E-readers are only part of the decision-making process for publishers

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The WSJ ran an article Friday, detailing plans of a Hearst project to develop an electronic reader for newspapers and magazines. This news points to the evolving tension between form factor and content, and between free and premium e-content in the newspaper industry. More important, the Hearst project provides and outline for decision-making processes that are facing other publishers.

The Hearst announcement indicates an important trend as they represent one of the major owners and influencers of important newspapers and magazines. Their e-reader will be a handheld device that is designed specifically for their newspaper and magazine e-content. In contrast to Amazon’s Kindle or Sony’s Reader Digital Book, Hearst’s e-reader will have a larger form factor designed specifically for newspaper and magazine formats.

For Hearst, of course, the e-reader represents more than a fanciful foray into the digital product marketplace. Rather, it is s bold — if too late — attempt at reversing the fortunes of an industry whose processes and vision did not evolve with the times.

Like other newspaper owners who see their revenues dwindling, Hearst is hoping to find success with premium online content. The company wants to find the magic market coordinates where users will pay for some of its online content while continuing to offer the rest for free via the ad-supported model. The premium content model has been elusive for newspaper publishers thus far and Hearst must be hoping that the e-reader will give it an advantage.

The general problem in the newspaper industry is that subscription revenues have dropped precipitously while ad revenue has not increased enough to offset that loss. Making matters worse is that fact that the publishers have been forced to support both print and online news with 24/7 update expectations from their users.

Steven Swartz, the president of Hearst newspapers, puts it this way. “Our cost base is significantly out of line with the revenue available in our business today,” He goes on to add, “It is equally inescapable that during good times, our industry developed business practices that were, at best, inefficient.”

Of course, there is more at play here than a simple case of getting costs under control and finding a technological magic bullet. The newspaper industry is also beleaguered by some deep philosophical issues. Chief among these is its conundrum that the marketplace is demanding more community presence and a greater voice in the news process while the industry itself is founded on value through expertise. This is summed up quite succinctly in a headline from last Friday — “Facebook gets it. Bummer newspapers didn’t.”

I do believe, however, that the decision-making process Hearst seems to be going through is the right one — even if too late — and that other publishing entities can learn from it. The road from analog to digital in the content business has a common set of forking paths at which each company or organization must make decisions.

  • Scarcity vs. abundance — When I was a kid I only had easy access to my local paper. Today, I have easy access to papers and other types of news sources all over the world. There is an abundance of information which means consumers can afford to be more demanding and more discerning with regards to what they are willing to pay for. In a world of information abundance, how do publishers manage the concept of value? Premium vs. public content — This is a case of the chicken and the egg for most publishers. If a company loses its reader base then its content has no value, regardless of how “premium” it may seen to be. On the other hand, if a company has no unique content or premium value, there is no differentiation from competitors. How much free content must companies provide in order to keep their readerships? What do they have by way of premium content that is valuable enough to get people to pay for it?
  • Experts vs. community — Historically, publishing has been about the few providing an information or entertainment service to the many. Experts ply their craft for a wage so that the rest of us can have high-quality content. What happens, however, when the marketplace announces that it puts less value on expertise and increased value on community participation? What happens when the readership demands a place of the decision-making table?
  • Singular, proprietary formats vs. common (open) templates — Hearst owns sixteen major newspapers and came to the realization that, while the differences between the newspapers weren’t that great, they had not been able to harness any efficiencies around that sameness. Is it possible to have a common design that lends itself to production efficiencies without lowering the perceived identities or value of the products?
  • Closed delivery models vs. open distribution — At this juncture, Hearst is betting on the idea that a single form factor will help them find production efficiencies and drive the value of their premium content. This is contrasted with another prevailing philosophy that says the value of content is its availability anytime, anywhere, and in any form factor. A digital newspaper reader is cool but I don’t have to have one. I need my smartphone and notebook/netbook, however, and would rather not carry another device.

