Increased Piracy Among College Students Means A Shrinking Market for Digital Textbooks
The Book Industry Study Group (BISG) has a new report out this week on the buying, non-buying, and reading habits of US college students. I only have the press release and not the full report (it costs $$$$), but if the report matches the driblets of info in the press release then I would be trying to exit the college textbook market right now.
According to the BISG, piracy (including photocopying of textbooks) is up among college students. A larger percentage of the survey group reported downloading pirated course content from an unauthorized Web site than in previous surveys. 34% of respondents indicated that they’d done this, from 20 percent when this was first measured in 2010. And just to make things even more interesting, the percentage of students saying they photocopied or scanned chapters of textbooks belonging to other students rose to 31% in this survey (from 21% in 2010).
Update: A friend passed me a few more details, and now I can tell you that this report indicates that faculty are seeing a decrease in adoption of core digital textbooks (30% in Feb 2012 to 16% in June 2013). I can also tell you that piracy has been trending upwards since at least November 2011, with the latest data from March 2013 showing an increase use of unauthorized websites (40%), scanning (37%), illicit sharing between students (28%), and outright piracy (26%).
I would think that the cause of the increase in piracy is obvious, but before I spell it out let me share with you the BISG’s explanation:
"This is important behavior to track, especially since it’s coinciding with other data that show declining student commitment to owning current editions of assigned texts," said Len Vlahos, Executive Director, BISG.
Yeah, that’s not what we’re seeing here.
Students are pirating more textbooks because they can’t afford to buy them. (Do you think they would go through the hassle of photocopying a textbook if they had another choice?) This is part of the reason why digital textbook purchases lag behind digital adoption.
Prices continue to go up every year in the core titles. This is one of the dirty little secrets in textbook publishing, according to one of my industry contacts:
Big pubs averaged approx. double digit price increases on active titles in the last 12 months. By the way, this is one of the publisher tricks when talking about pricing. They may say that their prices are flat or have only increased slightly, but they are including average prices of all books, front and back list, and they often discount or don’t raise prices on the majority of titles. But active titles – big sellers and gen Ed books that represent 80% for revenue – continue to see aggressive price increases.
If I were in textbook publishing I would be getting out of it right now. Thanks to the major textbook publishers, the college textbook market is in a bubble. This is a trend that has been going on for over a decade now as textbook prices rose faster than the CPI, faster than the housing bubble, and even faster than healthcare:
That is not a sustainable trend. And so long as prices continue to increase, the various efforts to encourage adoption of digital textbooks (like the volume license pilot programs of this past school year) will slowly meet with greater and greater resistance as students realize they cannot afford to participate.
Textbook publishers are pushing more and more into digital textbooks and digital textbook rentals. They’re doing it for the obvious reason; there’s no used digital market so there’s no competition from former customers selling off old books.
But as you can see from the survey data earlier in this post, students can’t afford to prop up an unhealthy industry. Instead they are finding other sources, including piracy.
image by allaboutuni2307
Logan Kennelly July 17, 2013 um 6:40 pm
Normally I dismiss fears of copyright infringement because if your audience likes you (they typically do), the buying experience is easy (it generally is these days), and the price is reasonable (it often is, but this definition is very fluid), then people will just do the right thing.
Textbooks often have none of these. You have a captive audience that doesn’t really want your product, and, as Nate points out, has very little money anyway. Top this off with a negative perception of your industry (deserved or not) and the relative numbers aren’t going to look good.
And what is this nonsense about students choosing which version of the textbook they buy? I assumed it was standard that the professor set the course text.
If you could "pirate" gasoline, I wouldn’t be surprised to see stories about the percentage of people doing that. Just be sure not to confuse lost opportunities with actual profit.
Laura September 3, 2013 um 4:47 pm
I understand the concern about textbook costs but remember most are also specialty items. Most have very limited print runs compared to trade books so the profit margin is tighter. Are many way too expensive? Yes. But stealing doesn’t do anything but increase the costs. The authors, yes textbooks have authors, need to be paid. For print editions warehouses need to be heated and staffed. Printers cost money. Even ebooks have publication costs including royalties to the authors and pay for all the of the editorial and production staff, who work in offices that have rent, electric bills, etc. I hate corporate greed but frankly it’s in every industry. I can guarantee you that most people involved in texbook publishing are far from rich and every book stolen is money out of their pockets.
Nate Hoffelder September 3, 2013 um 5:41 pm
"But stealing doesn’t do anything but increase the costs. "
If you are referring to piracy then you are simply wrong. A student who pirates a textbook increases instead of buying it from the publishers doesn’t affect on the publisher’s costs any more than the student who doesn’t pirate the textbook but still doesn’t buy the textbook.
Logan Kennelly September 3, 2013 um 6:06 pm
I almost commented, then didn’t. You dragged me back in, Nate.
Infringement could drive down costs because, due to the low volume, textbook costs are likely dominated by preparing the content. The overall margins appear to be around 30% from what little information I can discover. That isn’t wildly high, but the per-unit "margins" are likely over 1000% for the $120+ textbooks I’m used to.
Another 25% goes to the bookstore, of which about 85% seems to go to operating the bookstore and returns. e-Books in theory solve this problem because distribution can be cheap, but I’d be wary about going the route of easy, customer-friendly distribution in an market that doesn’t respect copyright, as well.
Laura September 3, 2013 um 7:03 pm
Piracy does not increase costs but it does decrease profit. Textbooks tend to have smaller target audiences, hence less sale. They also tend to have production costs that are different than trade books like the art. By art I also mean graphs, tables, etc. There are costs with producing, obtaining, reusing, and laying out the art that are beyond trade publication costs. Most textbooks have some type of art on almost every page. In addition, most books have more than on author and go through a review process. Ancillaries for the books are also produced. Again I’m not saying the major shareholders and CEO’s aren’t raking in the dough but it is a for-profit, capitalist endeavor and if there is no profit there will be no product. If you don’t want it run this way then the state should take over and run textbook publishing as a non-profit (look how that’s working for keeping state university cost down); however, stealing copyrighted materials is wrong no matter how you try to spin it. It is the property of the author(s) and the publisher. To pirate a textbook is no different than walking into a store and stealing something off a rack.
Logan Kennelly September 3, 2013 um 8:07 pm
I’m starting to think Laura is either a troll or hasn’t thought through her ideas…
First, you’re just repeating a lot of what I said in the response, but you presented it as an argument. I’m not sure why you’ve chosen to do so.
There’s also a dig at public universities. They used to be funded by taxpayer funds as a public good, and are now more proportionally funded through tuition. Universities are a service, but textbooks are a product. Although many textbooks do require periodic updating, those produced with taxpayer funds continue to be available even when the legislature stops funding development.
You want to know the real, capitalist reason textbooks are expensive? There is a lot of money to be made there and enough companies started producing them that it is just profitable enough to remain in the market. If there were one textbook choice, not fifty, the costs would be significantly lower. What is going to increase sales more: reducing copyright infringement from 31%(*) or eliminating competition through state intervention?
I’m not arguing for either approach, but your arguments are silly.
(*) This is a misleading number as the article states that 31% have admitted to some level of copying, not that 31% copy everything. My choice of the exaggerated number doesn’t hurt my argument, though.
Finally, we drag out the tired argument that copyright infringement is stealing. Are you going to be more upset if I walk into your home and steal a painting off the wall or if I merely take a photo of it? To argue that they are equally problematic is lying to yourself, and it’s a short step from there "used book sales are theft".
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