Distance learning has been around a long time," notes Ed Stanford, president of McGraw-Hill Higher Education. "It used to be called correspondence courses." Ron Dunn, CEO of the Higher Education Academic Group at Thomson Learning, observes that, "In the mid 1920s there were over a hundred companies granting degrees by correspondence, but neither the market nor the technology was right for them to survive." With the boom in higher education sparked by the GI Bill following World War II, distance education was also reborn. According to the President's report at the University of Maryland University College, enrollments in distance education are expected to grow from 710,000 in 1998 to 2.3 million by 2002. Over the last 60 years, including its newer incarnations using broadcast and videocassettes, distance learning, whether for credit or personal enrichment, has been a relatively small but positive development for publishers and bookstores. In the first place, books are often what holds the course together. Secondly, unlike on-campus students, many of whom beg, borrow, photocopy or ignore the assigned text altogether, a satisfying percentage of distance education students actually buy the books.

The arrival of the World Wide Web in 1995 changed the distance learning landscape, and even administrators of active distance learning efforts in more rural states like Maine viewed the Web as a godsend (despite the occasional faculty rebellion). Major non-academic distance learning providers like PBS, which had staked out significant market share with broadcast-based courses starting in the early 1980s, realized that they could expand their model of college professor+textbook+broadcast offerings to include Web-based telecourses. Even traditional college publishers, often taken to task by media like the Wall Street Journal for being behind the curve, began to sit up and take notice.

The Quarrelsome Quadrangle

While every business sector has its own complexities, providing teaching and learning materials in higher education has always been something of a three-legged race, awkward at best. Each semester, professors, students, publishers and bookstores, roughly tied together by marginally common interests, have to make it over the finish line without coming apart or falling down. With the rise of the used book market in the mid-1980s, bookstores and students broke away from the arrangement, much to the publishers' consternation. This led to a publishing strategy of more frequent "revisions." At the same time, a growing number of faculty authors became disenchanted with publishers.

Although professors play a critical role in the marketing process, they a remain as blithely unaware as ever as to whether students buy the books they assign, according to one publisher's recent study. Nevertheless professors remain the publishers' "customer." As Peter Jovanovich, CEO of Pearson Education, puts it, "The professor is the portal. He or she is in charge of choosing the content." Throughout the 1990s, the higher-educational value chain behaved like a dysfunctional family, with continuous feuding among publishers, booksellers, faculty, students (who thought of the textbook as a "necessary evil"), despite the efforts of trade associations to mitigate the problems. The arrival of Web-based information technologies and the possibility of delivering e-content directly to teachers and learners blew the windows open of this stagnating marketplace, with the "application" of distance learning leading the way.

The importance of distance learning was not lost on federal lawmakers, and relevant questions became part of the swirl of issues surrounding the drafting and eventual passage of the Digital Millennium Copyright Act, even though the real purpose of the law was to bring the U.S. into compliance as a signatory to the WIPO treaty, not to solve all questions of copyright online. In March of this year, academic and library groups convinced Senators Patrick Leahy and Orrin Hatch to introduce a bill to further loosen copyright restrictions for distance learning. Publishers responded with objections through the AAP that the language in the bill was too broad and could provide educators with unlimited free use of copyrighted materials. Quite surprisingly, given the bitter copyright battles of the late 1990s, a successful compromise became the basis for a revised distance education bill, just approved by the Senate. Assuming that the House accepts the language, approved legislation might be sent to the White House in July. "We are quite pleased," notes AAP's vice-president Alan Adler. "This truly is a win-win situation."

The Virtual Campus

Behind the smoke of legislative and rhetorical battles about distance learning, technology is creating even more fundamental change in higher education. The World Wide Web has brought in its wake a gradual clouding of the meaning of distance learning, in fact, of higher learning itself. If there was any doubt about the importance of the Internet to teaching and learning, retiring Harvard president Neil Rudenstein's 1997 op-ed piece in the Chronicle of Higher Education bestowed full academic legitimacy. Legitimacy is one thing; knowing exactly what the new technology actually portends, however, is another. MIT raised eyebrows earlier this year with an announcement that it was putting all of its courses online. Further investigation revealed that this would not include the content of either lectures or learning materials, and appears to be an extension of MIT's local learning network, Athena.