Certainly, here are other decisions that need to be made, and a number of lurking issues around cost to the marketplace and the fair treatment of content authors. Overall, however, the Hearst example provides a nice list of questions that must be answered for publisher to have any hope of managing successful transitions into the digital present/future.

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Programs in the News (June 2-8, 2008)

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Freshmen go to school on drinking
Pennsylvania State University trustees passed a resolution requiring all incoming freshmen systemwide to take AlcoholEdu for College, an online education program about alcoholic beverages and their effects on the body. — GoErie.com, PA

Public Demand Prompts University of Minnesota to Make Online Class on Alcohol Use Available to All Parents
With tragic alcohol-related deaths of teenagers in the news and the reports of high-risk drinking among college and high school students, the University of Minnesota is offering a tool to parents to help prevent their students from making bad decisions when it comes to drinking. The tool is the online course “Seminar for Parents: Alcohol Use on Campus.” The class was originally targeted to parents of U of M, Twin Cities’ students three years ago, but many other universities started turning to the U of M for the course and now public demand has also grown. — PR Newswire

Specialized education: Michigan colleges roll out more tech-oriented, online advanced degree programs
Michigan colleges and universities have crafted increasingly specialized advanced degrees focused on computer skills, e-commerce and marketing to an online audience. The programs mirror growth segments in the economy and reflect market demand from employers for high-tech or multifaceted skill sets. — Crain’s Detroit Business, MI

Student Marketing Company Founder Furthers Online Student Recruitment Efforts
Andy Kelley, founder of Boston-area student marketing company, Effective Student Marketing (ESM), was selected, along with other top educators, marketers and industry leaders, for membership on the College Bound Network Advisory Council. The Advisory Council was responsible, in part, for developing the campaign strategy for Reach Students Online, a resource-rich web site officially launched on February 14, 2008. — PR Web

Anchorage schools address Internet risks
Last year, the Anchorage School Board passed a resolution specifically prohibiting cyberbullying, harassment and discrimination. A child faces suspension if the bullying started at school or could in any way be linked back to school. Most schools also offer evening information sessions for parents on making smart online choices. Check with your school in the fall for more information. — Anchorage Daily News

Gatlin Learning and American Heritage University Announce eLearning Center Website
Gatlin Learning, Inc. has partnered with American Heritage University to host a Website for The eLearning Center, a comprehensive resource of online workforce training and continuing education courses. American Heritage University’s portal is available at ahu.theelearningcenter.com. — Newswire Today

Varsities to offer degree courses online
Kenyan students can now complete their degree programmes without being physically at local universities. This was disclosed Wednesday by Higher Education, Science and Technology Assistant Minister, Kilemi Mwiria at a continental conference to promote use of technology in university education. — Daily Nation, Kenya

Rota open house showcases online project-based learning
In continuation of its community education initiatives, the Qatar-based NGO Reach Out To Asia (Rota) organised an open house yesterday as part of its Connect ROTAsia programme with iEARN-Qatar – the International Education and Resource Network in the country.The event at the Qatar Academy Senior School in Qatar Foundation’s Education City, highlighted the success of the Connect ROTAsia programme and the pilot phase of iEARN-Qatar and Knowledge Network. — Gulf Times, Qatar

Online Asian language courses raise questions
British Columbia spent $2.4 million last year developing curriculum for high school students who want to learn Asian languages – including Mandarin – online, documents obtained by the B.C. Teachers’ Federation reveal.The expenditure raises new questions about Premier Gordon Campbell’s announcement late last month that Beijing has agreed to pay an undisclosed sum to develop online Mandarin language and Chinese culture courses for B.C. high school students. — Canada.com

Idaho Students to Receive Online Math Help
Help for Idaho students having a tough time with math is now just a mouse click away. The State Department of Education is introducing a new program aimed at improving math scores and providing additional tutoring for kids who need it. Education officials say about 45,000 5th through 8th grade kids will have access to Smarthelp Math. The online program provides one-on-one help for students who are falling behind. — Fox 12 Boise, ID

