We received a visit from Akademos founder and chairman of the board Brian Jacobs today! As noted previously on our blog, Brian left Akademos to start a new company focused on Open Educational Resources called panOpen. panOpen was selected to be part of the Kaplan EdTech Accelerator program and has been busy building an OER platform for a list of new client schools. To sign up for panOpen’s OER pilot program, visit them at http://www.panopen.org/.
Last week the team at Akademos received a visit from some of Connecticut’s government officials as they toured the state visiting education organizations and growing businesses. Lieutenant Governor Nancy Wyman, State Senator Bob Duff, and State Representatives Bruce Morris and Chris Perone all stopped by Akademos’ corporate headquarters in Norwalk, CT to talk about textbook affordability and overall college affordability.
Our interns, Rebecca Stabinsky and Marissa Intrieri were front and center. Rebecca made sure to grill the CT officials about what they are doing to improve the affordability of a college degree, citing rising student debt and the increased need to work one or more jobs to afford college as rising issues.
Below are some pictures from the visit.
As a virtual bookstore provider, part of our philosophy is that you really don’t need a large physical footprint to sell textbooks. So, sometimes I grapple with how much exhibit space to get at the education conferences we attend (one booth is 10′ by 10′). Does an innovative education technology company that is trying to change mindsets about the business model of a college bookstore really need 800 square feet to get the message across? That is a question that you, the college administrator, would probably be able to help me answer. But let’s agree that selling to CFOs is a little different than selling to students.
At a recent conference, as I walked the hall, I did note some organizations with build-outs that proved Rome can be built in a day. Just one question–who is paying for all this? Yes, the company, but more than likely the school and their students. So, as an educational eCommerce company that is in a growth stage, does buying more booth space show that we are bigger?
The irony is, we are bigger because the market has finally caught up to the importance of online bookstore services for physical and digital textbook delivery (AKA, students are fleeing brick-and-mortars for online retailers in their search for cheap textbooks). If I defer to my retail 101, the bottom line is that every square foot of physical space better be performing darn well. Otherwise, eCommerce 101 will tell you to put it on the Web. And there, I will be judging sales performance per square inch. We also need to account for the cost of warehousing. What does it cost to store and ship all this overhead?
I’m pleased to say that the Akademos booth has been packed with customers stopping by to say hello. If I had to judge our performance per square foot, I’d say we exceeded projections by a mile.
Akademos board director Eric Fingerhut was just named the President of Jewish student organization Hillel. Congratulations to Eric and we support him in his endeavors to continue supporting student learning.
Eric D. Fingerhut, a nationally recognized leader in education and economic development policy, was until recently the Vice President for Education and STEM Learning at the Battelle Memorial Institute, the largest non-profit research and development organization in the world. He currently serves on the Board of Directors and Advisors of Akademos,the educational online bookstore provider. Fingerhut previously served as the Chancellor of the Ohio Board of Regents, as an Ohio State Senator and as a member of the United States House of Representatives. Chancellor Fingerhut earned a Bachelor of Science degree with highest honors from Northwestern University in 1981 and received a law degree from the Stanford University School of Law in 1984.
The higher education conference season is in full effect. I attended an ed tech conference called UBTech held by University Business magazine earlier this month in Orlando, Florida. This was my first time attending UBTech, having formerly mainly focused on the CampusTech conference. UBTech had a good mix of college and university chief technology officers, chief information officers, chief financial officers, and similar roles. It also attracted ed tech companies, textbook publishers, bookstore services providers, and other organizations in the industry.
A central theme in Orlando this year was reducing college operating costs to manage net revenue. Speakers called out that the higher education business model and delivery system appears broken. Particularly at those institutions that are struggling with revenue generation. Why do we continue to push a traditional college delivery model in areas where technology is clearly positioned to disrupt (yes, it is overused, but you get the idea) business-as-usual? For my part, I spoke at a session about trends in bookstore services and textbook delivery. My session attracted a diverse mix of college CTOs, CIOs and CFOs, as well as publishers, our textbook rental partners CampusBookRentals, and some friendly competition by way of bookstore service operators like Follett and Rafter.
