Monday, September 16, 2019

Exclusive Access Comes to Campus: Interview with UC Davis Store Management

U.C. Davis has seen textbook sales to students fall from more than $16mm per year in 2008 to less than $6MM in 2018. While some of this decrease may be due to sales moving from the campus store to Amazon and other online outlets – even piracy – it is the belief of many faculty and administrators that students are forgoing the purchase of required textbooks in increasing numbers.  Non-purchase, second-hand or rental have been tactics used by students for more than 20 years to reduce their financial outlay, but to faculty and administrators, the non-acquisition of texts appears to be getting worse.   As a result, costs accrue to the university: More students who don’t purchase texts are unprepared for the first weeks of class, drop more classes and are less likely to graduate.  And there are other costs which could be mitigated if all students had the materials they need for class.

Historically, institutions do not negotiate directly with publishers over the price of their textbooks.  Some might suggest that institutions are motivated not to do so because the college bookstore was (and is) a profit center but macro changes in the retail market may be changing this dynamic for the better.   (In the case of U.C. Davis, the store is not run by a third-party corporation but as a non-profit).

Most education professionals are familiar with ‘inclusive access’ which provides textbook and/or publisher content at discounted prices to students in specific courses.  (This idea of a ‘lab fee’ first showed up on PND back in 2008).  U.C. Davis was one of the first schools to pioneer this approach in 2014 and most publishers today offer some version of this digital offering for students.  Now U.C. Davis is promoting a different version of an all-access model whereby all campus students pay a set fee irrespective of their class load or textbook needs.

The school has begun negotiating directly with publishers to sell this concept to them.   With estimates of annual textbook purchase costs for students running anywhere between $500 - $1,000, why would a publisher be interested in a program whereby the student pays $199 per semester?  Well, it’s math:   With student purchases falling below 25% of enrollment, if all students pay $199 semester publishers may end up doing far better financially.   Under this program (in test at U.C. Davis) all students get all assigned course materials they are assigned on the first day of class which makes the faculty, students and administrators happy.  And when publishers do their math, it makes them happy too.

I recently spoke via email with Jason Lorgan, Executive Director, U.C. Davis Stores, about the
Equitable Access program they have rolled out…

How did the program come about and did you consult with publishers about the program?  If so, how receptive have they been and do they have any objections/reservations?
This program came about because more and more students are lacking access to their course content and this lack of access for some students has created a significant equity issue on our campus.  Past attempts to deal with the pricing issue over the last several decades at mitigating textbook costs (used books, rentals, price comparison services, partnering with Amazon) are no longer as effective as our efforts need to be.  Additionally, past efforts did not take into account how financial aid works as it relates to course materials and so we came up with this comprehensive approach that addresses financial aid and access.
We have been holding meetings with publishers to inform them of the program and to invite their participation in it.  Some publishers have some reservations about the low unit costs we are asking for.  We are trying to get them to focus on the overall revenue to their organizations.  If a book is currently $300, but only 10% of students can afford it, it really does not have a $300 value to 90% of the students not purchasing the material.  Publishers have been very receptive to the Equitable Access concept, but negotiations are ongoing.  A complete paradigm shift is not easy to achieve, but I believe most of them see value to increase access to their content and to create a sustainable future for students and publishers.
What are the differences between all access and equitable access programs?
If you are referring to Cengage Unlimited type programs, this is very different.  Those programs require an institution to use a publisher’s or group of publisher’s content.  That may work well on private or for profit type campuses but, for public institutions, academic freedom makes those programs unattractive.  The EA model is attempting to allow academic freedom in a subscription like context.
You mention in your deck that this program will significantly increase revenues for publishers.  Could you put some numbers to that statement?
I will give you some real estimated examples of publisher revenue change pre- and post- Equitable Access.  One for a large publisher, medium publisher and one for a smaller publisher.  Numbers were developed using exact adoptions and enrollments from the most recent full academic year (2018-2019)
Large Publisher A
2018-2019 Estimated Revenue from UC Davis at current pricing $399,195.79
2018-2019 Estimated Revenue if Equitable Access was in effect at $20 per enrolled student $545,540.
Medium Size Publisher A
2018-2019 Estimated Revenue from UC Davis at current pricing $42,117.00
2018-2019 Estimated Revenue if Equitable Access was in effect at $20 per enrolled student $223,780
Smaller Publisher A
2018-2019 Estimated Revenue from UC Davis at current pricing $0.00 (all sales were used copies)
2018-2019 Estimated Revenue if Equitable Access was in effect at $20 per enrolled student $1,480.
This happens because of the very low sell through currently happening because of a student’s inability to afford their materials at current rates.
Do you see your type of program opening up the market to other publishers beyond the top 5-6?  Perhaps giving the smaller publishers more opportunity?
This program is designed for all publishers, including OER publishers, and we hope smaller publishers will see value in the program.  There is some concern that some smaller publishers may have less ability to lower pricing due to our desired range, but several have expressed interest.
What is the role of the bookstore in this program?  Do they get a cut of the revenue and, if so, what is the basis of that?  What services are they performing in the transaction which necessitates a fee/payment to the store?
The bookstore manages the entire program, collects adoptions, negotiates with publishers annually, works with the actuarial sciences firm annually, processes invoices, handles student billing and opt outs, manages LMS integration, student technical support, etc.  The bookstore will cover its costs but will not take profit out of the fund.  In other words, staff salaries, equipment, etc., will be covered from the fund, but funds will not be removed for other purposes.  This can happen because our campus does not have a contract with a for profit corporation to run our bookstore.  Our store is owned and operated by the Division of Student Affairs and profit is not taken from textbook sales.  Access is our goal.  For-profit operators might have a challenge with this cost-recovery model but independent, institutionally owned stores are well positioned to manage a cost recovery textbook program.
What plans do you have for expanding the program?
We are currently working with several universities who have interest in developing a similar program and we also have the support of two associations- NACS- the National Association of College Stores and ICBA- the Independent College Bookstore Association.  Our goal is to export this program nationwide to provide benefits to many more students, as has happened with the Inclusive Access program we developed in 2014.  That model has rapidly expanded to over 700 campuses in the last 5 years.
Jason and his team have also prepared a discussion document to be used as they speak to publishers about the program.  You can find this here.

This interview grew out of my earlier education post:

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