Monday, August 06, 2007

Let's Revisit the Textbook Dilemma

In recent years, Americans became aware that they pay far more for drugs that pharmaceutical companies sell cheaply overseas.

Few Americans realize that this same dynamic occurs in the sale of textbooks. On October 21, 2003, the New York Times reported that, "Just like prescription drugs, textbooks cost far less overseas than they do in the United States. The publishing industry defends its pricing policies, saying that foreign sales would be impossible if book prices were not pegged to local market conditions."

The same textbooks used in the U.S. sell for half price or less in England.

According to the US PIRG (Public Interest Research Group), American students spend an average of $900 a year on textbooks. Textbook prices have increased at four times the rate of inflation since 1994 and continue to rise.

Following the revelations about the wide variance in textbook prices between here and abroad, Congress requested a report from the Government Accountability Office [GAO].

On September 26, 2006, the Stanford Daily News reported that, "textbook prices have increased 186 percent since 1986, an annual increase of about six percent. By comparison, consumer prices rose 72 percent over that period, and college tuition and fees rose 240 percent, the GAO report stated.

The news report continued: "Nearly two-thirds of those receipts end up in publishers’ coffers. 12 percent of the book price goes toward the author’s royalties, 23 percent goes to the store, 32 percent pays for the publisher’s costs, and another 32 percent is publisher profit, according to the National Association of College Bookstores."

In June, 2006, Congressman Howard McKeon (R-CA) and Congressman David Wu (D-OR) asked the federal Advisory Committee on Student Financial Assistance (ACSFA) to conduct a further study of the cost of college textbooks, including recommendations on what could be done to make textbooks more affordable.

The report was released in May, 2007, and can be read here.

The ACSFA report concluded that treating both the symptoms and the underlying cause of the problem requires a dual approach:
  • In the short term, steps must be taken to increase affordability for all students, but especially for those from low- and moderate-income families.

  • In the long term, a supply-driven, producer-centric market must be transformed into a demand-driven, college- and student-centric market.

The report listed eight categories of solutions:

  1. Strengthen the market for used textbooks.


  2. Utilize faculty textbook guidelines (faculty can assist by giving the bookstores time to locate used textbooks and to comparison shop; retain textbooks for a longer period; use the same textbook for multiple courses; and other similar solutions).


  3. Provide key information to students and parents to help them budget and locate their own copies of required textbooks online.


  4. Increase library resources.


  5. Adopt alternatives that lower prices (publishers can alter format; bookstores can form buying consortiums).


  6. Implement a textbook rental program.


  7. Improve related financial aid policies.


  8. Utilize 21st century technology (electronic textbooks, no-cost online textbooks, open educational resources and print-on-demand services).

On Thursday, I speculated about university libraries using POD technology to lower the costs of textbooks. The ACFSA report had this to say:

Print on demand is another technological innovation that can be used to reduce the price of textbooks by utilizing a machine to digitally download, print, bind and cover a textbook within a matter of minutes. Many print-on-demand machines can easily print 200 to 300 textbooks in one day, each of which costs only a few dollars. The technology is often used by publishers to print small batches of textbooks because it is usually cheaper than traditional printing processes. Colleges and bookstores can purchase these machines to print course materials available in print-on-demand format, or those available in the public domain.

The University of Texas Co-Op Bookstore [in Austin] has a print-on-demand machine that is used to print course packs and textbooks with content consisting of materials in the public domain. Students pay only for the cost of printing the materials, typically just a few dollars. Another example comes from the University of Queensland in Australia, which has received permission from publishers to use portions of proprietary materials for a fee.

In other words, what I was describing as the future is already taking place--not in college libraries, but in college bookstores.

The ACFSA report goes on to describe a potential market system for the 21st century. I'll need some time to absorb it before trying to summarize it here.

The times, they are a-changin'.

7 comments:

Stephen Parrish said...

As a college student in the 1980s I watched the price of my textbooks rise so high that it became cheaper (in theory) to xerox them.

We all complained about the prices, but we felt powerless to do anything about it. The standard economic response---boycott---is tantamount to insurrection. You can forego your favorite herbal tea if you think the price is too high, but you can't show up in class without a book, especially if the professor wrote it.

The reason publishers price textbooks as high as they do is because they can.

Maya Reynolds said...

Stephen: The ACFSA report essentially agrees with you when it says the system is supply-driven and producer-centric.

However, the report also states "Information that can be used to create satisfactory course materials is more available to stakeholders than ever before via the Internet. Publishers are much more often being displaced as the primary knowledge management system for students."

David Roth said...

I won't re-write my blog comments here other than to say I think you have the issue spot on. Now, what's the next step? How do we force publishers to lower th prices they charge students, or get our local stores to use the POD technology. Further, having ther machine doesn't mean much if the publisher doesn't make the text available to the machines. They could conceivably say "OK - we'll let you use your machine to pring our books, but you still have to charge the same price for them as we do."

Maya Reynolds said...

David: The key is the school itself and the professors since they are the ones who select the texts to be used (and in my graduate program, often wrote the books).

Since the publisher is taking on average 64% of the revenue and the expenses of POD are so much less, it would be to both the school and professor's advantage to go the POD route.

The current breakdown is 32% in cost, 32% in publisher profit, 23% to the bookstore and 12% to the author.

Let's say costs are cut in half to 16%, 30% goes to the bookstore and/or university, and another 20% to the author. That would allow the student to receive a one-third cost break, meaning the $900 annual price tag for books would drop to $600. A four-year program's books would drop to $2,400 from $3,600. Everyone wins--except the traditional publisher.

David Roth said...

One can only hope. With the spiraling costs of education these days, kids need every break they can get.

I can't help but wonder how other nations on this planet seem to be able to provide their people with a basic level of health care and at least the chance for some university education at minimal cost to them, and we - supposedly the richest nation in the world - can't?

Perhaps it's because it's the very fact that we are willing to crush everyone beneath is that we are so rich!

Stephen Parrish said...

I live in one of those other nations, and the answer is simple: we pay higher taxes and we have only a token military force.

But the reason I came back (other than I hang out here a lot) is to mention that gobs and gobs of textbooks are destroyed every year because editions must be updated. HuckleBerry Finn lasts forever, but Advanced Techniques in Qualitative Analysis is pretty much out of date by the time it's printed.

I'd love to hear from someone who works for Wiley, or Prentice-Hall, or Addison Wesley . . .

David Roth said...

Steve,

I honestly hadn't considered that. Thanks for the reminder. I DO remember that my taxes were higher when I lived in the Netherlands.

Dave