The data I presented contrasted how college technology officers and financial officers see the future of the college bookstore. For example, while only 18% of college business officers in our textbook delivery survey stated college bookstores will sell textbooks completely via their online store, 95% of college technology officers we (more informally) surveyed at UBTech see the future of textbooks as delivered completely in an online bookstore. Now, given we were at a tech conference, I am not surprised. But the technology folks also noted they are ‘not so much’ involved in decisions about the bookstore. Which leads me to the question, Why are our CTOs and CIOs not more involved in the selection of bookstore service operators and strategies?
I usually approach conferences as an opportunity to listen. I might come prepared with a leading question or a thesis I am trying to get feedback on. This year, it was definitely about asking how involved college CTOs and CIOs are in textbook delivery and bookstore services. But also, and perhaps more nuanced, how much do they want to be involved, to be included in the textbook dialogue?
Those that attended our UBTech session were self-selected in that they chose to attend a session about bookstore services, so with that, are telling us they want to be more involved. But overall at the conference, most tech folks I spoke with shared that they were somewhat neutral on the topic of bookstore services. But they were quick to offer that online delivery is the way to go. In my session’s group discussion, the majority of schools shared that they have brick-and-mortar components to their textbook sales process. They also said that one of the biggest drivers to building out bookstores in the future is the eventual adoption of digital texts by students and faculty. Our contemporary at Follett estimated that number at an average of 10%, while Rafter and CampusBookRenters had less information on digital text adoption, likely because the rental market focuses more on physical textbook delivery. Everyone from vendors to schools agreed that eTextbook adoption was doubling each year, though still at small numbers.
But if eBook adoption is doubling year-over-year at colleges, when eTextbooks do indeed reach the tipping point, the mass adoption of digital texts by college students will happen “fast and furiously” (to quote the keynote speaker…more on that in a minute). The colleges and universities in my session said this was one of their biggest concerns—they want to be prepared when ‘digital happens.’ So while competition by third party sites selling textbooks (such as Amazon) was a dominant concern for CFOs, digital textbook adoption was the clear driving issue for our information technology officers.
Now on to that keynote address I mentioned. The opening keynote was delivered by Gene Wade, co-founder and CEO of UniversityNow, was well received. I’d heard of UniversityNow before but didn’t really know what they did. Here is the gist:
UniversityNow identify themselves as a social venture whose mission it is to ensure that a quality higher education is available to people everywhere. They manage Patten University and New Charter University, both online institutions serving predominantly working adults and offering course delivery within a somewhat new paradigm. For example, one set of instructors teaches you, while a different set grades you (anonymously). Tuition is based on how long it takes to complete your program (typically about 2-3K a semester for as many classes as you can muster). Learning is self-paced. Exams aren’t “unlocked” until students can show within the LMS that they have mastered the skill sets needed to pass them. Classes are held completely online. Course materials are digital.
Mr. Wade shared that MOOCs have made going to school online “sexier,” but that they are not addressing the market need (eg., a call center employee who is getting left behind because he or she does not have a bachelor’s degree; and needs a convenient, affordable degree that represents key learning competencies learned). According to the speaker, UniversityNow’s flagship school, Patten University, costs 11x less than a 4-year private school. At some schools, cost of operation, of delivery, is higher than net tuition coming in. His point was that we need to lower the cost of delivery or else.
His most powerful message? That five years from now, most colleges and universities will be dealing with “the wreckage.” Schools like UniversityNow are happening (as its namesake suggests) now. His metaphor…the rest of world will go straight to cell phones while ‘old schools’ will be dealing with their outdated land-line systems. And, of course, what is that cost of that?
If college bookstore administrators want to be ready for the move to online textbook delivery, they might consider the parallels of planning for online course delivery. The MOOCs and SOOCs are indeed coming. If schools can equate online course delivery with online textbook delivery, and maybe capitalize on the popularity (and hysteria) of MOOCs in order to frame the strategies for digital textbook delivery, we think they can be well prepared to build an innovative yet practical vision for the college bookstore of the future.
