As the pandemic creates shortfalls in state budgets, all educational programs face budget cuts, but higher education may get hit the hardest, creating a difficult outlook for higher-ed publishers
A curious result of the pandemic has been that, while trade (consumer) publishers are outperforming last year in terms of unit sales—particularly in juvenile nonfiction categories that support home education—educational publishers are experiencing dramatic declines in revenue versus 2019. The June report from the Association of American Publishers shows sales of PreK-12 instructional materials down by 30.3 percent year to date and university press sales down by 3.5 percent. Higher-educational course materials are actually showing gains of 4.8 percent, but industry analysts expect to see a “correction” later this year, when returns start hitting publishers’ warehouses.
Higher-education publishing has seen declining revenues for years now, as dramatic shifts take place in how college students buy course materials as well as in what materials professors require. About a decade ago, students were spending an average of $700 per year on course materials. That figure now stands at $413, according to the annual Student Watch survey, run by the National Association of College Stores. In 2019, the CEO of Pearson—the world’s largest publisher—proclaimed that the $300 textbook is dead and that the company would wind down investment in print products and pivot to digital textbooks.
Yet this isn’t entirely about a change in student preferences for digital over print; in fact, students tend to prefer print, especially for advanced courses related to their chosen major. But the skyrocketing cost of higher education has brought a great reckoning. Students owe over $1.5 trillion in school loan debt, and default rates are significant. Affordability initiatives have become a focal point for universities, including campus bookstores, which now offer students more options for accessing or purchasing course materials.
In a BISG panel last week, several industry experts discussed trends in higher-education publishing. Before the pandemic entered the picture, one of the big takeaways from the 2020 Student Watch survey is that students are more frequently obtaining digital course materials, either paid or free downloads. There’s been growth in the use of OER, or open educational resources, which are freely accessible. Some universities have even adopted “zero cost” initiatives for course materials.
As with so many other areas of life, the pandemic promises to speed up changes that were already in progress. College stores have remained open during the pandemic as one of the few essential operations on campuses, supporting the transition to remote learning and to hybrid/online learning in the fall. They’re helping manage digital delivery ramp-up, hardware support, and conversions needed for remote learning. (Interestingly, these stores are also helping universities source PPE due to their supply-chain relationships, switching their stock from caps and gowns to hospital gowns and face masks.)
But the most sobering picture relates to budget cuts for public education. Jay Diskey of Diskey Public Affairs offered the grim details during the BISG panel. State revenue declines are expected to reach 25 percent in fiscal year 2021 unless Congress provides additional stimulus funding. Thus far, about 15 states have been able to hold K-12 budgets flat and not institute cuts. But higher education, Diskey says, “has taken it on the nose.” California is planning for a 10 percent cut; New Jersey, 16.5 percent; Georgia, 14 percent; Ohio, 3.8 percent. “And it’s going to get worse,” Diskey said. What’s been set in motion is a two-to-three year event, meaning 2022 will probably be a more difficult year than 2021. Tax revenue declines will cause budget shortfalls going forward in the following year. (This is what happened after the 2008 recession.) And these cuts come on top of revenue losses that institutions took in the spring and summer by offering student refunds on tuition, housing, and dining.
Bottom line: With so much remote and online learning this fall, NACS believes that faculty (especially those who’ve never used digital course materials) have an opportunity to shift toward digital—which may mean more adoption of open educational resources, which tend to be in digital format. If that shift does indeed happen, then revenues for higher-education publishers will be in jeopardy unless they’ve invested in pivoting to digital resources and services, as Pearson has. Another higher-ed publisher, Cengage, reported a 17 percent decline in earnings for their most recent quarter (ending June 30) year on year, due to the pandemic. Cengage expects a 10 to 15 percent decline in US fall enrollment.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
