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Apple bites into textbook monopoloy
By Byron Brown |
February 3, 2012, Friday
|
Print Edition
Print Edition
WHEN students in my online course in intermediate microeconomic theory head for the bookstores they will feel the pain of the marketplace.
The required text for the course, Jeffrey Perloff's sixth edition of "Microeconomics," will lighten their wallets by a hefty US$206.67 retail. Or US$147.52 from Amazon. The best deal for the students is to buy a used copy in a local bookstore and resell it at the end of the course. That option will end up costing a student about US$50. It's the choice of about 75 percent of my students.
Why didn't most of the students choose the electronic version of the text? When publishers began producing e-texts they sold them for about one-half the suggested retail price of a new paper version. But students have shown a stiff resistance to buying them, mostly because they are 65-plus percent more expensive than the used paper option.
Current e-texts are also a markedly inferior product. They are static PDF knockoffs of vertically oriented print pages. That means they don't display well on most computer screens, and they resist printing an easy-to-read copy by inexplicably downsizing the fonts for home printing. Put this together with the 180-day licensing period and it's no surprise that fewer than 15 percent of students choose e-texts.
Digital delays
E-texts that started as a way to kill, or at least maim, the market in used paper texts actually retarded the development of new digital texts with innovative features such as audio, video and animated content under the control of the reader.
It is not an uncommon story in economics to find industries with monopoly or oligopoly power using that power to slow or prevent innovation. In most cases the innovation is only delayed.
Students and parents who are outraged by the high prices of textbooks should be cheering monopoly-breaking innovations in this hidebound market.
Last month, Apple introduced new software and marketing platforms that should, within a few years, totally reshape the old ways of producing and distributing learning content. The software is called iBooks Author, and the marketing plan consists of an iBooks Store to sell e-texts for the iPad and a new version of iTunes U for delivering content directly to students.
Consider first the software part of Apple's package, because this is where a revolution would probably take place. What is lacking in traditional e-texts is the seamless integration of text and other media - both video and audio - and the flow and manipulation of content that the iPad and its imitators provide. But that's only part of it. Old iPad apps and the newsreaders we saw in the commercials depended on a staff of professionals who make the digital copy that consumers eventually download.
The revolution is that ordinary users - on the order of folks who can create a PowerPoint slide deck - can now produce copy that will run on the iPad. This is revolutionary. It will unleash the creative powers of thousands of authors and artists, to say nothing of us mere mortals. Just as important, it will spawn imitators. Expect to see a Google app that will allow users to create content for Android devices.
IBooks Author allows the creation of smoothly flowing iPad "pages" of content in a mashup of text, videos, illustrations and animations that can be used by the students to suit their learning needs. The software is free to everyone.
These new texts can be the basis for a new art form. The crime novel of the future will include not only text but also videos and interactive illustrations. With iBooks Author, Apple hopes to do what TechSmith and Camtasia Studio did for the production of videos for instruction: Put easy-to-use but powerful creative tools in the hands of ordinary people.
What are the barriers to the best-case scenario playing out for Apple? Foremost, of course, is that the plan for schools and colleges would require a near universal ownership of iPads.
Why would the major publishing companies agree to collaborate with Apple? Why would they consent to a maximum price per copy of US$14.99 for K-12 texts and give Apple 30 percent of the gross? I suspect that when Apple came to them they knew the jig was up.
Death knell of monopoly
On the bright side, textbook authors not affiliated with the mainstream publishing companies may see the remaining 70 percent payout from publishing in the iBook Store as a handsome payoff. It is true that the publishing companies can provide marketing advantages in textbook markets, but these should be valued conservatively. A principal benefit from the iBook Store is that it is a very efficient way for prospective buyers to scan the offerings of not just one publisher, but of many.
What I would like to see is a vast increase in the quantity and diversity of instructional content in all fields. Traditional publishing firms will be hard pressed in such an open-content world to maintain their current pricing models, and they will be forced to compete with innovative authors who now will have sharply reduced entry barriers into the market for learning materials. Easy entry into a market sounds the death knell of monopoly, as any student of intermediate microeconomics can tell you.
