Tag Archive: move to digital

Pearson and Chegg Partner on Exclusive Rentals

In an effort “to make college more accessible and more affordable for students” (and to maintain a foothold in a changing textbook-distribution landscape), Pearson Education (NYSE: PSO) has partnered with Chegg (NYSE: CHGG) in an exclusive eBooks/textbook-rentals crossover plan.

Rollout Expectations & Textbook Conditions

Pearson will make available — via Chegg only — roughly 50 deeply-discounted high-sales textbooks in time for Fall 2017 semester.

Each of these 50 selected textbooks will meet the following criteria:

  • Not for purchase; available as rental only
  • Consigned to and rented exclusively through Chegg
  • Available as print OR digital download
  • Renting at a price point of $100 or less

Upon success of the rollout, Pearson plans to release more Chegg-exclusive titles for future terms.

Phase Two of the Pearson Plan

This announcement follows one made in January when Pearson announced immediate plans to reduce the prices of 2,000 eBook titles by up to 50 percent. Whereas that first phase lowered prices on eBooks only, this second phase does so for print books. It also makes them available as Chegg-only rentals. Pearson estimates that this will allow them to cut the costs of these books by up to 60 percent.

The Lead-Up

Perhaps most interesting about the Pearson-Chegg partnership is the way in which it combines rentals and eBooks. In the past, we’ve seen companies like Chegg and CampusBookRentals bank heavily on print rentals. Publishers like Pearson and Wiley have distributed their new print textbooks through college bookstores and kept eBook offerings to direct website downloads.

In assessing the Pearson-Chegg announcement, we must consider that just a few years ago, textbook conditions were limited to:

  • bookstore and Internet sales and rentals of new and used print textbooks
  • a small selection of academic digital downloads specific to publishers and/or usage platforms

Then we saw the blurring of textbook-condition boundaries in the forms of:

  • an increasing number of eBook textbook titles available as rentals for various durations
  • print textbook sales and rentals that contained complementary or supplementary digital content as well
  • digital-only direct distributors such as RedShelf who offered academic titles from multiple publishers for both sales and rentals

Reconfiguration Rather Than Innovation

In the latest Pearson-Chegg endeavor, we see a new kind of blurring: publisher-specific budget-priced textbook titles available only as rentals and only through a single website. That website is the work of the company most responsible for making print textbook rentals what they are today.

Offering multi-publisher print rentals online and outside of the college boosktore, Chegg undoubtedly changed the game in the mid-to-late 2000s. There is also no doubt that direct-from-publisher digital downloads disrupted traditional college bookstores in the years following the rentals boom. In the upcoming scenario where Chegg exclusively offers heavily-discounted Pearson titles, we see a reconfiguration rather than innovation or even reinvention.

It isn’t the same sort of game changer but it may be a smart way of creating a new option that students find attractive. Surely one must imagine that if initial rollout is successful, Pearson will increase the number of titles offered and other publishers will follow suit. This would be yet another blow for bricks-and-mortar college bookstores who will be excluded from yet another distribution model and revenue stream.

Barnes & Noble Education and Pearson PLC Stocks Getting Crushed

The Bad News from the Textbook Market Keeps Coming

Both Barnes & Noble Education and Pearson PLC saw double-digit drops in their stock prices recently after sales failed to meet Wall Street expectations. B&N Education (NYSE: BNED) CEO Max Roberts said that the decline was related to lower enrollment at colleges and a “softer retail environment.”
Taking a hit far worse than B&N Education, Pearson PLC (NYSE: PSO) lost 29% of its value in one day in mid-January after dramatically lowering revenue-and-profit expectations for 2017. How bad has it gotten for Pearson? Well, the folks at The Motley Fool writePearson stock is now down 66% over the past three years, and the market is showing no confidence that the company will turn itself around anytime soon” and Bloomberg’s “Pearson Forecasts Years of Textbook Gloom; to Sell Penguin” is in no way reassuring.

The Elephant in the Room

B&N Education and Pearson are really proxies for the whole textbook industry. The underlying causes of the industry malaise are rooted in two powerful trends: demographics and technology. After reaching a peak of 17.3 million students in 2010, college enrollment decreased 4% between 2010 and 2014 to 16.6 million in 2014 (according to the National Center of Education Statistics). This falling college enrollment is unprecedented, and obviously fewer students equals fewer textbook sales. Technical trends, including new business models (rentals), online sales, and digital books, further undermine the old model of new textbook sales to students through brick-and mortar-campus bookstores.

While the publishers try new tactics such as access codes and custom publishing in order to revive sales of new textbooks and shrink the used-textbook marketplace, the fact of the matter is these types of tactics only serve to alienate their customer base. Students are not stupid; they realize that algebra doesn’t change that much from year to year, so why should the textbook? The publishers would be well advised to create value-added services or pass on savings for students instead of thinking up new ways to milk students for their last dollar by inflating book prices.

The textbook industry is in the midst of some serious disruption. It will be interesting to see how it all plays out.

Musings on the End of Print as the eTextbooks Debate Heats Up

We’re not even three weeks into this month and already October has seen the Digital vs. Print Textbooks debate really heat up and some heavy hitters, including Education Secretary Arne Duncan, weigh in with the bold statement “Over the next few years, textbooks should be obsolete.” That’s provocative stuff and there’s a lot more to the story and good points made from all angles. (more…)

The Move to Digital: Why Publishers Want It to Succeed (and what we’ve learned)

Move to Digital

As we study the move to digital reading, we are introduced to new players such as the Worldwide Center of Mathematics, Flat World Knowledge, and others such as Inkling, Kno, and increasingly more. But the more-traditional players, the established textbook publishers, are not far behind and they have their hands in the game as well. Remember, they own the content and while new players like FWK will get some adoptions, the publishers will not give up market share without a fight.

Own the Platform

Kind of like a hedge bet in Vegas when you place your bet to cover your other bets, the publishers are spreading their risk by taking ownership of the industry via  different platforms. McGraw-Hill and Pearson own stakes in Inkling while all six major publishers have stakes in CourseSmart. I think we would be naïve not to believe that if one platform were to really take off (this has yet to happen where there is a de facto standard), the publishers would be wise to invest in or own it. In addition, a successful platform is only as good as the content it delivers.

Own the Content

Academic publishers are working with different platforms to control the price, market share, and content. It will be hard for start-ups to take away significant adoptions from traditional print publishers unless they can prove to faculty and administrations that the books desired by the educational community are available on the platforms or learning systems that educators desire.

Kill the Used Book

Why do publishers really love the eBook/eTextbook? Because it is the first real used-book killer they have found. The publishers have tried for years to shrink the used-book market as it drastically diminishes their sales. They started off by marking teachers’ editions and desk copies, even drilling holes and other tactics to make these books unsellable. Then they began frequently changing the editions, adding components to create packages and bundles, and updating the book (however slightly) to make last year’s copy seem obsolete. With changes requiring publishers to unbundle books and to make ISBNs and prices more upfront, publishers now need to find a new way to keep the used-book business from hurting their overall profit. Enter the digital platform.

(more…)