Textbook Publishers’ Changing Product Strategies

TAAHeaderNovHeadline from November 2014 TAA Newsletter
The Text and Academic Authors Association is a national membership association for textbook and academic authors providing resources such as grants, webinars, an online library of how-to articles, annual conferences, and a variety of mentoring and networking opportunities. For information visit TAAonline.net

A Companion Post for the TAA Article Forming a Publisher Relationship:  Three Steps for Submitting Your Project

by Sean Wakely, Founder and Principal Adviser, Academic Author Advisers

The Sixties through the Eighties might be considered the golden era of modern college publishing. Higher education student enrollments grew steadily due to favorable demographics and supportive government policies. Many four-year colleges and universities expanded operations and hundreds of new two-year colleges exploded onto the higher education scene. Total annual higher education student enrollments in the U.S. nearly tripled during this period, from 4.8M students in 1963 to 13.7M students in 1990.

Open field in Devon, England. Green grass and expansive blue sky with fair weather clouds. Bright and optimistic feel.

 

To Infinity and Beyond!

Due to robust enrollment growth in the Sixties, Seventies, and Eighties, good money could be made by companies involved in the business of higher education.  College publishing was no exception. Even when periodic recessions came along, well, that was good news for higher education textbook publishers too, because unemployed workers often went back to school. Many new educational publishing companies were formed to take advantage of such an attractive opportunity. As a result, the industry published thousands of new or revised titles every year that explored differing perspectives for even the most modestly enrolled course areas.

Ominous storm clouds at dusk over a lake

 

The Hangover

By the early Nineties, the pace of enrollment growth had slowed considerably. In 1999, total college enrollments in the U.S. were 14.8M students, only about a million more than at the start of the decade. Adding to publishers’ woes, competition from used books took an increasingly substantial bite out of their new book sales. In response, publishers aggressively increased prices, revised successful books more often, and launched many new titles. These strategies prolonged college publishers’ historically steady growth and strong profit margins well into the new century, making them attractive acquisitions targets. Such acquisitions eventually resulted in a highly consolidated industry, led by just a handful of major players.

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Darwin Would Be Proud

The three principal beneficiaries of the higher education publishing industry’s consolidation, Pearson, Cengage Learning, and McGraw-Hill Education, command an estimated share in excess of 80% of the U.S. higher education textbook market. Even with the advantages lent by such enormous market shares, the largest higher education publishers find themselves in an increasingly difficult situation. As noted in a previous blog post, competition from online used book and rental competitors, increased price resistance, and a painfully slow transition to digital product models present fundamental challenges to traditional publishing strategies. In response, higher education publishers are striving to develop innovative, online products—but that effort requires substantial investment. Digital transition costs are increasing just when unit sales are declining. What impact will this ongoing profit squeeze have on publishers’ product strategies?

Empty beach chair in silhouette with late afternoon in background

 

Where Have All the Products Gone?

At least three key product strategy trends are emerging in the U.S. higher education market, and I think each is likely to intensify over the next several years:

  • Fewer Choices. The biggest publishers will no longer offer their historically deep lists featuring many viewpoints on the same topics or for the same courses.
    • Certainly, there will be fewer upper-level titles (junior, senior, and graduate level) revised or launched in coming years. Those that remain will be sampled to instructors as simple eBooks. Ultimately, printed student copies of upper-level titles will be delivered primarily through custom or print-on-demand options.
    • Introductory and mid-level titles will be impacted, too. Products that aren’t among a publisher’s top sellers or those geared to niche markets will disappear. The steep cost of transitioning multiple print titles intended for the same course to fully digital product formats will be prohibitive. Consequently, publishers won’t offer several, mainstream titles featuring differing perspectives on the same subject. Decades of industry consolidation will allow the biggest publishers to cherry-pick only their top-selling titles for full digital transitions. The remainder will continue to be offered in print or less costly print/digital hybrid formats.
    • A selective product strategy makes sense due to the high cost of developing truly interactive digital experiences. For example, robust assessment content and complex underlying taxonomies are needed to support adaptive learning, and developing these new content assets is labor intensive. It’s hard to imagine a publisher making such investments for titles that might sell several thousand units over the life of an entire edition when those same, scarce dollars can be invested in other products that sell 50,000 units or more in a single year.
  • Primary Focus on Digital-Only Products. The process of integrating the strongest-selling titles into their publishers’ online learning platforms has already begun. Under the presumption that print will eventually become obsolete, these digital products are designed to function in stand-alone, online learning environments. In an effort to foil the rental and used book markets, and mindful of their considerable digital investments, publishers will increasingly focus all their development, marketing, and sales energies on driving success of their digital-only products–even at the potential expense of short-term print sales.
  • Diluted or Non-Existent Author Brands. Product acquisitions will be less aggressive than in the past. Publishers will sign up fewer new titles and the primary focus will be on acquiring “born digital” content that can be fashioned into online courseware. Gradually, publishers will experiment with publisher-managed, house-branded products. These managed products will be composed of new or re-purposed digital content assets that publishers will own outright, thereby decreasing publishers’ reliance on royalty-based, author-driven products.

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Change Will Drive Opportunity

In response to an increasingly digital and less varied set of product choices, some customers may seek options elsewhere. Small or start-up publishers who do a superior job of meeting targeted customers’ specific needs may offset the formidable barriers presented by big publishers and their entrenched sales and marketing machines. If experienced authors with loyal adopters can secure the return of the publishing rights for their discontinued titles, they might continue to profitably publish with smaller or custom publishers. New authors with distinctive voices or fresh perspectives may find a warm welcome at startup operations willing to take a risk on more innovative, author-driven approaches. As the Open Educational Resources (OER) movement matures, these free learning resources may become more generally accepted and used.

Business models in the throes of disruption generally create openings for entrepreneurs who offer better solutions to customers’ problems. There’s no question that higher education publishing is in the midst of profound change. As a result, we should expect to see many new product strategies and business models launched in coming years.

The advantages of the big higher education publishers are great, and they’ll certainly continue to be major forces in the marketplace for a long time to come. However, the likely changes in their overall product strategies could open up attractive niches for smaller publishers, startups, and content sharers while creating exciting new opportunities for savvy authors and content experts.

Next Time:  The Acquisitions Editor’s Evolving Role

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©Academic Author Advisers
Photos © Sean Wakely
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