Colleges Are Striking Bulk Deals With Textbook Publishers. Critics Say...

Higher Education

Colleges Are Striking Bulk Deals With Textbook Publishers. Critics Say There Are Many Downsides.

By Jeffrey R. Young     May 23, 2019

Colleges Are Striking Bulk Deals With Textbook Publishers. Critics Say There Are Many Downsides.

On some college campuses, it’s nearly impossible to find a Pepsi, because school officials have struck a deal with Coca-Cola to be the preferred soda vendor. Now something similar may be happening with textbooks, as publishing giants start to broker campuswide deals with colleges that give students unlimited access to a publisher’s digital textbooks at cut-rate prices.

For instance, Union County College, in New Jersey, recently forged a deal with Cengage to give the campus a steep discount on the company’s Cengage Unlimited subscription if they buy in bulk. College leaders stress that professors retain as much academic freedom as ever to choose which books to assign. But department leaders are encouraging professors to take a close look at the Cengage books to get the deal.

“Even if they love Pearson [textbooks], some faculty, when they saw some of the Cengage options, said, ‘This is pretty comparable, that’s fine,’” said Bernard Polnariev, assistant vice president for academic affairs at Union County College. “If they felt that Cengage is not as strong and Pearson is better, they kept with the Pearson.”

While in Big Soda the main players are Coke and Pepsi, their equivalent in the publishing industry are Pearson and Cengage (which has announced that plans to merge with McGraw-Hill). And of course there are other vendors, like Elsevier and Wiley (like Jones Soda and RC) and openly-licensed resources known as OER, or open education resources (which are something like a Sodastream homebrew).

Of course, there are big differences between textbooks and fizzy drinks. These new deals cut to the core of the academic enterprise.

The latest push by publishers may reshape the way students purchase college textbooks, ending the generations-old tradition of students shopping for course materials in physical bookstores. In the new model, students usually pay a per-course fee that covers digital texts and homework systems. It doesn't always involve working closely with just one publisher—many campuses sign up with a mix of providers or work out different deals for different departments.

Technically students can opt out (in fact federal rules require such an option), but in many cases doing so is cumbersome. And the colleges are obligated to offer lower prices for the materials than what students can typically find themselves.

Publishers claim that the new model, called “inclusive access,” will reduce the price of course materials (and thus the cost of college), while also making sure every student has everything they need for their classes on day one. That could mean a big win for students on financial aid who often wait until their awards come in to purchase textbooks, and risk falling behind as a result.

But critics see plenty of potential downsides to this new world where colleges do the textbook shopping for students by negotiating bulk deals—and where materials are digital-only. Even though the per-item costs with the bulk courseware arrangements are usually lower than the retail price, the switch eliminates the ability for students to find a used or free alternative from a friend or library. Ironically, students who were good at shopping around in the old textbook model may find themselves paying more for materials in the new model.

And some “inclusive access” deals leave out bookstores entirely, and make textbook purchases a thing that happens between college administrators and textbook giants. Many consumer advocates worry that once publishers have effectively eliminated the used textbook market and other forms of competition, they will jack up prices, even in their bulk deals with colleges.

And there's the fact that surveys show many students still prefer printed textbooks to digital ones.

But like them or not, the arrangements are getting more common.

“There’s a surprising amount of momentum behind it,” said Phil Hill, a longtime edtech consultant. At a recent conference on textbook affordability, he said bookstore officials and others were using the term “IA” (for inclusive access) frequently and without feeling the need to stop and explain it. “Inclusive access has already gotten up to acronym status,” he said.

“It’s part of the shift from publishers getting away from print,” Hill added. The best way for publishers to be able to lower the per-item cost, he said, is to create an environment where a higher volume of students actually buy the materials from the publishers.

Lawsuit in Charleston

Trident Technical College, in Charleston, S.C., has become a test case for this new model of inclusive access.

In 2018 the college began experimenting with a system of course fees in two dozen courses that cover access to digital materials used in those courses.

College officials decided not to go with Cengage Unlimited because that seemed at odds with giving professor choice over what materials to use, said Cathy Almquist, vice president for academic affairs at Trident. The economics of the arrangements only work out if a large number of professors across multiple subjects adopt the company’s books, she added, since that way the students save the most money with the deal that gives access to all the company’s digital books.