U professor awarded for music technology
U professor Renate Kesler received an Award of Merit from the Utah System of Higher Education on May 23 for technological innovations she implemented in her music class. Kesler managed to update and transfer a print-based music correspondence course to the Internet last year. The course, Music 3715, focuses on teaching future elementary school teachers basic approaches to music so that they can incorporate it into everyday classroom learning. — The Daily Utah Chronicle, UT

JPMorgan Chase pledges $100,000 to support STEM education
In the interest of making Lexington and Kentucky more economically competitive, JPMorgan Chase has pledged a $100,000 donation to encourage local students to pursue postsecondary education in STEM-based fields. — Business Lexington, ky

Research in the News (June 2-8, 2008)

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Department of Education Asks Kids to Critique Schools
Last week, the department launched an online student survey, asking students to log on and give their opinions on the state’s 21st century learning initiative and what they expect from it. The 21st century learning initiative integrates problem solving, critical thinking, communication skills and new technology into basic subjects already taught in the classrooms, such as math, science and English. — RedOrbit, TX

Games in the News (June 2-8, 2008)

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California university teaches on campus in Second Life
San José State University has opened a campus in the virtual world of Second Life that spans 16 digital acres and was created to add a greater social experience to online education. By using avatar-based students and educators, teachers hope to improve the task of distance learning. — Geek.com

IT News (June 2-8, 2008)

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More laws, collaboration required for online safety
Washington state’s attorney general is only half joking when he suggests that perhaps sites like Facebook and MySpace should require members to use a credit card to sign up for access as a way to prove their identity. “We need good age- and identity-verification technology so that it’s much harder for an individual to get online and pretend to be 15 when really it’s a 45-year-old man,” said Attorney General Rob McKenna at the Authentication and Online Trust Summit in Seattle on Thursday. — NetworkWorld.com, MA

Capella University Extends Partnership With Blackboard
Blackboard Inc., a leading provider of enterprise learning technology, today announced a five-year extension of its partnership with Capella University, an accredited, online university that focuses on master’s and Ph.D. degrees. — CNNMoney.com

eteach.com launches Facebook application
eteach.com, the UK’s number one online education recruitment service, has announced the launch of its new Facebook application.The new application allows Facebook users to search and apply for jobs from within their Facebook profiles. — Online Recruitment, UK

SAS Brings Online High School Curriculum Tool to Homeschoolers
Ed tech provider SAS inSchool, a unit of SAS, is bringing its online curriculum tool, Curriculum Pathways, to homeschoolers. The company this week announced that it would make the technology available for home users for a $99 annual licensing fee. – T.H.E. Journal, CA

Online Education in the News (June 2-8, 2008)

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Working Moms Get Ahead Using Online Education
The following top online universities offer flexible, quick and well-respected online degree programs for working moms. You can receive free information from each university regarding tuition cost, financial aid, course availability and graduation time by filling out their short “Request Info” forms: Kaplan University, University of Phoenix, AIU, Colorado Technical University. — DentalPlans.com, FL

Drexel Online Educator Presents Online Retention Strategies to Higher Education Leaders
Dr. Kenneth E. Hartman, academic director at Drexel University Online and resident of Cherry Hill, NJ, spoke by invitation to university administrators from around the country attending the National Dialog on Student Retention Conference in Atlanta, Georgia. His remarks, entitled “Retaining Online Degree Students: Different Needs-Different Methods” were intended to help universities better retain online learners, which now represents more than 10 percent of the overall training and educational market. — PR Web

The rise of ‘virtual schools’ divides education world
Online and computerized learning programs appear to be leveling the playing field between rich and poor school districts and between rural and urban students. Supporters tout it as customized education, a way of making the world every student’s classroom by catering to individual learning styles and answering the needs of kids who march to the beat of a different drummer. — MinnPost.com, MN

