Student Pirating Not to Blame for Publishing’s Problems

Higher education publishers continue to experience revenue declines as students seek more affordable purchasing options—and as larger cultural trends pressure everyone to make college more affordable

If your only source of publishing news were The New York Times, you could be forgiven for thinking that authors and the publishing industry are being driven into poverty by pirates. In a recent NYT op-ed, Richard Conniff relates his discovery that all the students in a college class he was teaching were using pirated copies of the text. While his piece required a correction (it was misleading in its portrayal of author income), it does raise an important issue: the largest higher ed publisher, Pearson, has seen revenues fall from $2 billion in 2013 to $1.3 billion today, with more declines expected this year. What does current student purchasing behavior say about the future of higher ed publishing?

The Book Industry Study Group recently featured consultant Jay Diskey and National Association of College Stores research analyst Brittany Conley in a webinar on trends in higher education. Diskey first discussed the larger cultural trends, remarking, “It’s an understatement to say the cost of higher education is high.” Students owe $1.5 trillion in school loan debt, and default rates are significant; consequently Congress is looking at how to reduce the cost of college education. Affordability initiatives have become a focal point for universities, including campus stores, which now offer students more options for accessing or purchasing course materials.

Conley presented data on student purchasing behavior as part of the NACS Student Watch annual report, which is based on 20,000 student responses from more than 40 higher education institutions. The key findings:

• Student spending declined by 14 percent in the 2018–2019 academic year, continuing a downward trend. Over the past 10 years, spending has declined 38 percent.
• However, the percentage of students purchasing required course materials has been stable since fall 2014, and 79 percent of students who purchased materials in 2019 did so from the campus store. Amazon as an acquisition source has remained stable overall, neither increasing nor decreasing in the last few years.
• When breaking down student spending on course materials (spending figures include both outright purchases and rentals), 34 percent acquired new print books, 47 percent acquired used print books, 14 percent acquired digital books, and 6 percent acquired a custom coursepack. 
• The percentage of students downloading materials they do not have to pay for (whether legally or illegally) has reached an all-time high of 22 percent, while 89 percent of students report using some type of free content for a course—which could include class handouts, lecture notes, website articles, and textbooks.

According to Conley, the increase in downloading free materials is a minor factor in the decline in course materials spending. Students also have access to better information, and they can find cheaper options. Furthermore, as mentioned earlier, stores are working toward affordability—so the affordability initiatives themselves are playing a role in decreased spending. Professors may also be adopting more non-paid materials, although no figures were shown to support that conclusion.

To address affordability, some institutions and publishers are testing or offering a digital textbook model called inclusive access. The model is inclusive in that every student has the same materials on the first day of class, with the fees included as part of their tuition. While research shows most students are interested in this model, that number decreases if the program limits students to digital content. The majority of students still prefer print—although student preferences shift based on the type of class and material required. Note that textbook authors sued Cengage in August for the publisher’s digital subscription model offerings (allowing students to access all of its digital textbooks for a flat fee); authors claim the company is cheating them of agreed-upon royalties. Cengage says the lower royalties are part of lower demand, and the subscription service stands to address this problem and create a “more sustainable business model.” (Learn more from Andrew Albanese in Publishers Weekly.) Cengage also plans to merge with McGraw-Hill, which would only bolster the appeal of its unlimited subscription plan.

Despite students’ current preference for print (at least according to the NACS), the largest educational publisher, Pearson, has ceased its print publishing program. In an interview with Recode, Pearson CEO John Fallon says, “The $300 textbook is dead.” The company is shifting now to a rental model (to better compete against other rental services like Chegg and Amazon) as well as service offerings, in which content is combined with assessment and more personalized, adaptive capabilities. “That’s still a sustainable business,” Fallon says. But it will require a significant revolution inside the company, as consultant Bill Rosenblatt points out in Publishers Weekly: “The changes to editorial infrastructure and processes necessary to go digital first are profound; Pearson has been putting them in place for several years.”

Bottom line: Are educational publishers’ latest moves a sign of innovation, adaptation, or struggle? Let’s say all three. Rosenblatt says higher ed publishing is the segment undergoing the most disruptive changes today. Therefore, he says, “It’s an exciting time for business model innovation. … It’s certain that the textbook market of 10 years from now will bear little resemblance to today’s market.”