On college campuses, technology is like air – always present, necessary, and only noticed when it is lacking. College networks reach seemingly everywhere. Today’s courses use technology for enrollment, collaboration, communication, etc. Much of the basic research that underlies technological breakthroughs in business and industry is pioneered on college campuses. We find on employee surveys that recent Millennial graduates are often underwhelmed by the technology they have access to at their employers because they became accustomed to a higher standard when they were students.

Why then has a technological revolution that colleges are such a central part of seemingly skipped over what is at the core of most college courses:  the college textbook?

Depending on which source you consult, digital textbooks currently comprise between 10% and 15% of college textbooks and this percentage has been growing glacially … at like 1-2% per year.

Contrast this with other types of books. There are currently nearly half a billion digital trade books sold each year. In the “normal” (non-textbook) book world, there are about two digital books sold for every three printed books sold. In trade publishing the conversation isn’t about whether digital books will continue to grow and dominate (as there is a consensus that they will), but more about how massive Amazon will become in the space and what the impact of a growing audiobook segment will be.

Clearly, penetration of digital books is happening much slower in college textbook world than the trade book world.

But why?

First and foremost, the role of publishers in the college textbook market is different than in the trade book world. About 80% of the college textbook market is controlled by just five publishers and there is a trend towards further market consolidation. Publishers have the lion’s share of market power; after all, they control nearly all the content. So they can also control how this content is distributed.

Publishers’ market power is even greater than one might initially imagine. There might be just one or two viable choices for textbooks to select for a course. The result has been an increase in textbook prices of +1,000% or more since the mid-seventies, and, importantly, little incentive on the part of publishers to innovate. Publishers have created digital options and online learning systems, but these aren’t terribly innovative and largely serve to protect existing (and profitable) print textbook franchises. Textbook publishing is a cash cow and publishers protect it.

A finger can also be pointed at colleges. The college bookstore was once seen as an essential service to provide for students. It is now viewed as a profit center, giving colleges little incentive to push back on publishers to keep prices low and to innovate. The college bookstore’s mission has moved from being educational to being profit-centered.

College professors are unwittingly part of the problem. We have done studies that show that students largely buy the textbooks professors tell them to buy. Publishers market textbooks one professor at a time. There are no buying groups or purchasing departments negotiating prices on behalf of students. Our studies show that professors don’t think much about the cost of a book to a student before putting it on the list for the semester. Textbook costs and innovation just aren’t something professors seem to think much about.

There are a few countervailing forces. Used textbook distributors help recycle books and keep prices down. Textbook rental firms have had a similar effect. Increased online buying options have created price competition. But, these forces are swimming upstream in the face of the power held by publishers. Our data show that although the total textbook market is growing (because more students are going to college) the average number of textbooks obtained is decreasing. But, the average price per textbook continues to increase. This leads us to conclude that students are managing increasing textbook costs by going without some books to compensate for increased prices on books they cannot do without. This clearly isn’t the right thing to do from an educational standpoint. Students should be able to afford the materials they need to learn.

The internet has a way of being a disintermediater – of removing barriers between buyers and sellers and decreasing transaction costs. This effect has taken some market power away from publishers of traditional books. The ease of buying online at Amazon, the growth of digital books, etc., has served to make trade publishers less dominant than they used to be. And, in the non-textbook world, there has been a proliferation of self-publishing. An author no longer needs a publisher to reach an audience. Publishers are still important, but they are getting repositioned.

This hasn’t happened with textbooks. Academic book authors still largely use the traditional route via publishers (although some do self-publish, but mostly for students at their own universities).

What is most troubling about the lack of innovation in college textbooks is the academic impact it can have. There is lots of grumbling among student groups and elected officials about the cost of college textbooks. Few mention how true digital innovation in college textbooks would transform education.

We’ve often talked about how when a new medium arises, it initially isn’t all that innovative from a content standpoint. As an example, when television first became established, its content was largely just adapted from the successful radio content of the day (news, variety shows, serials, etc.). Once the new, innovative delivery mechanism was established, the content itself changed to take advantage of the unique features of the new media. The Internet was similar – initially its popularity was as a new delivery mechanism for content that could be found on other media (information like news, weather, encyclopedias, etc.). Once the mechanism was established, the unique power of the Internet (communication, collaboration, etc.) became evident.

Digital textbooks are following this pattern. Currently, digital textbooks are pretty much printed textbooks forced into a digital format – not much more exciting than a PDF copy of a textbook. But, digital textbooks hold much greater potential than printed textbooks. They can share highlights across students, catalyze students to collaborate on content they don’t understand, link to additional sources of information if an area is unclear, illustrate concepts with animations and video, adapt content based on formative assessments along the way, etc. It is easy to get enthusiastic about what a digital textbook could potentially do. It could transform education and teaching. It is easy to see a future where the textbook is the primary method of instruction and the professor becoming more of a coach and less of a lecturer.

The incredible potential of digital textbooks won’t happen until textbook authors see this and start creating textbooks differently and until publishers move past their reliance on traditional printed textbooks and find a profitable path. This seems to be an industry ripe for disruption.

We’d like to say this change is coming soon and is inevitable – but this entire blog post was based on a presentation we gave eight years ago to an industry event, so we have reservations that this change is impending.