N. Gregory Mankiw is one of the most well-known economists in American politics. A Harvard professor, he chaired George W. Bush’s Council of Economic Advisers from 2003 to 2005 and served as a senior adviser for Mitt Romney’s presidential campaign. Many observers saw him among the top contenders to replace Ben Bernanke as chair of the Federal Reserve in a Romney administration.
But for hundreds of thousands of undergraduates, Mankiw is better known as the author of Principles of Economics, one of the best-selling college textbooks in America. Politics may have made Mankiw famous, but his book—list price: $293.95—has made him a very wealthy man.
The Internet has made access to many kinds of information more flexible and less expensive. Novels, films, songs, photographs—all manner of things can be gotten from a broad array of providers for low prices, or for free, in digital form. Creators and distributors of intellectual property have struggled to balance the erosion of old business models with opportunities to sell their products in new and interesting ways.
Yet the college textbook industry has not only managed to insulate itself from this trend—it has moved in the opposite direction, using digital content as a way to charge more money. Add-on software gets packaged with physical textbooks and often has an expiration date, undermining the resale market for books. Students and parents pay the price, which often gets added on top of increasingly onerous student loans.
Now a startup called Boundless.com is trying to change that with a service it calls “textbook replacement.” Over the last decade, a great deal of academic content has been made available on the Internet, for free. The open educational resources (OER) movement has produced high-quality texts, videos, charts, problem sets, and other useful content in a huge array of subjects. Some of the authors are college professors who want to share their work at a larger scale; others are sponsored by nonprofits promoting education in the developing world that embrace the ethos of the open Internet.
In fact, there’s so much open content out there now that sorting through it all can be daunting. Boundless curates OER and organizes it in a way that mirrors popular textbooks. So if you’ve been assigned to read Chapter 4 (“Principles of Supply and Demand”) of Mankiw’s book, you can simply head to Boundless and get free content that covers that same ideas and concepts, optimized for your tablet or e-reader. For students stocking up on textbooks for their spring 2013 classes, that sounds pretty appealing.
Naturally, the small group of major publishers that controls the lion’s share of the $7 billion textbook market is now trying sue Boundless out of existence. They don’t argue that Boundless actually copies what’s written in their textbooks, because it doesn’t. Instead, they argue that the order of chapters is sacrosanct—as if deciding to put “Principles of Supply and Demand” before “Elasticity” is so complicated and critical that it’s worth $293.95.
One of the litigants is Cengage, publisher of Principles of Economics. In the legal complaint filed with the court, the publishers explain, “The Research Papers in Economics project has ranked Dr. Mankiw as the 25th most influential economist in the world based on his academic contributions.” But if that really mattered, they would have no reason to sue Boundless, since consumers would be willing to pay a premium for Mankiw’s expertise.
In fact, publishers are simply protecting the rents they’re extracting from college students. The college textbook market is unusual in that the person deciding what people should buy—the professor—isn’t the one actually doing the buying. It’s akin to prescription drugs and suffers from many of the same excesses, with large companies vying to protect highly-profitable blockbuster products and employing legions of salespeople to influence the relatively small number of agents who decide what millions of consumers will buy.
The Boundless lawsuit highlights a critical aspect of higher education as constituted today: There are really two different higher education systems within the standard four-year curriculum, each with very different goals and underlying economic models.
In the first system, students take a broad range of standard courses. According to a U.S. Department of Education study, more than 20 percent of all credits earned by college graduates come in just 13 courses, including calculus, Spanish, biology, and intro to economics. These are essentially commodity courses, based on widely accepted concepts and information. No matter where you go to college, you’ll learn to conjugate Spanish verbs in more or less the same way.
In the second system, students take specialized upper-division courses often taught by professors with expertise in the subject. This is where students specialize academically, and where colleges really distinguish themselves in the depth and quality of education.
The problem for book publishers—and for colleges themselves—is that the first system is much more profitable and more replaceable than the second. Calculus hasn’t changed much since Newton and Leibniz invented it in the 17th century. Yet there have been seven editions of James Stewart’s best-selling Calculus (list: $245.95), the profits from which allowed Stewart to build a $24 million home with its own concert hall. And you don’t need calculus to calculate how much money colleges make by charging hundreds of students sitting in a lecture hall standard tuition rates, minus the negligible cost of an adjunct lecturer standing in the well. By contrast, nobody is going to create an open-source replacement for the Quintessence of long-time Harvard philosopher W.V. Quine. But not that many people are going to buy that book, either, or pay very much for it. (List: $26.50.)
So it’s not surprising that textbook publishers have filed the equivalent of the Recording Industry Association of America’s infamous lawsuit against the first MP3 music player. That’s what you do when your rents are threatened: use them to hire good lawyers.
The amount of free, high-quality online educational content is sure to grow. At the same time, the rise of the global middle class is creating a surge in demand for low-cost education. The best place to be, economically, is in between the people who want all that content and the content itself. It’s not easy to make smart choices about which free textbooks, courses, and videos are right for a particular student.
The Boundless method of using traditional textbooks as a metaphor for organizing content is one way to do it. But there are others. In November, a new venture called Project Blue Sky was announced. It will use a search engine developed by a company called Gooru specifically for online education, allowing people to “search, select and seamlessly integrate Open Education Resources.”
The owner of Project Blue Sky? Pearson, one of the textbook giants suing Boundless. Even as textbook companies try to keep the age of super-expensive college textbooks going a little bit longer, they’re also trying to position themselves for the much better, less expensive future to come.