Fixing the Textbook Model

Indiana University's Brad Wheeler explains how his institution is ditching the college textbook and replacing it with digital alternatives that are accessible to students from day one.

• By Dian Schaffhauser
• 06/21/17

The idea that students could still be over-paying for course materials all over the country really burns Brad Wheeler, the vice president for IT and CIO of Indiana University. A big part of the problem, he believes, is that it's taken a long time for textbook publishers to own up to the "fundamental flaw" of their industry: "They are obsessed with counting their gross margins on the things they actually do sell." And, he added, they ignore the enormous amounts they lose through the other 75 percent of the market made up of used and rented books and other kinds of substitutes. Because of those blinders, the publishers have "long pursued a model that has been failing, year over year."

Wheeler has arguably been one of the loudest voices telling textbook companies to change their ways. In 2009, his university began piloting an e-textbook program that eventually pollinated to numerous institutions and started a movement that led to the founding of an organization dedicated to helping schools reclaim ownership of their decisions and data.

Here's the idea that kicked off the pilot: to negotiate with willing publishers to lower the pricing of their textbooks in return for getting the near-guarantee that every student in a course section would pay for it all upfront as a course fee and receive it in digital form. That included the ancillary content ("digital thingies" in Wheeler's parlance) such as labs, flash cards and other digitized resources, which the university would take over and distribute — reducing support hassles.

The approach, now followed by Indiana U and a bunch of other schools, "structurally fixes the marketplace," according to Wheeler, "so the content creators and publishers and editors who add value can get reasonably paid for their use of their content. And content consumers can buy content at reasonable prices, not the ridiculousness that we've seen with the spiraling costs of textbooks."

Wheeler hates the name "e-text," suggesting that it was foisted on higher ed by the publishers. His preferred moniker: "Day One Access." That name derives from the idea that from the very first day of a new class the student has all the materials he or she needs. "I like that label because it speaks to one of the real values educationally of the program," he explained.

However, he's quick to emphasize that the decision about going digital is still up to the faculty member. "What we've said to them is, 'We're putting this in place as an additional path. If you like what you're doing, then keep doing what you're doing. But if this looks like it's a good value to your students pedagogically [and] helpful to your course, then you should opt in.'"

Beginning of the End

Starting in the mid-1990s, the price of educational books rose faster than just about any other measure, including healthcare. Something had to give. Wheeler has seen a "constellation of things" forming to bring about change. First, the e-reader software has matured, he said. "It works on your phone, your tablet, your laptop."

Second, students are "increasingly digital." They're "comfortable with interacting with digital information [and] electronically marking it up." After all, he noted, "some of them went through high school with digital books and materials."

Third, familiarity is growing among faculty too. "They see e-texts not just as a substitute for paper, but as a teaching and pedagogical tool. They can go in and annotate that paragraph in the textbook and point to classroom materials or go online and correct something," Wheeler explained. Suddenly, everyone's book can be updated so the instructor's e-mail "doesn't blow up when students are trying to do the problem that has an error in it."

Fourth, the printed textbook-first philosophy has stopped paying off for publishers. "You're really seeing the end of a business model that had been failing everyone," Wheeler asserted. "Rather than trying to kill the first guy with a $250 textbook — which he is then motivated to put back in the marketplace as a used book and sell against them — [the publishers] have finally come around to the idea that it's a lot better for everyone if each user of their content pays a reasonable and modest fee."

The three biggies — Pearson, McGraw-Hill and Cengage — weren't first in line to sign on, even as additional universities piled onto Indiana U's project. As a result, their reticence to promote textbook alternatives hit their bottom lines. Eventually, Pearson's shares took a hit, hovering currently around $8; McGraw-Hill's education division was peeled off and sold to Apollo Global Management in 2013; and just months later Cengage filed for bankruptcy, emerging a year later with $4 billion less debt.

Reaching the Tipping Point

The tipping point may finally have arrived in 2016 when, for the first time in 17 years, the College Board decreased the undergraduate student budget for books and supplies in its "Trends in College Pricing" report.

In that same year, McGraw-Hill announced that sales of its digital products exceeded its print products. Cengage reported the same. Pearson was more secretive, telling Inside Higher Ed that its "digital and services revenues rose to 65 percent" across its worldwide operations, up from 47 percent in 2010. While the same article questioned the truth of those sales, suggesting that much of the sales could be bundles incorporating print items too, the overall message was that publishers had repositioned themselves as digital businesses.

