Strategic Publishing Initiatives: Flat World Knowledge

1 Mar

Week before last it was time for the annual Texas Community College Teachers Association (TCCTA) Conference that was held this year in Austin, Texas. This was the third year in a row we’ve exhibited there and it was familiar yet still interesting. (Odds and ends of photos can be found here.) In the exhibit hall we visited with folks from the various TSTC colleges as well as with other people we’ve come to know from Cengage, Norton, American Technical Publishers, and Hampden.

A personal highlight was tagging along to a dinner that Thursday night with Dr. Eric Foner, historian extraordinaire, while, in a more practical sense, the most helpful (and surprising) thing that happened was my wife showing up unannounced in the exhibit hall Saturday morning with a couple of IKEA tall chairs for me and Lindsey to use. That is, if you sit in a regular chair at your booth it tends to make you look slouchy; however, standing on your feet all day is just murder. Murder! Last year we noticed that the president of ATP in the booth next to us used a tall chair—that way you’re at eye level while sitting down when people come up to the booth instead of looking like you’re working a garage sale waiting to make change in nickels for crazy people buying your junk—and we had talked about getting a couple of them; however, it took my blushing bride to actually pull the trigger on that.

Anyway, old home week, dinners, and tall chairs aside, the most interesting new thing I saw in the exhibit hall was the Flat World Knowledge booth.

It’s no secret that that the textbook publishing business is reaching a real point of crisis: prices keep going up, the people who make textbook choices (teachers) are divorced from the reality of prices in relationship to those who buy them (students), and textbook publishers are doing anything they can to kill the used book market for their titles. It’s gotten to where state legislatures—in Texas at least—keep discussing possibilities such as 1) regulating prices and/or 2) dictating how often new adoptions may be made by faculty. Without a doubt the current model for textbook publishing is in trouble. The big question is : What’s to be done about it?

One thing you can do is just lower textbook prices. After all, that’s what we’re doing. Most of our books are in the $30-$50 range with none above $65. Of course, with lower prices there are limitations to the features we can provide: soft-cover textbooks, black and white interiors, and limited student/instructor ancillaries.

Then again, you can try what Flat World Knowledge (a video overview can be seen here) is going for with a wide range of business & marketing titles: textbooks freely available online combined with the options to buy hard copies directly from them (b&w versions for $30 and color versions for $50) along with other student ancillaries (digital flashcards, podcasts, review tests) available individually or in bundled packages. Also, they’re using print-on-demand so that’s reducing inventory and storage costs, especially those costs for books that might never actually get sold as can easily happen when printing large offset runs.

At first this complete reversal of the textbook publishing model—after all, textbook adoptions traditionally drive sales with free ancillaries helping to convince faculty to select a particular title—seems pretty counter intuitive. In particular, I was immediately wondering how authors make money if their books are given away for free? Plus, given my first question, where is it that these books are coming from?

Authors, it turn out, make a 20% royalty on the hard copies and ancillaries sold. (That’s a big leap of faith if there ever was one!) And, although they don’t explicitly say it, it seems from looking at their forthcoming titles that some are new editions that had originally been published in some earlier form by other publishers. (Not that there’s anything wrong with that; however, if a publisher drops a title it’s typically because they have stronger titles in that same area and are culling the weaker titles—sales-wise—from their list.) There are, however, some 100% new titles coming out over the next year. There are some other nice features too: instructors can modify the text of the books they’re using online and if students order a hard copy of the book it will reflect the changes the instructor made. Plus, instructors can re-order chapters in books—as well as, I think, drop chapters out—and in the future should be able mix and match chapters from different books.

One thing Flat World has going for them is that the two main guys behind the company are long-time textbook publishing insiders. With their years of experience they have a pretty thoughtful idea of what they’re doing and why and how they’re doing it. Plus, their site alludes to research done which, in theory, shows that each student in a class using one of their books generates an average of $26 in revenue. Another factor working in their favor is that students wanting a hard copy of a book buy it directly from them as opposed to through their college bookstore. This eliminates bookstore/distributor discounts (typically 25%-55% of retail price) so they’re gaining some financial ground there. Finally, by making textbooks free, they have an easy way to disseminate their product across the Web instead of doing the more laborious (as we’ve learned) task of utilizing outside/inside sales with the endless sending out of desk copies.

So, will it work? I just don’t know. I’m kind of a pessimist at heart—most days I call this being a realist—and I see two big potential stumbling blocks: 1) convincing authors to rely on single-copy (as opposed to bulk adoptions) sales plus additional revenue from ancillaries (especially when it comes to writing a new book from scratch as opposed to revising an out-of-print book they’ve already done the majority of work on) and 2) that students over the long haul really will generate significant amounts of income from single copy and ancillary sales when the text itself is available online. And, as well, I think technology constantly outstrips the desires/abilities of the public at large who are supposed to embrace it. That is, teachers like to use books that are as easy as possible to adopt; I’m not sure most have the time or inclination to be editing a book online for their particular class a la the FWK model. But, I do think it’s certainly an interesting experiment. The free distribution model means plenty of faculty can immediately give their books a shot. And the founders certainly get my kudos for trying something COMPLETELY different as opposed to just applying some cosmetic changes to the current publishing model. For some other people’s take on the FWK model, take a look at the comments at the bottom of this blog post at Wired.

The bigger question is, of course, could this business model work for us? I’d like to say yes but it’s hard to know. On the one hand, given that the majority of our revenue comes from sales within the colleges in the TSTC System, anything that could quickly and widely increase the scale of use of our titles would be great. On the other hand, there are two big issues here: 1) we don’t have, as I mentioned at the beginning of this post, the kinds of ancillaries Flat World is betting their success on (although, as we’ve realized, we’re got to produce those and are in the process of doing so) and 2) many of our technical titles are still so niche oriented (FWK is certainly targeting a very large market by starting out solely with business and marketing titles) would the investment in said ancillaries make sense financially? (Then again, if any book can’t justify the cost of ancillaries, why publish it at all?)

In one of my few favorite business books Surfing the Edge of Chaos the authors talk at one point about how companies reach certain “fitness peaks” based on a particular business model and to grow from there requires actually becoming less efficient/profitable for a while as they descend from their current fitness peak to climb another (presumably) higher one. So perhaps this is a case where me being a pessimist is at heart really me just being a coward as opposed to it (pessimism) being a synonym (as I suggested above) for realism. Realism, in this case, could wind up being something more in line with the STEOC idea in relationship to with what FWK is doing.

Anyway, to make a long post endless, Flat World Knowledge was by far the most interesting booth I saw at TCCTA this year. I certainly wish them the best of luck. I’ll be watching closely over the next couple of years to see how it all comes out in the wash. As Tom Woll told us last year when he was down, publishing is eventually just a big crap shoot where you place your bets and then sweat it out until you see what happens.

Mark

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One Response to “Strategic Publishing Initiatives: Flat World Knowledge”

  1. Ron Sanders March 3, 2009 at 7:53 am #

    I noticed on their site that they are using the Creative Commons licensing for the books. I also noticed that they haven’t actually published anything yet, so this is still a theory. I haven’t read the research, but $26 per student sounds like a stretch to me! I do wish them the best though. You can’t fault them on innovation and courage.

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