Modernizing Continuing Education With Online Courses
Accredited online nursing courses are replacing traditional classroom-based courses, offering nurses a more convenient method for receiving credit, while providing flexibility in their credentialing options. — Earthtimes

SMARTHINKING Announces Beta Launch Of StraighterLine Program
SMARTHINKING, Inc. (www.smarthinking.com), an award-winning market leader in providing online tutoring and academic support to students, has formally announced the launch of its new online education division, StraighterLine. Launched on May 15, 2008, StraighterLine provides students a high quality, better supported, and lower cost online solution to obtaining college credits through regionally accredited colleges and universities. The new division will focus on the following entry-level curriculum courses: College Algebra, English Composition, Economics 101 and Accounting 101. — USPRwire

StraighterLine Announces Free Textbook Offer
StraighterLine (www.straighterline.com), a new online education solution that provides students a high quality, better supported, and lower cost way to obtain college credits through regionally accredited colleges and universities, has announced it will offer its textbooks for all of its courses free from May 15 through June 30, 2008. This offer provides all textbooks at no cost for each of the four courses it offers in its initial lineup: College Algebra, English Composition, Economics 101 and Accounting 101. More courses are planned in the future. — PR-CANADA.net

Nintendo’s Innovative Education Niche

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By Sarah Schutz (www.ChicksDigGames.com)

Videogames have long been notorious for creating vapid couch potatoes out of children and adults everywhere, luring them in with addictive pixilated gameplay. While educational gaming has existed for quite awhile in the form of computer games, it had yet to break into the realm of the evermore-popular console gaming (Xbox, Playstation and Nintendo). While games have become robust and mentally demanding, console gaming had yet to (successfully) target the educational gaming market, but with the advent of Nintendo’s latest gaming consoles we can now have games in our homes that spend a lot of their marketing bucks focused on education for children and adults alike.

Nintendo’s two main consoles, the infamous Wii and the portable Nintendo DS have the largest educational gaming libraries on the market. The Wii, controlled with an intuitive motion-control remote, has attracted the attention of newcomers to gaming with its ease of use. Most recently, Wii Fit was released for the Wii. While not a traditional educational game, Wii Fit teaches its users to become more aware of their bodies with Yoga, Strength Training, Aerobic and Balance exercises on a Balance Board that reads the users movements. More traditional educational games like Big Brain Academy: Wii Degree, help users become more adept at various learning categories including: Visualize, Identify, Memorize, Compute and Analyze. Problem-solving and quick-thinking are made more fun for all levels by the competitive gameplay, charming graphics and increasing challenges.

While the Nintendo Wii is ramping up its educational library, the DS is really where educational gaming is at these days. Games like Big Brain Academy and My Word Coach are both games that were modified for the Wii, but the personal, portable nature of the Nintendo DS allows for more efficient learning methods. The console features two screens, one of which is a touchscreen with stylus, which allows the player to draw or write in answers in various games. While games like Big Brain Academy, Brain Age (1 and 2), Mega Brain Boost and My Word Coach focus on more explicit brain training, other titles like Professor Layton and the Curious Village incorporate mystery and adventure gameplay into puzzles and problem solving. Adults who never thought “gaming” could be for them are picking up Brain Age and DS crossword and soduku games to keep their brains active on the go. Games have also been created for younger enthusiasts to foster early learning and creativity. The Imagine series by Ubisoft inspires children, especially young girls to explore hobbies and interests while interacting with the DS and simulating “grown-up” careers including Fashion Designer, Master Chef and Animal Doctor.

Nintendo’s focus on families and educational gaming has drastically changed their consumer population by creating products for the casual gamer looking for a new way to learn. Those skeptics of gaming as a vehicle for innovative learning are now picking up controllers. Videogames are finally being seen as potential catalysts for educational growth and are managing to subvert the notorious couch potato stereotypes by making learning innovative and fun, while incorporating educational fundamentals.

