Perhaps the only surprise in the fact that major changes and dislocations are taking place in educational publishing is that they took so long to exhibit themselves. The more recent change is the aggressive growth of all-access textbook deals sold to students – frequently via the institution – which provide students access to the entire content catalog published by a textbook publisher. Cengage put the wind up most educational publishers two years ago when they launched their program, which they now claim has been sold to more than one million students.
Other publishers (including Wiley, Pearson and others) have followed Cengage and that company’s very public proselytizing about the model is a strong validation of the strategic importance that digital delivery and subscription models have to the future of this market. While the Cengage business model represents a fundamental market change it is only one of several strategic interrelated changes now affecting the market for education content. The infrastructure supporting the way textbook and educational content is sourced, delivered and developed is heading for significant disruption which will displace some current market incumbents and fortify others.
Here are five trends I see driving the market:
First all-access products developed by publishers are unlikely to be widely adopted on an exclusive basis by institutions. Just as there has never been a requirement for academics to source print textbooks from specific publishers, faculty independence will continue. However, this is likely to necessitate interoperability across textbook database products. Publishers with a poor user interface and experience, unable to support single sign on, remote access will be at a disadvantage especially compared to more experienced database vendors. This suggests there will be a bias towards aggregation as dealing with multiple, non-compatible products can be complex for administrators, faculty and students.
Second, aggregators are already a significant presence on campus via the library. EBSCO, Proquest and Gale, for example, already support student development and include textbook content as database products. Textbook content is a natural product extension for these companies and they operate a business model very familiar to campus librarians and provosts. Aggregators act as wholesalers of textbook content which can be a valuable market channel for many textbook publishers. Notably, there is no reason to believe that textbook sales will eventually not be subject to the same type of consortia price negotiation which governs other academic content sold to universities.
Three publishers in particular – Wiley, Taylor & Francis and WoltersKluwer – may have advantages because they publish academic (journal) products sold directly to campus libraries. Their advantage over aggregators and other publishers would be to integrate this content effectively to enable the delivery of comprehensive educational products. WoltersKluwer has long hosted their textbook content on OVID (their online product) for example.
Third, the global textbook market is dominated by large publishers and represents an aggregation of sorts, although many publishers retain distinct ‘franchise’ products supporting specific content disciplines. While publishers are selling all access to all their products, smart publishers will also attempt to ‘carve out’ branding opportunities around these franchises and create online ‘centers of excellence’ which extends the branding of these franchise products. This trend is important because creating an all-inclusive all-access product may level set all author brands to the detriment of the publisher’s strong legacy author franchises.
Four, it is hard to see where the traditional on-campus bookstore fits in to this paradigm. College stores are a profit center for the institution and most bookstores are operated by Barnes & Noble, Follett or independent operators under contract from the institution. The relationship these retailers have with the publishing industry diminishes in importance as more content is delivered online and, as these stores are disintermediated, bookstore contracts become a diminishing asset for bookstore managers. As these store contracts come up for review, more institutions will be rethinking their entire retail strategy and will invite more general-purpose retailers to compete for these contracts. Importantly, most college bookstores already sell far more general merchandise than textbooks.
Fifth and last is perhaps the most contentious issue: Who will ‘control’ the valuable data “exhaust” which is produced by students and researchers interacting with online content. This data about students, faculty, research activity and other collectable information represent a significant competitive asset. Institutions are slowly awakening to the inherent value in this information and are being chased by innovative start-ups to gain access to the data. While individual institution data has value, more value may be gained by aggregated data from multiple intuitions and these “cohorts” may become data sharing collectives. In turn, these institutions may sell data to publishers and other parties for their use. Naturally, there are concerns about how this data is collected and leveraged and industry groups are calling for governance in this area.
Strategists have long anticipated the death of the print textbook but we are now finally in the midst of a massive transformation of this market. Some textbook publishers have positioned themselves to take advantage of these changes; however, no publisher is guaranteed a successful outcome given the comprehensive challenges they face. Some big-name publishers will exit the textbook market rather than gamble that they can make these transitions successfully.
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Michael Cairns is a business strategy consultant and executive. He can be reached at firstname.lastname@example.org or (908) 938 4889 for project work or executive roles.