Byron Brown is a professor of economics at Michigan State University. His position includes university-wide duties helping faculty use instructional technology effectively.
The required text for the course, Jeffrey Perloff's sixth edition of "Microeconomics," will lighten their wallets by a hefty US$206.67 retail. Or US$147.52 from Amazon. The best deal for the students is to buy a used copy in a local bookstore and resell it at the end of the course. That option will end up costing a student about US$50. It's the choice of about 75 percent of my students.
Why didn't most of the students choose the electronic version of the text? When publishers began producing e-texts they sold them for about one-half the suggested retail price of a new paper version. But students have shown a stiff resistance to buying them, mostly because they are 65-plus percent more expensive than the used paper option.
Current e-texts are also a markedly inferior product. They are static PDF knockoffs of vertically oriented print pages. That means they don't display well on most computer screens, and they resist printing an easy-to-read copy by inexplicably downsizing the fonts for home printing. Put this together with the 180-day licensing period and it's no surprise that fewer than 15 percent of students choose e-texts.
Digital delays
E-texts that started as a way to kill, or at least maim, the market in used paper texts actually retarded the development of new digital texts with innovative features such as audio, video and animated content under the control of the reader.
It is not an uncommon story in economics to find industries with monopoly or oligopoly power using that power to slow or prevent innovation. In most cases the innovation is only delayed.
Students and parents who are outraged by the high prices of textbooks should be cheering monopoly-breaking innovations in this hidebound market.
Last month, Apple introduced new software and marketing platforms that should, within a few years, totally reshape the old ways of producing and distributing learning content. The software is called iBooks Author, and the marketing plan consists of an iBooks Store to sell e-texts for the iPad and a new version of iTunes U for delivering content directly to students.
Consider first the software part of Apple's package, because this is where a revolution would probably take place. What is lacking in traditional e-texts is the seamless integration of text and other media - both video and audio - and the flow and manipulation of content that the iPad and its imitators provide. But that's only part of it. Old iPad apps and the newsreaders we saw in the commercials depended on a staff of professionals who make the digital copy that consumers eventually download.
The revolution is that ordinary users - on the order of folks who can create a PowerPoint slide deck - can now produce copy that will run on the iPad. This is revolutionary. It will unleash the creative powers of thousands of authors and artists, to say nothing of us mere mortals. Just as important, it will spawn imitators. Expect to see a Google app that will allow users to create content for Android devices.
IBooks Author allows the creation of smoothly flowing iPad "pages" of content in a mashup of text, videos, illustrations and animations that can be used by the students to suit their learning needs. The software is free to everyone.
These new texts can be the basis for a new art form. The crime novel of the future will include not only text but also videos and interactive illustrations. With iBooks Author, Apple hopes to do what TechSmith and Camtasia Studio did for the production of videos for instruction: Put easy-to-use but powerful creative tools in the hands of ordinary people.
What are the barriers to the best-case scenario playing out for Apple? Foremost, of course, is that the plan for schools and colleges would require a near universal ownership of iPads.
Why would the major publishing companies agree to collaborate with Apple? Why would they consent to a maximum price per copy of US$14.99 for K-12 texts and give Apple 30 percent of the gross? I suspect that when Apple came to them they knew the jig was up.
Death knell of monopoly
On the bright side, textbook authors not affiliated with the mainstream publishing companies may see the remaining 70 percent payout from publishing in the iBook Store as a handsome payoff. It is true that the publishing companies can provide marketing advantages in textbook markets, but these should be valued conservatively. A principal benefit from the iBook Store is that it is a very efficient way for prospective buyers to scan the offerings of not just one publisher, but of many.
What I would like to see is a vast increase in the quantity and diversity of instructional content in all fields. Traditional publishing firms will be hard pressed in such an open-content world to maintain their current pricing models, and they will be forced to compete with innovative authors who now will have sharply reduced entry barriers into the market for learning materials. Easy entry into a market sounds the death knell of monopoly, as any student of intermediate microeconomics can tell you.
Byron Brown is a professor of economics at Michigan State University. His position includes university-wide duties helping faculty use instructional technology effectively.
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