More representative of concerns on campus is the University of Michigan's just-released "The President's Information Revolution Commission Report" (www.umich.edu/pres/inforev/executive.html.) Recognizing that Internet usage on campus is doubling annually and that "the information revolution... touches every aspect of university life," the report reflects the understandable discomfort of an institution based on deep traditions being forced to make radical changes. What emerges from the report is a clearly acknowledged sense that the University of Michigan (and hundreds if not thousands of other institutions as well) finds itself at what the report calls "a point of precarious balance." While the administration wants its response to be far more than "a wiring diagram" for optical cable, what this will actual mean has yet to be understood.

As Internet usage continues to explode and each new class of entering students is more and more familiar with IT of all kinds, it has become clear that "distance" is a matter of degree. Customer "convenience" may be a better way to describe the inboard motor powering the new craft of e-learning. Just as it was more convenient for students in rural areas to take a broadcast telecourse at a center only few miles from their homes rather than traveling the tens if not hundreds of miles to campus, students across campus are finding it much more convenient to visit their professor's office, go to the library, get their course assignments, develop cooperative projects, even download some learning materials, not to mention take quizzes and tests, without having to leave their dorm rooms at all. Professors can offer 24/7 office hours. Libraries can offer 24/7 access to content. The combination of online administration, course information, content, and communications with professors and among students themselves, wherever they may be, can no longer simply be called distance learning. Rather, distributed learning appears to be the term of art. As Dunn puts it, "We are going to see a whole spectrum of learning situations, from the traditional professor in front of the class, through hybrid situations on campus and in corporations, to distance only where professor and student, whether for undergraduate degrees or corporate certification, communicate purely electronically and never meet."

Technological innovation has led some experts to speculate about a transformation of higher learning itself. Rather than occurring during the traditional four years, it would stretch out over a lifetime as needed, intertwined with the demands of jobs and professions. Instead of taking courses, students will achieve mastery of "competency sets" in areas of interest. In place of textbooks, learning would be achieved via online "digital learning objects". How quickly, or universally, or whether this might happen at all is a matter of debate. "I still think there will be meaning to what we now consider an undergraduate course of study," notes Elizabeth Hacking, senior vice-president, Houghton Mifflin, "but the timing and location aspect may fall out of the equation. It's whenever you want it, from anywhere you are."

This kind of speculation, and the sheer power of new technology, prompted the development of a number of complex, multiple-media learning products from publishers in the late 1990s but which didn't gain much traction in the marketplace. Referring to these less-than-successful initial approaches, Susan Driscoll, Bedford Freeman Worth's COO, comments, "I think we all became a little too infatuated with the 'whiz-bang' aspects of the technology at first." However, as Will Pesce, president and CEO of John Wiley & Sons—a company whose success is based on its steady, measured strategies—cautions, "There are human beings involved—faculty, students, administrators. These innovations must move at a pace acceptable to the customers." The general consensus among publishers is that the sciences will lead the way in terms of online learning materials. For some institutions, moreover, distance learning is nothing new, and the newer online aspects are already a central part of the process. The University of Maryland University College has been involved with distance education for half a century. According to Gerald Heeger, inaugurated as the fourth president of UMUC last September, the institution currently provides over 70,000 students around the world with distance learning, including about 40,000 enrollments in online courses.

Demographics will also play a role in this transformation. Not only does an increase in lifetime learners influence the equation, but American colleges face a huge swell in demand from the arriving children of the baby boomers, as well as interest from a growing number of students from industrial and developing nations. Taken together, the adult and traditional age group demand will swamp the ability of physical campuses in the U.S. to provide sufficient places. Online education may be the only possibility for many candidates. "Even before our grandchildren are in college, all higher learning will incorporate e-learning," Driscoll observes. Distance issues, then, are simply one region along a spectrum of customer convenience issues.

The Virtual Publisher

Not surprisingly, higher education publishing is now in a state of dynamic ferment. From a couple of dozen active players only two decades ago, the now highly competitive college publishing landscape includes essentially three large publishers—McGraw-Hill, Pearson Education and Thomson Learning, and three smaller ones—Bedford Freeman Worth, Houghton Mifflin and John Wiley. (The recent acquisition of Houghton Mifflin by the French media giant, Vivendi, which should be approved this summer, will probably shift the pecking order somewhat.)