Why the Kindle Won’t Have a Dramatic Impact on College Course Materials for at least Five Years (Part 1 — College Textbook Publishers)

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 (This article was published previously on sixslides.com, and is the first in a series of articles on the subject posted there. My sixslides site also features daily research clippings and commentary, weekly video posts, and stories and commentary in our unique Six Slides format.)

Introduction

Kindle e-book readerThere has been significant buzz over the last few days about Amazon’s announced plans to create a special version of its Kindle e-book reader of the college market. This article is the first in a series that explains why a Kindle reader for the college market will not have a significant impact on the price of textbooks or course materials for at least five years. The author is a former teacher and administrator at a large public university, a former author and employee for multiple major textbook publishing companies, a parent to two college students, and the lead product designer for a proprietary online e-book platform built and sold by an educational software company.

This first installment in the series addresses textbook publishers and their business models, and discusses why that model will be a hindrance to the rapid integration of the Kindle reader into the college textbook market. There are four primary features of the current textbook business model that will deter this integration:

  1. Content development costs and profit margins
  2. Royalty rates
  3. Sales models
  4. Product feature demands

The article concludes with a brief assessment of variables that must change in order to change the proposed prediction timeline.

College Textbook Publishers
Understanding the College Textbook Business — How Sausage Gets Made

With the many articles written about textbook prices of late, there have appeared a number of general statements about the textbook publishing industry. These include claims that publishers profit at the expense of their authors, that publishers create unnecessary new editions of existing textbooks in order to drive the sale of new textbooks, and that publishers inflate artificially the prices of their textbooks simply to add to their profit.

There is no doubt that major textbook publishers are big business. The college textbook market represents between $5 billion and $6 billion and the the last 18 months have seen the sale of two major publishers (Houghton Mifflin College and Thomson Learning) for $750 million and $7.75 billion respectively. The overall consolidation of the college textbook market has left four primary players (listed in order of size and market share): Pearson, Cengage Learning, McGraw-Hill, and Wiley. While each of these companies has different strategies and discipline emphases, their business models are largely identical. An understanding of their business model is critical to appreciating why they will not be quick to adopt the Kindle reader is a primary distributor for their content.

First, it’s important to understand how these companies operate and how they make money. If you take a look at any of the major college textbook publisher Web sites, you’ll see that they have hundreds (even thousands) of textbooks in their catalog. These books range from small niche titles for low-enrollment upper division courses to major tomes targeting high-enrollment General Education courses. The lower selling textbooks are often referred to as “B” or “C” titles while the high-volume sellers are often called “AAA” titles. As you probably suspected, textbook publishers make more money on AAA titles because they sell more of them. Of course, they also have a much higher investment in each one as well. This amount of investment for C title may be $20,000-$40,000 while the investment for a bestselling AAA title can range between $400,000 and $1,000,000.

The average life-of-edition (LOE) for a college textbook is three years. When publishers talk about the profitability of a textbook they measure it in terms of its profitability over its LOE. The first year of a print textbook’s edition life will necessarily represent its highest sales and revenue potential since subsequent years will see the sale of new textbooks eroded by the presence of used textbooks (from which the publishers receive no revenue). As an example, a AAA title in Spanish might have first-year sales of 30,000, second-year sales of 12,000, and third year sales of 3,000. Textbook publishers often try to develop special second or third year selling strategies for popular AAA titles by introducing new ancillaries that are be sold in bundles with new textbook copies.

A key point about textbooks and editions is that there is only one time when a publisher can guarantee the sale of only new books — in the first year of a new edition. Subsequent editions will have new textbooks without a used book market for that edition, but they will lose sales to used books from previous editions. This is why textbook publishers must constantly sign authors to create new textbooks. In fact, this is one of the most important jobs of an acquisitions editor or publisher. New textbook projects mean new first editions and higher profitability. They also serve as insurance against aging titles in a portfolio.

