In recent years, higher education publishers have transformed themselves from textbook publishers creating elaborately designed and illustrated print textbooks to full-fledged digital learning solutions providers. This shift is due to the changing landscape of education, including an increase in hybrid and online learning and growing demand for engaging digital content and learning tools, including flashcards, adaptive quizzing, and auto-graded assessments. Courseware has allowed companies to offer more attractive pricing to students while also avoiding the problems caused by the used book market and piracy.

As Brian Jacobs, CEO of PanOpen and a longtime observer of higher education, puts it: “Interactive courseware reconstitutes value for stakeholders—publishers, students, and faculty. Instead of seeking techniques to artificially preserve the business model of printed textbooks in a digital environment, courseware promotes the publisher’s economic interests while reducing student costs, easing faculty teaching burdens, and improving student engagement and learning success. Most importantly, these digital tools help publishers meet students where they are, in a multimedia environment through which most now prefer to learn.”

That transition was not an easy one. It took publishers many years of painful experiences from increases in textbook prices and the effect of these increases on unit volume, which resulted in the print pricing death spiral.

The print pricing death spiral is a phenomenon that arose in the publishing industry as a result of the need to maintain profit margins to meet the economic demands of owners. Initially, publishers believed that textbooks were not price-sensitive, since students had no choice but to purchase the books recommended by their professors. However, as prices continued to rise students began seeking alternatives such as open educational resources (OER), used books, old editions, international editions, and piracy. This led to a decline in unit volume for publishers, resulting in even higher prices to maintain margins.

The unintended consequence of this spiral was that it improved the economics of the used book market. As students sought lower-priced alternatives, the need for, and supply of, used books grew, making it easier for students to find affordable options. This caused more students to stop buying new books, further decreasing unit sales for publishers. Ultimately, the decline in unit volume outweighed the increase in pricing, causing significant economic harm to publishers. This spiral highlights the delicate balance between maintaining margins and pricing textbooks at a level students can afford and shows the potential consequences of pushing prices too high.

Other strategies
The death spiral led to other strategies for maintaining publisher economics. One was to increase the frequency of new editions, making used versions of the previous edition obsolete. Another approach was to offer loose-leaf editions that wouldn’t survive beyond a single student’s use. Finally, publishers jumped into rental programs, allowing them to capture revenue from what used to be a used book sale.

In addition to extending the life of print textbooks, publishers tried shifting texts into e-book format. While e-books had many of the positive economic features publishers sought, they had largely been rejected by students. As Jacobs points out, “Technological transitions usually have a period of imitation when the new technology mimics what it is replacing. Think of the first gas-powered lights made to look like flames or the illusion of page turning with the first e-books. PDFs and other flat files attempt to digitally render a copy of the physical book for educational materials. However, technologies only come into their own when they allow their adopters to move past the imitative stage and do things with them that would be unthinkable in the older medium. Courseware represents that break from the old form. The practical consequence is that it dramatically improves economic and pedagogical value for all the stakeholders: students and faculty.”

Courseware not only generates better educational results for students but—due to increased sell through (all students need to be able to turn in their work), reduced ability to substitute (you can’t get a used book that ties into the grade book), and direct-to-student sales—courseware allows publishers to lower prices while maintaining profitability.

In response to the challenges presented by the print pricing death spiral, higher education publishers have been forced to adapt and find new ways to maintain their profitability, and companies know that more change will be necessary to continue to prosper. Indeed, new commercial and product models are being introduced. Inclusive access (in which course materials are delivered to students automatically with an ability to opt out before they are billed) and continuous publishing models (where the material is updated automatically without waiting for the publication of a new edition) are both promising opportunities for students and publishers.