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October 15, 2008

Tackling the Textbook Giants

Brian Belardi
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Professor Noel Capon has something in common with his students: he thinks the price of textbooks has gotten out of hand. “It’s a serious social issue,” he says.

Capon likens the landscape of the textbook industry to that of the airline industry in the 1950s and ’60s, describing it as a “cozy oligopoly” in which the different players “compete for authors and over the quality of the books but not on price.”

To help ease the financial burden, Capon is allowing students to pay what they wish to use the online version of his text Managing Marketing in the 21st Century. The pay-what-you-wish model was made famous by the band Radiohead, who allowed customers to download their most recent album, In Rainbows, for what they thought it was worth. The print version of the text, which sells for $45, is priced about $100 less than its competitors.

Capon hopes that the unconventional pricing strategy will cause the major textbook publishers — such as Pearson Education, McGraw-Hill and Cengage — to lower their prices. In this respect, he likens Wessex Press, which publishes Managing Marketing and which is owned and operated by Capon, to Southwest Airlines.

“Thirty years ago, in came Southwest with a very efficient, low price model, offering a safe ride in a new aircraft but without all the frills,” Capon says. “Well, I’ve come in with a book that doesn’t have a lot of frills but which is very much to the point and which is a very serious marketing book.”

Though Capon is unsure of how much revenue he’ll secure from the online version — he’s also donating 50 percent to college scholarship funds — he hopes that the new pricing model will give instructors cause to consider using his text.

“It’s a way of getting my book into the hands of as many people as possible,” Capon says of the model. “The major barrier I’ve had to overcome is the reluctance of instructors to switch books. By taking the price of the online version to zero, instructors who weren’t interested at the old price are going to have to give my book a serious thought.”

Capon hopes improving the book’s readership will benefit Columbia Business School, as well. “Columbia has arguably the world’s leading marketing division, but we’ve never been strong in the textbook area. I’m hoping that this move, if it’s successful, will strengthen the School’s position as having the world’s leading marketing division.”

Capon’s colleagues are taking notice. Michael R. Czinkota, Ilkka A. Ronkainen and Michael H. Moffett, authors of Fundamentals of International Business, have published the new edition of their text with Wessex. While Capon “wouldn’t rule out” taking on similar projects in the future, he plans to remain focused on his day job, teaching at Columbia Business School and writing his own books.

When asked about being referred to as the “Radiohead of textbook authors,” he only laughs. Capon, who hails from Southampton in southern England, says, “I’m fine with that. They’re British, after all.”

Comments

by Alex T-M | October 15, 2008 at 12:18 PM

I remember how annoyed friends of mine were with texted prices when we were in college. If you think about the markup with the wholesale and retail, we're talking about $100-$200 textbooks that get 3-4 months of use. It's too much! I'm a believer that a majority of the learning actually happens in the classroom and the textbook should just suplement that. It's nice to see someone supporting the learning process, as opposed to supporting the wallets of corproate America.

by GPM4 | October 15, 2008 at 12:45 PM

$145 for a textbook is appalling. This sounds like an ideal market for an ambitious publisher to enter with a high quality, but comparatively low priced product. During my university years it always irked me when I had to purchase the professor's book for $100 so he could make a few extra bucks. One even had written exercises on pages that we were required to rip out and turn in, most likely so that we couldn't sell it back for the next class to buy used. A little competition would do this industry (and students) some good.

by Matt C | October 15, 2008 at 12:49 PM

This is really refreshing. Its nice to see that academic minds really do appreciate the financial crunch that their students are under these days. To donate 50% of the proceeds further demonstrates that Capon's head and heart are in the right place. Kudos to him.

by CEV | October 15, 2008 at 5:12 PM

Pricing competition is something the textbook industry doesn't have. In my short academic career I've witnessed editions printed with little change but a few words and a few pictures. Many textbooks are packed with CDs and online links making me wonder if the already enormous cost of tuition is actually worth it: am I learning from the book or learning from my professor, or is my professor using the book simply as an extension to their expertise? There has been little pricing competition due to the obligation students have in purchasing the textbooks because they contain exercises they must complete. So in an age where information is readily available via the internet on sites like Wikipedia (though we can't vow for Wikipedia's accuracy), can someone tell me why the price of texts increase at rates beyond inflation? Perhaps someone should explain it to McGraw Hill, Addison-Wesley, etc.

