For our Move to Digital series, we are featuring a few articles from Katherine Molina, a recent M.B.A. graduate from the MIT Sloan School of Management, where she studied the business of innovation, education and entrepreneurship. The first two concerned Consumer Trends and Drivers toward e-Textbook Adoption and Digital Product Sales and Format/Model Competition. This is the third and final post from Katherine in our Move to Digital series.
Pricing is often the 800-pound gorilla in eTextbook conversations, partially because textbook pricing overall has become such a rancorous subject for students and observers alike, and partially because of the tragic truth of most digital content revolutions – as content (from music to literature to photographs and art) goes digital, prices go down and margins suffer. Price experimentation, however, the time-honored way of finding appropriate price points for new content and the glamorous, sometimes controversial digital hot topic of trade publishing for the past year or so, is not an easy option for textbook publishers to explore. Long sales cycles, government-backed expectations of price transparency in advance of adoptions and, particularly for large publishers, a vast print-based infrastructure to support don’t allow for rapid response to market data. Online (and in-store) eTextbook retail outfits have some more room to test various prices for existing products, but they still may not be able to understand price and demand dynamics for untested products and features as publishers begin rolling them out.
With these limitations in mind, I would argue that price experimentation with eTextbooks is still not only possible, it will be necessary to the health of the industry. In a new world of disaggregated content and seemingly limitless possible product feature improvements, publishers will need to be more market-oriented than ever before; they will need to understand what prices are acceptable to both faculty (in principle) and students (in practice) for different digital features and flexible content packages in order to earn out their development investments and achieve acceptable sales volume. Ideally publishers and retailers large and small will be doing this as much as possible now and in the coming 1-2 years; as custom content and large-scale integration with university-wide systems continues to ramp up, the negotiating partners are only going to get bigger and tougher. Knowing how students really value different digital options will help publishers (and retailers) come into these meetings well-prepared.