Just in time. Even as the death knell was sounding for print, Indiana U has seen nothing but growth for its IU eTexts digital initiative:

• In the fiscal year 2017, 40,734 students had at least one digital textbook, and the number of students in each of the fall and spring semesters added up to 53,622.
• During FY17 alone the gross student savings (list price minus what students paid) exceeded $7 million; cumulative savings have reached $10 million.
• Student spending on e-texts has grown 50 percent year over year for the past two years. The amount of revenue passed through to content providers will top $6 million solely in FY17.
• Students and faculty are also embracing the unique capabilities of digital content. During one month alone this spring — March — Wheeler said that 100,000 annotations and notes were added by students and faculty through Unizin Engage, the e-reading platform in use by the university.
• With each passing year, there's growth in the number of faculty authors who have written books and assembled their own course packs of collected readings.
• Perhaps most tellingly, 25 publishers representing 88,000 titles and adaptive educational exercises have joined the IU eText program.

Across the institution, a total of 2,588 course sections for 1,112 courses have adopted e-texts. But even with that growth, Wheeler said the transition to digital is "still at the very early edge, relative to all course sections across Indiana U." He's right about the capacity for additional growth. According to reporting online by the IU Office of the Registrar for Fall 2016, the Bloomington campus had 6,696 course sections issuing 10 or more credit hours during the semester. That means, according to the numbers, fewer than four in 10 sections (38 percent) have bought into the use of digital materials and Day One Access. Growth is organic — "section by section, instructor by instructor," Wheeler observed.

What's the Day One Access Holdup?

If the model is proven and growth is relentless, the question remains, how come more instructors — or institutions for that matter — aren't dumping the traditional textbook? Wheeler thinks ownership of the problem is the big obstacle.

"If you wanted to sell athletic-wear to the university, there's probably two people you've got to deal with — the athletics director and the director of purchasing," he suggested. "Who makes the decisions for e-texts at campuses? No one owns it. There's no one that owns the whole of the problem, and so what you find is it's very easy for anyone to say no and stop it from moving forward."

The naysayers may include those who see a threat to bookstore revenue or administrators already beleaguered by dozens of other priorities and lacking the bandwidth to take on another one. It could be the campus leaders who believe that shifting e-text billing to the bursar's office will require approval by the trustees or regents because the addition of course materials into the mix will give the impression that the cost of college has gone up. In reality, said Wheeler, "they're reducing the overall cost of attendance."

"Time and time again, what we found when those are investigated is that they're not really very deep obstacles. But there's no one to own and champion it," Wheeler said.

Moving Forward with Unizin

Soon, however, institutions ready to go in the direction of Day One Access could have help from Unizin. This is the organization created by Indiana U and other large institutional partners to develop services that could replace major paid third-party applications, such as learning management, digital textbook and data warehouse platforms. The goal: to enable higher ed to own its data.

But Unizin has also taken over the work handled in the early days by Indiana U and others of negotiating deals with publishers for content.

In the "not-too-distant-future," Wheeler said, Unizin will open up and take on “subscribers,” institutions that just want the services but aren't interested in the hard work of service development or governance. "When you become a member of Unizin, you get all of those contracts. You get the e-reader annotation software, great usability and accessibility," he declared. "That makes it a lot simpler for an institution to opt in and start making an e-text offer today than when we did it and we had to go negotiate with the publishers one by one."

As Indiana U's own agreements with publishers expire, it's adopting the deals cut by Unizin. That encompasses both open educational resources and commercial content, which, in spite of his tough talk, Wheeler respects. "There's lot to like," he insisted. "The commercial model yields good content. They keep it up-to-date. And faculty like teaching from the ancillary materials."

But that respect is couched in an expectation that the new world of curriculum is ruled by schools. "Faculty want the choice to pick the best stuff for their classes and then to acquire it at the best possible prices. When students and faculty interact with that content and generate data, we don't want to be buying our data back. We want to own [the data] so that our researchers can draw inference from it."

Of course, participants must be ever vigilant to prevent backsliding. The current ruse being promoted by publishers is the "adaptive model, with robo-tutors and everything else," according to Wheeler. "They're trying to offer all kinds of empirical evidence to bolster their claims that their robo-tutor achieves a better result than something else," with the goal of regaining "monopolistic pricing power." He isn't buying into the pitch. "It's a variant of the same problem we were trying to solve in the first place."

"We're all going digital very, very quickly," Wheeler insisted. "Absent institutions using their role and bargaining power and their billing mechanisms, we leave students exposed to an even less perfect market than what we had previously."

Recalling the early years of Day One Access, Wheeler remembers one "really contentious" negotiation. "The publisher asserted to me that they would allow [printing from the digital text], but only one page at a time. You couldn't print a chapter. I talked them down from that ledge, but that tells you how wrapped around the axle they were back in that time. We're just past all of that silliness now."