Educational publishers are experimenting with ebooks and rentals

Textbook publishers are in crisis: their products are too expensive. University students, faced with rising tuition fees and mounting debt, are turning to pirated or second-hand books, or forgoing course materials altogether.

The industry has been quick to adapt by producing cheaper e-books and offering rentals for individual texts. One publisher is even betting that a Netflix-like subscription model can boost revenue, while meeting demand for lower prices.

Cengage Learning, one of the world’s largest educational publishers, will launch a subscription service for US students next year that includes unlimited access to digital materials for $119.99 per semester.

“It’s a model that breaks with 100 years of tradition,” said Michael Hansen, chief executive of Cengage. “We say we don’t want to sell units to students. We want to sell them a subscription which, at an attractive price, gives access to our entire library. »

The publisher says the move is a response to financial pressures on American students, who spent an average of $579 on course materials during the 2016-17 academic year, according to the National Association of College Stores.

Cengage aims to shift 90% of its US higher education sales volume from print to digital by 2020. The publisher saw a 10% decline in revenue in in its last fiscal year, due to weak print sales in higher education. The hope is that subscription volumes will compensate for the price gap between print and digital.

Cengage peers – including Pearson, the former owner of the Financial Times – have experimented with subscription models for individual texts, but not a full library. But there is competition. British start-up Perlego sells document subscription packages from publishers such as Pearson, Bloomsbury and Oxford University Press. Rental specialist Bookbyte has built its business around a service that aims to prevent course materials from becoming expensive clutter.

“Companies fall in love with their own business model. This allows disruptors to come in and establish massively profitable business models, Hansen said.

“If Disney had decided to actively challenge its own business model, Netflix would not have existed and would not have taken $60 billion worth of media.”