“How do you do Cengage Unlimited unless your entire campus goes to Cengage? And we’re not going to do that,” she said in an interview. “That’s one of the things I assured faculty from the beginning. Our faculty are still in charge of selecting the materials for their classes.”

So the college chose to work with a company called RedShelf, which helps colleges manage inclusive access arrangements with a variety of publishers. Each professor can choose to adopt digital materials from a range of publishers, and then the company helps manage the logistics of buying bulk licenses from each of the publishers.

“RedShelf is to publishing, what Expedia is to airfares,” said Almquist. “It gives us the ability to work with several different publishers.”

She compares the new course fees in the participating classes to a lab fee for a biology course. “The fee is attached to the course,” she said, “and that just rolls into their overall tuition and fees bill.”

Almquist argued that the new system is far cheaper for students than the traditional way of buying course materials, especially for those from low-income backgrounds. “Students who have the highest financial need have the least ability to shop around because they don’t have a credit card” and therefore can’t use Amazon or some textbook rental programs, she said. “We’re making sure the cost to the student is lower than anywhere else the student can go to purchase the material.”

For courses at Trident that use inclusive access arrangements with publishers, students can access the material on their first day of class through the course-management system, just a click from where they are looking at their syllabus and other course information. And all students have two days from the start of class to opt out of the materials fee if they choose to try to find a digital access code for the same materials on their own (or just forego having the materials). A 2015 regulation by the U.S. Department of Education sets the rules for how colleges can embed course materials into class fees, which must be lower than the “competitive market rates” of the materials. The rule also requires an option for students to opt out.

“The intent is for us to do some of that leg-work on behalf of students and to a certain extent to level the playing field,” Almquist added.

The deal has drawn controversy though. A second-hand bookstore chain called Virginia Pirate Corporation, which has a location near the campus, sued the college earlier this year, arguing that the institution is not following the rules for letting students opt out. The chain’s leaders say that the college is unfairly impacting the bookstore’s sales as a result.

Jeremy Cucinella, regional manager for Virginia Pirate Corp., said in an interview that in some cases professors at Trident are telling the students that they can only use the access codes provided by the college or otherwise not allowing students to opt out. And he says he can find better prices for the digital access codes than even the reduced rates negotiated by Trident officials.

Almquist contends that she doesn’t know how students could find a better deal, but that they can opt out if they want to. Per-course fees in the participating courses run from around $20 to $115, far lower than textbook costs for typical courses. And she said that less than 10 percent of students have chosen to opt out of the program.

Cucinella, of Pirate Textbook, said he uses “creative-sourcing” of access codes, which he said is the only way to stay in business. “There are tons of wholesale options out there. There are students who will buy an access code and not need it and sell it on Amazon,” he said. “We scour any possible outlet to source books that we can if it’s going to lead to end user savings for our customers.”

No publishers are listed as defendants in the lawsuit, though the college works with several.

Todd Markson, the chief strategy officer for Cengage, said inclusive access pricing is the same nationwide, and lower than what the company offers through other arrangements. (He acknowledged that some colleges doing bulk deals with the Cengage Unlimited program are getting lower rates.)

Tom Malek, senior vice president and head of partnerships at Pearson, said that some stores are able to offer low prices on some digital products, but that “it happens in pockets, but it doesn’t go to scale—and it can’t go to scale.” In other words, he argues that it is rare to find such discounts, so that for most students the price of the college-negotiated materials will be the lowest available.

Publishing officials said that there is also a black market of sorts for textbook access codes, some of which have been obtained through illegal means, though neither Malek or Markson accused the bookstore involved with the lawsuit against Trident of going that route.

This month an article in the student newspaper at Pierce College, a two-year college in Los Angeles, said that the campus store there has reported several incidents of students opening the shrink-wrap of a textbook in the store without buying it and taking a picture of the access code so they can use it in their course. Since each code can only be registered once, that amounts to stealing the digital content and diminishing the value of the store’s bundle.

Cucinella, of Pirate Textbook, denied using any stolen codes, and said that no one would buy a photo of a code from his stores. He said he sells the same things the publishers do—cards that the purchaser has to scratch the coating off to reveal the access code. “It’s almost like a scratch-off lottery ticket,” he said.

