several attempts to cut into the used and rental book markets -- for example, pushing for more faculty members to use digital course materials, exploring direct-to-student marketing and sales, and charging students who buy used books to access homework questions.

None of those strategies have addressed the “fundamental problem” of making course materials affordable and accessible to a greater number of students, Wheeler said

“We’ve just had such a distortion in how people who consume pay the people who produce,” Wheeler said. “If every user pays a little bit, you do away with piracy, you do away with … whether a student can afford to buy a book or not. It brings a whole new level of rationality of acquiring course materials.”

Other universities have signed similar agreements with a single publisher, such as the California State University System’s 2012 deal with Cengage Learning. IU has expanded its program to about two dozen publishers, including the five largest -- Cengage, John Wiley & Sons, Macmillan Publishers, McGraw-Hill Education and Pearson -- but also smaller ones, such as its own university press. The publishers aren’t disclosing how much of a discount they give, but students pay substantially less than they would for a traditional print book.

Joseph J. Esposito, a management consultant in the publishing industry, said the initiative is a “major development” in the textbook market that, if copied by other large universities, could shift the balance of power in textbook sales away from resellers and back toward publishers. He described it as a “brilliant move” -- and not just for the university or its students.

“Meanwhile, behind closed doors, they’re uncorking the bottles of champagne in the publishers’ offices, because they’re making more money on this deal than they would have otherwise,” Esposito said.

Picture a class of 30 students. About a dozen of them -- if publishers are lucky -- will buy the newest version of the textbook assigned by their instructor. Among the remaining students, maybe 10 rent or buy the book used, a handful get their hands on pirated copies, and some can’t afford or simply don’t buy it.

With the eTexts initiative, publishers are guaranteed that virtually every student in a class buys the textbook -- an almost unheard-of 100 percent sell-through rate. None of those digital course materials end up in the used book market. And since the textbooks are delivered digitally, the publishers are able to cut down on manufacturing and shipping costs, as well as the markup college bookstores collect, Esposito said.

College bookstores aren’t expressing any concern about the eTexts initiative and similar programs, however. On the contrary, the National Association of College Stores in a statement said it “applauds efforts to make course materials and education more affordable for students.” NACS pointed to institutions such as the University of California, Davis, which works with outside vendors to offer students a choice of where they buy their course materials.

“The campus store is well positioned to play an important role in these programs,” the organization said in the statement. “The store has relationships with students, faculty, other campus services and content providers that are key when creating and implementing a digital course materials initiative.”

While faculty members at IU opt in to using eTexts in their courses, the growing popularity of the program means it is becoming increasingly opt out for students. Many IU students today have a choice between sections using eTexts and those that don’t, but if more faculty members continue to opt in, that may no longer be the case in the future. IU offers an electronic opt-out form for students who want to purchase their own course materials regardless of which sections they enroll in (although “practically no one” has used it, Wheeler said).

A 2015 case study that looked at student participation levels and motivation suggested students prefer eTexts to print textbooks -- as long as their instructors actively used the course materials in the class. In those classes, a slight majority of students said they read and learned more.

IU’s model also raises questions of ownership. Students who pays the fee to access the eText assigned in a course lose access once they are no longer enrolled at the university. That is a much longer window than what many rental programs offer, but still temporary.

But the “notion of physical ownership” is tied to print books, Wheeler said. Students “expect more” from digital course materials -- features like collaboration and searchable highlights and notes, he said.

For print lovers, IU’s agreements with publishers allow students to print as many pages as they want. And for an additional fee, students can order a print copy on top of digital access -- which is still less expensive than opting out and buying a new print copy at list price, Wheeler said.

“I think we’ve struck the right kind of balance with eTexts,” Wheeler said.

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