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Pearson Dooms Itself By Jacking Up Textbook Prices in the Library Market

15550685686_7bd6f66416_hHaving priced itself out of the college textbook market through three decades of horrendous price increases, Pearson is about to do the same to the library book market.

The Telegraph reports that academic libraries are up in arms over recent price increases.

A string of leading universities have stopped buying the FTSE 100 company’s teaching materials in a row over charges for ebooks, The Daily Telegraph has learned.Some top institutions, including Imperial College London, have gone so far as to seek to purge all Pearson materials from their courses, according to publishing industry sources.

The price hikes have prompted Britain’s leading academic library bodies, the Society of College, National and University Libraries (SCONUL) and Research Libraries UK, to write to Pearson chief executive John Fallon to appeal for a reverse in policy. The company’s UK higher education unit told universities in August that it would impose steep price rises, including some of more than 100-fold, on library purchases of their ebooks.

Pearson is trying to force universities to cut back on the number of copies bought by libraries and instead either have the academic departments buy the ebooks for the students or make the students buy the textbooks themselves.

Citing industry sources familiar with Pearson’s business, The Telegraph says that  the strategy is intended to the growing trend of students buying fewer traditional printed textbooks in favor of other sources.

But unfortunately for Pearson, digital textbook sales are not rising fast enough to match the decline of printed textbooks, nor will they.

What we have here is a publisher that has priced itself out of its market. Textbook prices are so high that students are forced to find cheaper alternatives.

Pearson is disrupting sabotaging its own business model through high prices, and to make matters worse it doesn’t even realize what it’s doing. And yes, I do mean disruption sabotage, and in doing so Pearson is creating opportunities for disruption.

When I read the piece in The Telegraph, I was reminded of a comment left on a post I wrote on Saturday. William Ockham argued that publishers were too focused on book sales to notice that they were being disrupted by other markets and other industries:

My actual point is that the threats to Big Publishing aren’t coming from anything that has ‘book’ in the name. Ebooks are better than paper for narrative fiction. But non-fiction physical books are losing to hundreds of different things, but no individual change seems important. When was the last time you used a phone book, encyclopedia, or cookbook?

He’s right, and that is exactly what is happening right here.

Pearson has forgotten that a textbook is just one tool that students use learn. In addition to the free textbook initiatives at universities and offered by states and provinces, there’s also Khan Academy, free online tutorials, Youtube, MOOCs, and even markets where students can sell their notes to other students or get hired as tutors.

I mentioned one such market in a post I wrote back in October which explained why an annotated digital textbook wasn’t a panacea for publishers. A student wouldn’t annotate a digital textbook for further sale because:

There are sites where students can sell their notes, just not like Wikert pictured. In fact, B&N invested in one such site earlier this year. It’s now called Luvolearn, and it lets students sell their notes, study guides, or video tutorials to other students. (It also lets students hire each other as tutors.)

That marketplace might not look like a competitor to Pearson, but it does ultimately serve the same purpose: to educate students.

So yes, it is a competitor, and yes it is one of the disruptions to the textbook market, and Pearson doesn’t see it coming. If they did then they wouldn’t have created opportunities by continuing to jack up textbook prices for so long, and they wouldn’t have expanded that error to the library market.

Your margin is my opportunity, as Jeff Bezos likes to say, and Pearson is selling textbooks with a heck of a margin.

And with stockholders to satisfy, true change isn’t going to happen any time soon.

Edit: Shortly after publishing this post I started to question my conclusion. What are the chances that Pearson is disrupting sabotaging textbooks in favor of its other divisions? It is an edtech company, after all.

images by brewbooks

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Barry December 14, 2015 um 3:16 pm

Publishers raising prices seems to be a common theme these days. Following the Apple led fiasco I doubt this is actual collusion but it’s probably pretty easy for business to pass ideas to one another without actually colluding and I wonder if the idea that’s going around is "let’s raise prices and talk about how ebooks are dying" and maybe they’ll just go away."

That seems to be the pattern, beginning with the big 5 publishers and then some smaller ones and now in textbooks.

Here’s hoping this will continue to backfire and they’ll eventually catch on that they have to actually start competing.

Yesterday in a forum someone was complaining that the Travis McGee books have gone up to $12 each, which is ridiculous for books written written from 30 to over 50 years ago. I bought them a few years ago at Amazon for much less. This is asking for piracy on one hand and pushing honest customers to self-published authors. I can’t see how successful businessmen can think this will succeed. Obviously I’m missing something.


Steph Miller June 29, 2016 um 2:12 pm

looks like Luvolearn is no more (check their site), but provide a similar service that my friends use.
I suggest you update the link!

Nate Hoffelder June 29, 2016 um 2:16 pm

hanks for the heads up!

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