Starting in the early 1990s, heads of houses understood that technology was no longer something they could wave at once they comfortably retired. The transformation of learning appeared to be at hand. In fact, e- learning, especially in higher education (the great incubator of the Internet), was hailed as the next "killer app" after e-mail, e-commerce and eBay. "The truth is all publishers are always looking for new ways to get their content to market," states Larry Klein, vice-president, content management/publishing technology at Pearson Education. "The difference between now and 10 years ago," explains Dunn, "is that everyone can see the benefits of making investments, the potential for a marketplace. Before, it was mostly speculative."

Not all of his colleagues, however, are quite so sanguine. Speaking with larger e-publishing issues in mind, Jovanovich notes that "there is only a content business behind the firewall, in libraries and corporations." Similarly, Driscoll comments: "The e-learning product hasn't really been defined yet. Where we get the most hits on our site is for testing. That's the first real success. Online quizzes, instantly and automatically corrected, have so many advantages for both professors and students." Henry Hirschberg, group president, higher education, professional, and international publishing at McGraw-Hill, suggests that "professional reference books [such as M-H's successful medical encyclopedia Harrison's Online] have the best possibility of becoming a big deal. Nobody is going to read Plato on a computer screen." Noting that most of what publishers have is "fairly rudimentary," David Serbun, vice-president and director of technology in Houghton Mifflin's higher education division, explains, "What needs to emerge are new learning systems that will make it possible to aggregate all the different digital learning products we have created."

In fact, in very few cases have textbooks themselves been put online, whether for distance or distributed learning. Kim Kelly, assistant vice-president, University College, University of Maryland, has spoken quite frankly about her impatience with publishers in this regard. If loathe to open the content vault too widely, publishers are nevertheless spending considerable resources in new media, including creating Web sites for every textbook, featuring additional content and links to the outside in order to supplement the materials that the professors have adopted for their courses. "In this way," Hacking observes, "the Internet is helping to make college less 'academic,' delivering students from the isolation of campus to the real world."

However, while the emphasis is still on supplementary materials in terms of what is being transitioned to e-formats, even the most traditional publishers have begun to hedge their bets. "Even since last fall I have seen exciting amounts of further investment in digital content," notes Isabella Hinds, director of publisher alliances at the digital learning platform, WebCT. "Whereas I used to meet with a single individual at the publishing houses, usually in middle management, now I meet with teams including senior and middle managers."

When questioned directly, publishers were unwilling or unable to define how much of their $3—$5 billion marketplace is being spent on e-learning. Without being specific, however, they were generally positive. "I can't give you exact percentages in terms of year-to-year growth," says Bonnie Lieberman, senior vice-president, general manager, higher education at John Wiley, "But it is growing exponentially." Driscoll conjectures that "there was a big burst at first. Now I think it's stabilizing." Nontraditional providers like PBS, which now offer over 120 adult learning courses, confirmed the vibrancy of the market. "Well, we are far from being a $50 million operation," PBS vice-president of education, Ginny Goldstein, explains, "but we are growing continually and have been self-supporting since 1983." Summarizing the trends, Dunn notes that "there is a shifting in the investment of resources in college publishing in our approach to the creation of content. We are now digitizing all of our content through our editorial and production systems." Agreeing with the idea that eventually digital delivery of all content is not a dream, Klein observes, "It's a question of time and market readiness."

The Virtual Co-Opetition

The timing of that arrival is not in the publishers' hands. Changes on campus and new competitors are having a significant impact. There is a widening spectrum of new players. The University of Phoenix offers a significant number of professionally focused online degrees and courses and is demanding online content from publishers. Electronic learning platforms like WebCT and Blackboard have inserted a whole new computerized layer into the academic process that allows faculty to easily create at least online administrative structure for their courses, including varying levels of content from traditional publishers. Data just released by WebCT shows "strong" growth in publisher-provided academic materials for use in WebCT's course management system. Called E-Packs, these materials include customizable online course materials, such as video animations, sample syllabi, lecture notes, quiz and test banks, and glossaries packaged with course management software. WebCT currently offers more than 800 e-Packs from 20 leading publishers in virtually every academic discipline. Notwithstanding the Internet chill, other e-content providers like ebrary, netLibrary and Questia are swimming into this tide, each with different business models.