by Lori | October 15, 2008 at 9:17 PM

Everyone is under a financial crunch these days! Yet, step back a minute and think about what it takes to produce a textbook. It takes intense research, personal sacrifice, and a lot of time and money for academics, as well as publishing companies, to produce valuable learning tools like textbooks. Compare the value of a textbook to that of a "name brand" coffee or the latest mobile phone. Think about the value of that particular product at the time of purchase and its future significance. $5 "name brand" coffee purchases over time versus a book that helps you to get an education and hopefully a job?! Textbook publishing is a lot like the music industry. You've got the used book market which is really a type of pirating of someone else's hard labor and research. The used book industry makes a profit without putting forth the research or the labor behind the production of the item. Who is really benefiting here? I think its great to produce and try to sell your own work - more power to you. I do think publishing companies are now providing purchasing options - ebooks (at a significant price difference than an actual hard copy text which most people don't buy)loose-leaf versions, or direct purchase options. All of which are significantly less than a used book. I foresee textbook purchase options changing and becoming much like music - buy a chapter for .99... A very interesting industry and seemingly ripe for new and creative ways to publish. At least its an industry with potential and options unlike other industries right now!

by Jane | October 16, 2008 at 11:10 AM

I agree with Lori. I work on college textbooks, and you'd be surprised by how much effort goes into making them as useful to instructors and students as possible. At my company, authors often work closely with a development editor to produce a book that will be readable, that will cover the topics instructors want to cover (you'd be surprised how many authors focus on pet topics to the exclusion of mainstream topics) and that are accurate. We also spend a good deal of time and money having instructors review the materials and pilot them in class. Would a textbook that doesn't get that kind of rigorous development be as useful a teaching tool? Possibly, but in my experience it's a rare author who can write a textbook that people want to use in class (at least an on the introductory level) without a good deal of editorial assistance. With the additional costs that the editorial process generates and the loss of revenue in the second or third year of an edition due to used books, a high sticker price is inevitable. Some authors may be willing to give away their labor to keep costs down--and I wish Professor Capon the best of luck--but I'd be interested in knowing whether a book produced with little editorial intervention will be as useful to students and faculty as are textbooks produced by the mainstream companies.

by Sally | October 16, 2008 at 11:12 AM

These days buying a required textbook is like driving a new car off the lot....which a college grad may never get to do in this economy. Very smart of Columbia to recognize this issue and provide a feasible purchase option to its students. Mimicking Radiohead can only be a good thing!

by Todd | October 16, 2008 at 4:12 PM

The best textbooks, from what I've seen, have years of experience behind them, whether it be the writer or the publishing team. The work that goes into them is extraordinary, herculean when you factor in the marketing, distribution, associated assessment, instructor tools, student technology and research. But the homegrown textbooks like Capon's text, Managing Marketing in the 21st Century, are just so nascent that they just can't compare. However, give these new user-generated textbooks a few decades of collaboration with their audience, a good dose of disruptive technology, a few government standards and then add in releasing it through creative commons and I'm certain that prices will come down. Until such time, there's a solid rationale for the prices and their associated quality to stand.

by Bennett | October 17, 2008 at 4:53 PM

I think other posters have hit upon a relevant item: Pricing for textbooks is not just based on competition (which leads to accusations of collusion) but also costs. (Obviously, the price is not based on customers' willingness to pay or we wouldn't have having this discussion.) Although many people here mention research, technology and editorial costs, what hasn't been mentioned is the massive marketing and direct selling apparatus that textbook publishers employ. While I wish Professor Capon the best with his venture, I don't know how his innovative pricing can compete with the hundreds of sales reps that call on professors across the country. To be certain, there are free and cheap textbooks available elsewhere. What's really missing from this discussion, however, is the idea that textbooks suffer from a terrible price anchoring problem: we compare textbook prices to other books rather than to what they are most analogous to: college tuition. According to the 2005 GAO report on textbook prices (which links the rise in prices to a rise in costs), college tuition has grown at a rate slightly faster than textbooks. Perhaps Professor Capon can convince Columbia to offer a pay-what-you-wish tuition scheme? As a recent Columbia grad, though, I would hope this would be retroactive. :)

by mac | January 10, 2010 at 11:03 PM

For the benefit of some of the doubting Thomases, this book is the result of years of work and has benefited from inputs from large numbers of students and faculty, as well as professional editors. All of these inputs are accessible to the willing without having to pay for the absurd overheads of major publishers. They have limited marketing skills in many cases, and out-source most editorial work themselves! Get with the digital age!

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