In a gross simplification, discipline publishers or editors are like franchise owners who “borrow” money from the central organization to cover the development, operating, and sales costs related to a book. The central organization approves these “loans” on a per-book basis and based on common profitability models that have developed over the last three decades. As a rule of thumb, the sales of a textbook should ideally be eight to ten times the development and sales costs over the LOE (this is called the sales-to-plate or sales-to-plant ratio). As an example, a popular title with development costs of $500,000 should generate $5,000,000 over its three-year LOE. This profit formula takes into consideration manufacturing costs, operational overhead and, most important, author royalties. Author royalties on a college textbook typically range anywhere from 8%-20%.

At regular budget meetings, publishers and editors make the case for each textbook they want to produce by providing projected costs and sales figures. In order to provide incentive for the best cost management and sales performance, these projections form a good portion of the bonus plan for these same employees.

Within this context, e-books are budgeted as a small percentage of the overall budget. From the textbook publisher’s perspective the development costs are identical whether the content is being flowed into a print textbook or an e-book. This is because textbook publishers make most of their revenue of print textbooks and, consequently, most of the content development strategy is formulated around those print textbooks. E-books are simply “add-ons” or extra products that can be viewed as a by product of the core print development process.

Dollar SignUnderstanding the College Textbook Business — How Sausage Gets Sold

Textbook publishers, it must be remembered, are not actually large, homogeneous or single-cell organizations. Rather, they are a series of franchises and operating units held together by central manufacturing processes and pricing, and revenue goals. In the textbook publishing world, editorial teams sign authors and create products. Through multiple justifications after the signing, they are finally able to secure the actual budget for a project and put it into production.

Once a textbook is nearing readiness for sale, the editors and publishers must then convince the sales staff that they can make money selling the book. A typical sales representative will have multiple AAA titles for each discipline and will be covering several large disciplines. Their catalogs are big and their book bags heavy. They make the most money on large adoptions of first-edition AAA titles and are necessarily motivated to spend more of their time selling those. These sales representatives work with individual faculty members and departmental committees to make sales.

I should also point out that college textbook publishers are also increasing their efforts to sell at the institutional level. Institutional sales differ from traditional textbook sales with regards to size, multi-year commitments, and the degree of customization required. In both instances all sales efforts are directed at either instructors or administrators. These are the actual decision makers with regards to the textbook adoption.

Of course, the actual “sale” –getting the commitment from an instructor, department, or institution — is only the starting point for the textbook publisher in the revenue cycle. Securing the adoption has likely encumbered a commitment for onsite training and/or a level of customization. Additionally, unless the textbook is a first edition in its first year, the sales representative must also negotiate with the campus bookstore to lock in a commitment to a specific number or percentage of new textbooks. Finally, textbooks are placed on bookstore shelves or sold via online sites and publishers can start tracking their success.

Within this sales process, e-books can play a couple of roles. For the most part, e-books are primarily pitched as “low-cost” alternatives that allow college textbook publishers to provide a counter to the rising cost of print textbooks. In some instances, e-books also exist as enhanced, multimedia versions of the textbook although these cost more than the basic e-book. Finally, e-books are often included in different electronic ancillary components such as online homework management systems or online courses.

Today, e-books still represent a small percentage of textbook revenue for college textbook publishers. They are seen as incentives that help close adoptions, provide good PR with regards to news about high textbook prices, and are a cheap addition to the publishing package for a traditional textbook.

Understanding the College Textbook Business — Why the Kindle Doesn’t Fit

Within the textbook publishing processes described above, there are key factors that preclude too much excitement about the Kindle becoming the primary e-book platform for college textbooks.

First, within the current content development workflow for textbook publishers, the plant investment remains the same regardless of whether the product is a print textbook or an e-book. And, since publishers sell far more print textbooks than e-books, there is no incentive to change production workflows to favor the creation of minimized or lower-cost e-books from which print textbooks could be created. This means that publishing e-books, without significant changes to current design and production workflow, does not reduce the publishers’ costs significantly. This is important because it means all current e-book solutions for textbook publishers take into consideration the print book production process and derives cost efficiencies from that process. There are neither sales incentive or cost efficiencies in the current workflow that would cause publishers to get excited about the Kindle.