Uncertain, however—at least in the publishers' view—is the long-term response from professors to these new players. "Having watched this for a while," Serbun notes, "I think that professors ultimately will respond better to a content-driven solutions more easily than platform-driven ones." Driscoll notes that professors who are actively using one of the learning platforms for some of their courses still come to the publisher to select and add the teaching content component. " 'Just tell me what I need and give it to me' is pretty much their attitude," she reports.

Publishers' demands that content be protected also spawned a number of DRM (digital rights management) companies that have attempted over the past two years to engage the college publishing market. Reciprocal, DigitalOwn and SealedMedia each offer different flavors of protection and e-commerce. Both the larger and smaller companies have agreed to limited pilots in this regard, but with the collapse of the dot-com bubble, a number of these DRM players have significantly cut back their staffs and their operations. A panel of experts at the recent BookExpo America convention—including representatives from companies as different as Questia, World Book Encyclopedia, Overdrive and Reciprocal—proposed that publishers' concerns are excessive, and that "encryption" may be choking rather than enabling the development of the e-content market.

A similar story seems to be playing out with e-books. With the trade-publishing prospects sputtering, e-books are still viewed by many as having their initial value not just for the 0.001% of the population that flies from JFK to Sidney once a quarter, but rather for students curving their spines under the weight of textbook-heavy bookbags. Both Adobe and Microsoft are converging on this marketplace, although Palm Pilots and laptops, rather than dedicated e-book readers may end up being the devices of choice. To the degree publishers are involved, "We are still in the information gathering phase," explains Serbun . "What we are doing is just putting textbooks in digital formats."

Finally, there are more academically based initiatives, such as UNext, where online course are being created at $1 million a pop. Not having the benefits or inhibitions created by ink-on-paper revenues, these new players are betting the farm that electronic learning is the future. Despite their official reserve, and to their credit, traditional publishers are also playing through the back door, investing in these new companies: Thomson Learning with WebCT, Pearson with Blackboard and McGraw-Hill with ebrary. In addition, the traditional publishers, large and small, all have "pilots" underway with just about any e-company that appears to have a good idea. In a sense, there are only one or two degrees of separation between the players in the higher education e-learning content space.

Curiously, the one dark horse in terms of potential competitors is the larger academic community that senses a new opportunity for revenue. The president of a major state college has lamented the loss of the STM market to commercial publishers, putting his colleagues on notice that the same could happen with online learning. Robert Christie, CEO of Thomson Learning, has been quoted (News, July 31, 2000), as being less concerned about competition from other publishers and more concerned about what might happen from within universities. Driscoll points to the potential from "consortia" of faculty in different disciplines working across institutions that might create learning materials. "I am less concerned about this than I was a year ago. That kind of change is difficult," she observes. Pesce also sees some issues that must be addressed. "Developing and branding content in the digital world and disseminating it to a global marketplace is quite different than in the print world."

The Actual Future

Sifting through all the uncertainties and looking toward the foreseeable future, one likelihood, in the view of traditional publishers, is the online convergence of publishing products in higher education, professional education and "lifelong learning." This convergence has long been at the heart of Wiley's strategy. "Wiley's core businesses are becoming more connected," says Pesce. "Technology is now enabling us to provide customers with content from all our businesses. Wiley InterScience, our online service, initially only included STM journals. Recently, we added major reference works and professional journals."

At Thomson Learning, Dunn foresees a gradual evolution. "There is no bomb going off here. It's simply a matter of time—which was also true 10 years ago. However," he adds, "three things have changed since then. The market receptivity of both professors and students has gone way up; the sophistication of the technology has soared; and the availability of pedagogical techniques geared to electronic delivery are now available. We are not forcing old-style content to fit new digital tools."

As to when significant amounts of revenue will be generated for publishers, it's "anybody's guess," according to Hacking. "There is probably some little shop out there," she offers, "that is creating a electronic product that will become the 'tipping point.' Then publishers will be like lemmings and all rush after it. Hopefully, it won't involve a cliff."

Note: A related article on home schooling materials will appear in our July 9 issue.