Prescription for consumers challenging academic textbook cartels

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I didn't plan to get into an overview of U.S. academic textbook marketing politics, but a couple of readers took issue with my brief mention of this highly unusual consumer category. Since a lot of Boing Boing readers are students (and faculty, it turns out), I thought I'd give an overview so everyone can make more informed consumer choices.

Faculty behavior is a key factor that drives textbook pricing in academia. Though many academics will claim they are above being swayed by marketers, their consumer behavior is influenced heavily by manufacturers and distributors. I'll use a prescription analogy, summarizing the excellent 2006 overview by Dr. James V. Koch, commissioned by Congress. In this analogy, faculty = physicians, and textbook publishers = drug companies trying to influence them. I also include a link to the rebuttals of Koch's work by the Association of American Publishers and others, as well as some great info for students from Public Interest Research Group and some open-source textbook alternatives. After this, I'll get back to less wonky posts, promise!

The academic textbook consumer category

1. General information
a. This market is generally unregulated.
b. Few organized markets exist where one party (faculty) chooses the product and another party (student) pays. Another example is prescriptions, which have also risen in price more quickly than other consumer products for many of the same reasons.
c. In 2006, 17.66 million U.S. students spent $4.9 billion on textbooks ($1.9 of that was used books).

2. Faculty behavior
a. One study found 42% of faculty did not know the cost of their textbooks.
b. That study also found only 43% of faculty chose a book based on affordability.
c. Faculty get free book samples, just like doctors with prescription drugs. This freebie has a significant effect on faculty consumer behavior, such as brand loyalty, logrolling, etc.
d. In many markets, it is considered a conflict of interest to require someone to buy something when you or your colleagues get a direct benefit. Not as much in academia.
e. Faculty members who devise their own course materials usually charge less, but the materials have little or no resale value compared to textbooks. That loss has to be baked into student budgets.

3. Publisher and bookseller behavior
a. Five conglomerates control 80% of textbook production.
b. They sell their product to distributors/retailers, who in turn sell them to bookstores (on and off campus, including internet).
c. Four wholesalers dominate textbook distribution, especially used books.
d. These four wholesalers operate about 1/3 of college bookstores. About 1/2 are university owned and operated, and the remaining 15% are independents.
e. If a new book costs $100, wholesalers typically buy it back for $15 to $25 and resell it for $50.
f. It can be cheaper to re-import textbooks from non-US markets, just like prescription drugs. The response to this by publishers has been to force booksellers into contracts that prohibit re-importation.
g. Publishers and distributors can work together as a cartel to remove used books from the market, in order to generate more high-margin new book sales.
h. Textbooks have a low back catalog value, meaning you need to recoup your costs quickly because the books get obsolete quickly, like a 3rd-party manual for using a computer program.
i. Publishers routinely bundle electronic media with textbooks, which is often cited as a major reason for recent increases.

4. Institutional behavior
a. Nearly all institutions garner profits from owning and operating their own bookstores, or contracting the operation of their stores to outside firms.
b. College bookstores sell about half as many lower-margin used books as web-based bookstores do.
c. Increasing government financial aid to meet increasing book costs further increases textbook costs, because it creates a cycle of incentives for manufacturers and distributors to increase costs. It's one of the problems with fixing US healthcare, to use the prescription analogy again.
d. Textbook rental systems are one option that can save money, but they require significant up-front expenditures.
e. Non-profit bookstores are making headway, but this potentially reduces a short-term revenue stream for some institutions.
f. E-books are rapidly emerging as a viable option for reducing costs, but DRM makes reselling a big question mark from the consumer POV. If you buy a hardcopy used textbook for $100 and sell it back for $50, that's the same final cost as a non-transferable $50 e-book with DRM.

5. Student behavior
a. Students basically function as a captive consumer audience, like the Joads having to buy from the company store in Grapes of Wrath. Only those with the means or ingenuity to obtain textbooks from alternative sources do so.
b. 80% of students buy the faculty-prescribed books.
c. Internet textbook purchases (which account for 67% percent of used book sales) have greatly contributed to price elasticity and take sales away from bricks-and-mortar bookstores, causing them to recoup those losses by passing them on to the consumer in other forms.

6. Koch's suggested remedies
a. Teach the same editions longer
b. Unbundle supplementary materials
c. End prohibitions on reselling and re-importation
d. Publish textbook lists online early
e. Link to other booksellers for comparative shopping
f. Cut out the middleman
g. Establish nonprofit bookstores
h. Establish text rental systems
i. Encourage used textbook use
j. Patronize the Creative Commons

This last option is where things will head once consumers finally get fed up with this cartel and its antiquated business model. One of the main reasons I am a big Wikipedia chick is because systems like this textbook oligopoly are killing our culture. Check out our sister project Wikibooks or these other excellent open-source alternatives:

Wikibooks
http://en.wikibooks.org/wiki/Main_Page

Flat World Knowledge
http://www.flatworldknowledge.com/

Open Source Text
http://www.opensourcetext.org/

Open Textbook
http://www.opentextbook.org/

The best consumer-POV site on the topic is the "Affordable Textbooks" page from U.S. PIRG (Public Interest Research Group):
http://www.uspirg.org/higher-education/affordable-textbooks

Sources:

Congressional Advisory Committee on Student Financial Assistance: College Textbook Cost Study Plan Proposal
http://www.ed.gov/about/bdscomm/list/acsfa/kochreport.pdf

Summary of the hearing (see Session II)
http://www.ed.gov/about/bdscomm/list/acsfa/sept06hringsum.doc

Reply from Association of American Publishers, Inc.
http://www.ed.gov/about/bdscomm/list/acsfa/txtbkpres/schroedersup.pdf

Reply from National Association of College Stores
http://www.ed.gov/about/bdscomm/list/acsfa/txtbkpres/hershmanremarks.pdf

You have over $5 billion in purchasing power! Fight for your consumer rights!

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