A Student’s View

Deontae Hardee is a student at Trident Tech who opted out of the college’s system and purchased his code from the used bookstore for a Principles of Management course.

He said the college’s fee was $100 for the course, and he was able to find the exact same materials through the used store for $70. But he found the process of opting out difficult. “They gave me the run-around for a while, saying ‘Just call this person,’ or ‘You have to call that person.’ It kept going on and on”

Hardee said resolving the issue took time away from his studies. He also works at a bank, sometimes drives for Uber, and has a wife and young son to spend time with as well. “I feel like this should be one less thing that I should be having to worry about,” he said. “It was a horrible experience.”

He said he is always looking for the best deal for textbooks, and that for other courses he is able to sell back his books after the semester is over, which is not possible with a digital access code.

“I never thought of myself as a college type of guy because of the cost,” he said. “Any money-saving tactic I can find” is key, he added. He said he hopes the college updates its policies to make it easier to opt out of its program for those who want to shop around.

Concern About Lock-In?

If such inclusive-access arrangements become widespread, some worry that publishers will raise prices.

That’s one argument made by the Scholarly Publishing and Academic Resources Coalition, or SPARC, which advocates for lower textbook costs and OER. “There is ... no mechanism preventing publishers from resuming their historical rate of price increases once the model becomes widespread,” the group said in a recent analysis of the changing landscape for course materials.

Publishers, for their part, promise that they won’t hike prices later.

“There’s always going to be skeptics when you go to a new model,” said Malek, the Pearson executive. “It’s going to be a journey, and it’s a long path that we’ve been going along with students to earn back that trust.”

Markson, Cengage’s strategy officer, argued that the company is “extremely committed” to driving down costs for students. He said that the secondary market has been bad for students as well as for the publishers, describing used books with highlighting marks from previous owners as “subpar offerings.”

“We think those are not in the best interest of the student,” he added.

The college officials making these big campus-wide deals feel that even without a used-textbook market, there will be other forces to keep publishers in check on pricing.

Polnariev, from Union College, said he’s going to monitor the arrangement with Cengage carefully, and that he can always go to Pearson or others to try to get a better price or terms in the future. “We’re locked in for $130 [per license] for three years, and that’s a great timeline for us to see if that’s working to see how it’s working for faculty and students,” he said. “Competition is good,” he said.

And he added the old way of charging students hundreds of dollars for a single book was just not sustainable. “The book prices have been so inflated over the years, it’s disheartening what the costs are to students,” he said. “We haven’t done right by the students at a larger level.”

At Trident Tech, meanwhile, Almquist said she has another point of leverage with publishers: those OER options sitting out on the web for free or lower cost. “If you make it too expensive, colleges are going to look harder at OER,” she said. And she said if publishers try to raise their bulk rates too high in the future, “the colleges won’t go for that—the students won’t go for that.”

Who Owns Student Data?

But what if price isn’t the biggest issue?

SPARC, the consumer-advocacy group, said in its report that control of student data and what can be learned from it is the more important issue that colleges should pay attention to as they negotiate these new inclusive access arrangements.

“Once students transition to digital materials it enables both their institutions and the commercial vendors to collect vast amounts of data on them: their physical location when they use them, their study habits, their learning profile, and granular knowledge on their performance,” they wrote in their report. “This poses significant privacy issues, and—potentially—legal liabilities which could become, at some point, very grave.”

For Union College, data wasn’t a part of the discussion, said Polnariev, who says he is focused on student success and lowering costs.

In the short term, students appear to be spending less on course materials now than in the past.

According to the latest survey from the National Association of College Stores, annual student spending on textbooks has gone from about $700 in the 2007-2008 academic year to $484 in 2017-2018.

Richard Hershman, vice president of government relations for the association, said in an interview that student spending on textbooks is the only area of college spending that is actually going down.

The same survey, however, said that more students than in the past wait to buy course materials until after the first week of class, either because of their high price or because they want to wait to see if the professor makes use of the materials before buying them.

In other words, students are used to being in control of how they source their textbooks, and they don't like feeling like they are being forced to buy, even if the colleges consider the resources essential.

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