How Merger of Two Textbook Giants Could Impact Course Materials

Higher Education

How Merger of Two Textbook Giants Could Impact Course Materials

By Jeffrey R. Young     May 3, 2019

How Merger of Two Textbook Giants Could Impact Course Materials

The announced merger this week between two of the world’s largest textbook publishers—McGraw-Hill and Cengage—could mean more students end up buying subscriptions to digital courseware libraries each semester, rather than making a trip to a bookstore.

That appears to be the hope of officials at the two companies, which have both been trying for years to shift the focus of their businesses from selling print books to shipping software and other online tools, and have recently been experimenting with subscription models. They argue that the digital options will mean lower prices and more predictability for students.

Both companies have also made deals with colleges to buy digital licenses to courseware in bulk, and then add that cost into a course fee or tuition. McGraw-Hill calls the approach “Inclusive Access,” and stresses that research shows that students who have course materials from day one of a class do better than those who put off or skip getting them altogether.

But educators and industry watchers have plenty of questions about the marriage of these long-time rivals, and about what it will mean for professors and students. And they see plenty of downside to these new business models, which could end the ability for students to buy used copies or borrow textbooks from the library as courses require digital tools to perform basic class functions like turning in homework.

The merger between the publishers must meet regulatory approval, but officials say it could be completed by early next year.

A Shared Subscription Could Happen Fast

In a joint interview with EdSurge, Michael Hansen, the CEO of Cengage, and Nana Banerjee, president and CEO of McGraw-Hill, said that allowing students the option of paying a flat fee for digital content across the publishers’ offerings could happen sooner than people might think.

That’s because doing so doesn’t require all the content to live on the same technology platform, but simply means setting up an account that can work across existing products.

That’s the way Cengage created its subscription product, says Hansen. Called “Cengage Unlimited,” the program offers students access to every digital textbook and tool the company sells, across the many different tech platforms on which they run. (Many of them were acquired as separate products over the years, such as WebAssign, an online homework application.)

He imagined the same approach will work once Cengage and McGraw-Hill become one company.

“It won’t be that complicated,” he said. “The unlimited subscription model is a business model. It is not a platform.”

Merger Will Mean More Tech Push

Both CEOs said they agree strongly on the need to move to a digital line of products, which they couched in terms of an urgent need to modernize education.

Only about 20 percent of courses in the U.S. use digital course materials, estimated Hansen, meaning that “80 percent of the students are still learning like my parents learned—with a book and with a teacher.” He argued that digital tools have the potential to help students learn better and to improve retention in courses. “We’re just at the beginning of that evolution.”

Banerjee agreed, noting that “this merger gives us the ability to invest in tech. We need new products and functionality.”

Concerns About Consolidation

Groups advocating for lower textbook prices expressed concerns about the merger, and offered a narrative of how and why the industry is changing that is very different from the publishers’ talking points.

“This is the struggle for the control of the infrastructure we use for digital learning,” said Nicole Allen, director of open education for the Scholarly Publishing and Academic Resources Coalition, or SPARC. She said that the textbook market is already down to only a few major players, and this merger would trim it even further. And that could mean less room for new entrants to come in and innovate.

She also worried about the amount of data that a company of that size would have on students. “The future of publishing is not about content, it’s about data and data analytics,” she argued. These digital texts provide publishers a window into student behavior and performance as never before, since the courseware can track which material students look at, for how long, and how they do on digital homework. “We may end up in a situation where publishers know more about students than institutions do if institutions don’t take action now to make sure we’re managing student data.”

She said she is not against using data or analytics, but wants to make sure educators and students retain control of the learning process.

Her group recently produced a landscape analysis of scholarly and textbook publishing laying out its broader critique.

The two textbook CEOs say that even though they are joining forces, they expect plenty of competition. Hansen mentioned expecting new digital products from competitors such as Chegg, and added, “I would not be surprised if Amazon builds something in this space.”

Students Want Choices

For many students, the goal is to find the cheapest way to get what they need for class, and they are used to making that calculation class by class. And many have expressed frustration when professors require them to buy access to digital courseware to turn in required assignments, as happens with a growing number of products offered by publishers, including Cengage and McGraw-Hill.

Megan Simmons, a sophomore at Barnard College and director of strategy for the national nonprofit group Student Voice, had one of her first experiences with a digital homework tool in an Italian class. The textbook cost $150, and the access code for the accompanying digital system was another $100. “And the access code can’t be reused,” she complained, meaning she couldn’t resell it after the semester. “Everyone is basically stuck buying that $100 access code.”

Even though she said the courseware turned out to be helpful, she resented being forced to buy it. “I think it’s ridiculous,” she added. “It’s such a clear indication that it’s about profit and not about the well-being of students.”

Hansen, the Cengage CEO, says he understands that students do not like getting blindsided by additional costs. “What students rightly object to is if there is some hidden cost that they weren’t aware of,” he said. “With the unlimited subscription model, you have access to everything we have, so we don’t do an upsell” to something like a homework system, he added.

Banerjee, of McGraw-Hill, said that options like Inclusive Access, in which colleges broker the deals and pass along the costs through fees, also helps lower the cost per student “because we are getting high volume.” He described that as a “win, win win.”

Simmons said she has no idea which publisher produced her Italian courseware, or the other textbooks she’d been assigned, so she’s not sure whether a subscription would be worth it. But she said she worries more about how the growth of these new digital options would impact low-income students. In particular, she pointed out a resource at Barnard called the Barnard FLIP, which provides a lending library of textbooks for those who can’t afford to buy them. With digital access codes, such sharing wouldn’t be possible, she said.

New Models Have Challenges

The publishers’ new business models have also faced legal challenges.

A bookstore in Charleston, South Carolina, has sued Trident Technical College over its Inclusive-Access deals with publishers, arguing that the arrangements violate Department of Education requirements that colleges that provide digital access programs give students an opt-out that lets them buy the materials from other retailers. The college says it does offer such an opt-out, but the bookstore argues that it erects barriers for students because it has contracts with publishers guaranteeing it will bring in a set number of sales.

Meanwhile a group of authors sued Cengage over its Cengage Unlimited subscription service, arguing that it violates their agreements with the publisher and will cost them royalties. The company issued a statement in response saying that most authors back the arrangement and that the subscription service is in line with its author contracts, and the case was later resolved.

Correction: This story was updated to indicate that Cengage settled a lawsuit by authors regarding Cengage Unlimited.

 

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