Bucking the e-book trend
The growth of electronic books is simply staggering.
The Association of American Publishers (AAP) has revealed that its latest stats for February show a growth of 202%. The annual figures from January/February 2010 to the same time this year is equally impressive - a 169% rise to $164m (£100m).
Print books fared badly in the last year with sales falling 25% to $442m (£270m). But there is one area that is bucking that trend, which does not show up in AAP's figures. That is the market for renting books - the printed versions, not the e-book versions.
And the audience that is the most open to this practice is arguably the most digitally literate: students. Chegg is the leading book-renter in the industry and has been dubbed the Netflix of college textbooks. Its chief executive officer Dan Rosensweig says that, for students, accessing information in what might be regarded "the old fashioned' way is all about the bottom line:
"Our mission has not been to rent textbooks or not rent textbooks. Our mission has been to save students time, money and help them get smarter," said Mr Rosensweig, who previously worked as an exec at Yahoo and at Activision Blizzard.
"The higher education market textbooks continue to be easily 98% of the market. The reason for that is the technology is only getting ready now. Books have a better battery life. You can always depend on them. But just as importantly, you can rent a textbook substantially cheaper than you can get a new textbook, or a used one, or one that you can buy digitally," said Mr Rosensweig.
"Students are looking to get access to the content they want in the easiest format and at the least expense. For the moment, that means renting books."
Chegg said that last year it reached 25% of college students and plants a tree for every book it rents out. The company has just announced that it has planted its five-millionth tree, so I will leave you to do the maths.
In cold hard cash, Chegg said in January 2010 it had saved students a total of $100m. That represented the difference between what a student would have had to pay to buy a book versus renting it.
"This is a $10bn market, with over 200 million books changing hands every year," said Mr Rosensweig.
"If a textbook was $120 new to the student it would cost $100 used and we would probably rent it for about $55. That represents a substantial saving at a time when families in the US are struggling and education becomes more and more expensive."
A number of other players vying for the attention of struggling students agree there is money to be made in second hand books.
Rival company CampusBookRentals.com said about 10% of college students rent their books.
BookRenter.com, which had a bit of spat with Chegg over just who could lay claim to the #1 slot moniker, said it serves six million students, representing about 31% of the North American market. The company also claims to be "one of the fastest growing start-ups in Silicon Valley, growing at over 725% each year".
ValoreBooks.com promises to provide the cheapest textbooks in the nation by having students sell to students:
"We are an online marketplace. What an online marketplace is is an open platform. Anybody can sell their books and any buyer can buy any book," said CEO Bobby Brannigan.
"As you get more sellers on the site it drives price down. It's basic economics."
A new competitor will enter the fray at the beginning of next month, proving the industry is booming.
BookDecay.com will allow students to review how professors use required textbooks in a class, helping others to make informed decisions as to how - or whether - they should obtain the book themselves.
"One semester I bought several books, and they sat on a windowsill and kind of decayed, if you will," Rocco Carzo told the Democrat And Chronicle.
The site will allow students to buy, swap or rent books and will link to Chegg and Amazon.
While the physical textbook doesn't seem set to be replaced anytime soon, what about its digital rival? Why have e-textbooks failed to penetrate?
"It is a matter of getting the experience right and the price," said Mr Rosensweig.
"One of the things that holds it back isn't so much the technology, which will be solved. It's that school starts once a year. If it's not this August, it's next August.
"Education is one of the areas where technology has not yet had a chance to work its magic. Like everything in technology, you can't pick the day it is going to flip but you need to make sure you are ready for it. But it is going to happen."
He is betting that 2012 is the year the digital future will arrive.
Comment number 1.
At 14:38 27th Apr 2011, AKA_Fanzine wrote:"He is betting that 2012 is the year the digital future will arrive."
And what will he do when it does arrive? There are already 2 wars being fought over digital books, Kindle users against Amazons "only lend to 1 person for the life time of the book" and rights holders trying to force more money from libraries saying they can only lend a book 23 times before having to purchase it again.