Furthermore, there is the rather important issue of royalties. Amazon currently commands a 60% royalty share of content sales related to its product. That is a fine solution for trade book publishers (fiction and non-fiction) targeting business travelers and who see the Kindle as providing incremental sales. But textbook publishers expect (and need) much higher margins for their products and have major concerns about pirating sales from their print solutions. With development costs remaining the same, textbook publishers would make much less in a world where e-books were too popular. They would make even less by using Amazon’s product as their already-decreased profit margin would be sliced further by Amazon’s take.

Also, major textbook publishers have already invested in technology solutions and companies that support their current business model and that help them achieve other business goals such as sampling textbooks to instructors. Each of the major college textbook publishers supports multiple online technologies to meet their production and product needs, and they have also formed a business partnership to provide a unified technology response to the demand for low-cost textbooks. The Kindle would represent yet another production workflow as well as another sales channel to confuse their representatives.

Another consideration is that e-books for textbook publishers also represent important contextualized learning tools that support their homework management products (LMS solutions). This use of e-books favors online e-books that can be integrated seamlessly into a BlackBoard, Angel, Moodle etc. LMS platform. The Kindle could certainly be used for this but that would require a significant change in the current workflows and processes for textbook publishers.

Finally, and most important, while the Kindle will be extremely attractive to students, they are not currently significant decision makers in the textbook adoption process. College textbook publishers sell their product to instructors and institutional representatives. What is important to those decision makers, historically speaking, is not representative of the students’ preferences or desires. So, unless the Kindle can be presented as valuable to the instructor (saves him/her time, helps with assessment, etc.), there is little incentive for the textbook publisher to move aggressively to partner with Amazon.

What Will It Take?

This is not to say, however, that the Kindle won’t become a major player in the college textbook market in the future. My purpose in this article has been simply to point out that there are a number of “acceptance” obstacles from the perspective of textbook publishers. Those obstacles, as with any business scenario, could be overcome and the landscape could change sooner than I currently predict (minimum of five years), however, with any or all of the following changes.

  • Growth of the direct-to-student textbook market for publishers — Currently all real adoption decisions are made by instructors and institutions. There is no real direct-to-student or direct-to-consumer revenue to speak of. If students become a more significant factor in the adoption process everything in the industry would change.
  • Much lower royalty rate for Amazon — Amazon could increase the incentive for publisher partnerships by lowering its demand for royalty.
  • Re-evaluation of development processes and workflow for publishers — If publishers can decrease their production costs significantly, or if they switch models to an electronic-product-first concept, the Kindle would make much more sense.
  • E-book functionality to meet all needs — Much will hinge on the actual functionality delivered by the new version of the Kindle. In order to meet minimum textbook publisher standards, it will need to have a color interface, a true browser, and support embedded links and media. Wait, that sounds like a laptop.
  • Integration with other learning platforms — Textbook publishers are re-inventing themselves as learning solutions experts and providers. This means providing content packages that are integrated with many different technology platforms. The Kindle will need to be adaptable to support LMS platforms, Web sites, catalog sites, etc.
  • Conclusion

    Personally, I have used the Kindle reader and I like it. What makes it attractive to me s a business traveler or even a student (size, convenience, wireless capability), does not necessarily make it attractive to college textbook publishers. The 60% royalty share is likely deal-breaker, and the potential to pirate print textbook sales is negative as well. Of course, the one thing that could change the playing field unexpectedly and dramatically is if the Kindle actually becomes as popular for e-books as the iPod did for music. I don’t think that will happen (for reasons which I will discuss n an upcoming article), however, so I think we’re looking at least five years into the future before this product has a dramatic impact on the shape or cost of college course materials.

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