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January 20, 2012

I watched Apple’s announcement about their textbook offerings with great interest yesterday. It’s a market that I’ve been following for a long long time and one where I have pretty strong feelings. A couple quick thoughts from my vantage point:

1. The $15 pricing is not nearly as disruptive as one would think. Here’s why: A typical textbook publisher essentially takes their cover price on a title and divides it by the number of years in circulation to get the effective revenue per title per year. High school textbooks cost about $70-$100 to schools. Divide that by the typical 5-year period they are in circulation, and you get ~ $14-$20 per year per title. From a publishers standpoint, Apple’s $15 annual price isn’t a big change, so they are going to be pretty happy. $15 sounds like a nice number, but it doesn’t really change the equation much. It just amortizes the cost across the life of the book. College textbooks are much more expensive than K-12 books, and new editions come out much more frequently. I think you’ll see major college textbooks offered closer to the $50-$80 range, which is basically what digital books are going for now at Coursesmart.

2. I’m a big believer that education and content should become more open. Pricing is one component of openness, but it isn’t the only one. I’d argue that Apple’s moves are an attempt to make educational content LESS open. Think about it – Apple is still going to anchor its content around the big publishers which essentially represent an oligopoly. These publishers spend hundreds of thousands of dollars per title to produce content that is essentially undifferentiated from what you could find on the open web. I’ll bet that this Apple partnership will be designed to strengthen publisher’s stronghold on education, not loosen it. Moreover, if Apple is successful, you’ll also see another new gatekeeper introduced into the ecosystem on the distribution side, namely, Apple itself. I think Apple’s objective through this move is actually to drive greater adoption of its iBooks business and market share for its own devices. This doesn’t have that much to do with education, it has everything to do with increasing market share for Apple and tightening the grip that publishers have on an already captive market.

3. Let’s not get ahead of ourselves here. iPad penetration in schools is still miniscule, even in higher ed. Apple announced that 1.5M ipads are being used in “educational institutions”. There are over 80M students in the US. I think we will get to a place where over 50% of students or more will have access to a computer or tablet, but we aren’t there yet. I’d also like to think that students will have some choice on what devices they use and there is some healthy competition in this market.

4. All that said, Apple being apple, crafted a very inspirational vision about what educational content should look like. I’m glad that they are setting a high bar – I believe in this wholeheartedly.  Personally, I think educational content should be:

  • No-brainer affordable for everyone
  • Up to date
  • Presented in a variety of formats to fit different learning styles
  • Extremely high quality
  • Modular so that it can be personalized by instructor
  • Modular so that it can adjust to the pace of learning of individual students
  • Social. I believe any student studying about photosyntehsis should be able to interact with other students studying the same thing (by the way, it shouldn’t matter if you are studying from the same book.)
  • Provide students the ability to go extremely deep and also move across topics with the same ease as they do on the internet

Apple’s new platform promises the ability to do many of these things.  But not all. I don’t think some of these are possible as long as the content layer is controlled by a few very large publishers.

5. Overall, I think we are witnessing the end of a very archaic period in education. It’s baffling to me that over 10 years since the death of physical encyclopedias, we still rely on essentially the same format to communicate information to students today.  We’re seeing progress, and I think it has been accelerating significantly in the past 3 years.

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