Digital works don't decay so BookDecay.com might hit a problem, they are still the same copy as the day you bought it, which leads to the rent v buy argument. I buy the book and it's mine, I can do with it as I want (apart from reproduce it, but that's a different argument) if I choose to resell the e-book then it hasn't lost any value and I can resell for $120 (using the figures above) I lose nothing. If I was to rent the book it would cost me $55 and I lose that money.
I do like the idea of reducing the cost of education, especially with the new tuition fees in the UK, but rights holders are fighting hard to extend their monopolies into the digital era, I fear 2012 may not bring the future he dreams of....
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Comment number 2.
At 14:52 27th Apr 2011, Dave wrote:I found your blog very interesting. Especially how the rental market effects the publishers. When I was in school, I would occasionally keep some of my textbooks instead of selling them back. With today's rental programs the students have to send their books back, keeping more used books in circulation. College Book Renter is the third largest player in the rental market and is growing similarly to the rates you you referenced in the blog, see: https://business.indenvertimes.com/indt.indenvertimes/news/read?GUID=18000979
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Comment number 3.
At 09:53 28th Apr 2011, Fwd079 wrote:I am so gonna miss the paper books once the e-books hit the schools.
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Comment number 4.
At 12:49 28th Apr 2011, Tams wrote:I don't use books much for studying. They are expensive, even to rent and by the time they are publish often out of date or a lot of subjects. Universities sign up to journals, which are payed for partial through tuition fees. You can access the source of information; not paraphrases and you can find the most up to date thinking in an area.
The only benefit books seem to have is perhaps a better 'feel' and having arguments presented better in an easier to understand manner.
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Comment number 5.
At 14:42 28th Apr 2011, USAperson wrote:Saw a US news blurb where it was stated Tacky Romance novels had the biggest switch to E-Book from paper.
See https://www.paperbecause.com/paper-is-purposeful/still-an-effective-media
Software companies switched to PDF manuals many years ago. At site all or part of the manuals get printed out because the paper manual is easier to reference when you are trying to resolve a problem. This results in a greater use of paper unless the company has a duplexing printer.
Guessing the next big software revolution will be allowing you to print our all or part of that e-book textbook.
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Comment number 6.
At 09:40 29th Apr 2011, Pratish wrote:Maggie, thanks for a very interesting article - especially since I bought my e-book reader specifically to read textbook PDFs! I didn't even realise there was a whole market out there for book renting - I just wouldn't have thought it to be a practical solution given the amount of highlighting and marking I did in my own textbooks at uni.
I imagine once better annotation technology is in place with e-book readers, they will become a lot more popular with students. Coming to think of it, most students have laptop computers now anyway so perhaps the key will be to introduce and market an application on that platform rather than have students purchase an extra device.
Pratish (News blogger)
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Comment number 7.
At 10:06 30th Apr 2011, Indian Online wrote:In India we typically have no such problems given that the technology is largely too expensive for the average student. Photocopiers and cheaply republished texts, on the other hand, provide a great solution to textbook sharing - much to the dismay of traditional publishing companies.
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Comment number 8.
At 09:23 4th May 2011, Eponymous Cowherd wrote:I have tried a text book on the Kindle and, while it is a better experience than reading on a computer (or other back-lit) screen, it just isn't as versatile as a physical book. That may not be such an issue if the cost reflected this, and the other deficiencies of the eBook format (can't sell on, can't buy 2nd hand, can lend to friends, can't keep in the office for general reference use). The trouble is the eBook price is often more than the "treeware" price.
The Kindle (at least) is best suited to pure text (i.e. no diagrams), and hence it is best suited to regular fiction (novels). Here, again, however, price is a problem. Kindle editions of new releases are often more expensive than the hardback edition. This is largely down to the "agency" pricing model a number of publishers have forced on eBook retailers. This is currently under investigation by the Office of Fair Trading. I'm hopeful this will be ruled illegal (like the Net Book Agreement) and we will start to see eBooks at sensible prices again.
If it isn't outlawed, and eBooks continue to be priced above paper books, the pirates are going to have a heyday. An eBook is typically under 1Mb in size and most author's entire portfolios can be distributed in a file the size of a single mp3 track.
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