Can Internet Competition Open Up the Textbook Market?

by Fred Siegmund

College textbooks

The market for college textbooks has never worked well.

In the age before the Internet, new books tended to be sold as a monopoly in the college bookstore. After the first semester of a new textbook, a used book market emerges that competes with new books sold at the bookstore.

Used books remain as a competitive problem from the publisher’s and bookstore’s point of view since used books wipe out sales of new books. For decades, publisher strategy called for a new edition every couple of years to eliminate the used book market.

New textbook prices continue to rise partly because of new editions and the limitations in used book markets, but also because publishers sell their books by first getting college faculty to adopt them for their classes.

Publishers advertise and promote directly to college faculty, but college faculty adopt books without paying much attention to price.

More Books Should Lower Prices, Not Increase Theme

In the popular press, publishers can sell more books if they keep the price down and turn to paperback editions later.

Book publishers realized long ago that sales are limited to enrolled students and retail competition will not increase their market, but could threaten their price structure.

Textbooks are sold to enrolled students; few others will buy a 1,000 page economics or sociology tomb to read for fun. The publishers can’t sell more books lowering the price, but many textbook markets are so big they don’t want to be left out.

I once had a book representative for a major publisher tell me that sophomore sociology, psychology and economics textbooks had over a million sales a year across the entire college market. He also admitted that the market was over published because so many publishers felt obligated to compete for some part of the market.

In other words, new book prices keep rising with more and more books being published to decrease sales and profits to individual publishers.

Competition that works should lower prices and increase sales. Competition that works does not bring higher prices.

Rent-a-Text Emerges as Competition

The Washington Post recently published a news article describing a new angle in the college textbook market (College students rent textbooks to save money). The article quotes a college book store price of $142.65 for a new “Social Psychology” text. The rental price is $60 for a semester.

The rental company, chegg.com, operates through the Internet similar to Netflix. An order is placed and the book is sent to the students address with a prepaid return box.

Apparently, the books arrive in bright orange boxes that are very visible on campus and in the mail room. These orange boxes are setting off alarm bells at college books stores. The article mentions that the book store at George Mason University is planning to start a rental program.

It is doubtful a rental market for textbooks could function without the Internet to reach so many students and to keep an inventory of books. The Internet is here to stay, so maybe, finally, there will be some competition and students will get a break on textbooks.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

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