The Government Accountability Office (GAO) today released its report on the implementation of the Textbook Affordability Provision of the Higher Education Opportunity Act. The report was released on-time (early, even) and comes two years after the provision was passed.
The GAO found a majority of colleges and universities stated they do provide textbook information online, though the report was unclear the number of schools the data represents.
- 81% – schools provide textbook information online
- 19% – schools DO NOT provide textbook information online
Of the schools that did not provide textbook information online, 12% stated they included textbook cost in tuition or fees.
The GAO report also noted that publishers stated they are disclosing the textbook information required by HEOA (such as pricing and format options) and are also offering unbundled course materials. But according to the report, “stakeholders GAO interviewed said these practices have had little effect on faculty decisions.” Faculty interviewed by the GAO shared that they prioritize “selecting the most appropriate materials for their courses over pricing and format,” which is no surprise and is as it should be. Faculty also added “they are more aware of affordability issues than they used to be,” though there was no data to judge progress on faculty awareness.
GAO also shared feedback from students they interviewed that “students have benefited from timely and dependable textbook information” such as having “sufficient information and time to comparison shop for their course materials before each academic term.”
Overall, the report made no recommendations, but in noting that they stakeholders they interviewed believed these new textbook affordability practices were not impacting faculty adoption decisions, underscores the lack of significant data that could track whether faculty have indeed received textbook information such as costs, and whether faculty have weighed this information in their textbook adoptions.
The Textbook Affordability Provision (SEC. 133 of HEOA) was passed in 2010. Its purpose is to ensure that students have access to affordable course materials by decreasing costs to students and enhancing transparency and disclosure with respect to the selection, purchase, sale, and use of course materials.
GAO was tasked with reporting on implementation by institutions of higher education, college bookstores, and publishers, with a focus on the availability of college textbook information on course schedules; pricing information to faculty publishers; use of bundled and unbundled material in the college textbook marketplace; and implementation of the provision by institutions of higher education, including the costs and benefits to such institutions and to students, all on or before July 1, 2013.
You may have seen the recent post on the Akademos blog summarizing outcomes from our survey of college and university CFOs about textbook trends and bookstore services practices. Many of our findings were not a surprise—such as the idea that students are leaving the college bookstore to shop at third-party retailers because of perceived better pricing. Others were a bit confounding—like the desire to offer students lower-cost textbooks, while simultaneously hesitating to sell textbooks from anywhere but brick-and-mortar college bookstores.
As college administrators search for the right direction regarding bookstore operations, I think lessons from changes in the trade bookstore business are worth considering in this discussion of how college bookstores may evolve. Today’s trade book consumer is fiercely value-conscious, and the brick-and-mortar bookstore business has been revolutionized by the selection, price, and speed of delivery offered by online retailers. Local bookstores that have survived have done so by offering unique services and products not readily available from online sellers.
Are college students any less concerned about value? A recent article published by The Chronicle of Higher Education (“Students Get Savvier About Textbook Buying“) shows that students are also diligent bargain-hunters. We see little evidence that college bookstores are adapting quickly to this challenge of providing superior value to their students. In fact, the trends we see from examining RFPs and college bookstore contracts suggest the opposite.
Bookstore contracts are too frequently awarded to service providers who promise double-digit commissions to schools, or multi-million dollar capital commitments to rebuild student centers or other campus facilities. Yet aren’t students the ones really paying for these high-cost contract commitments? And what of the corresponding business practices resulting from these agreements that conflict with the mission of higher education?
Here are a few consequences that give us concern:
- Financial aid dollars are tied to use at the college bookstore, so students face the dilemma of using out-of-pocket funds to purchase low-cost textbooks outside the college bookstore, or running up their already high debt burden by overpaying for their course materials in their college bookstore.
- Custom textbooks that offer little incremental value beyond the standard editions are developed in a coordinated effort between publishers, faculty, and bookstore operators. These books are often priced extremely high, and their exclusive availability in the college bookstores thwarts students from renting or purchasing used editions of these textbooks elsewhere.
We think it’s time to focus on how this cycle impacts student outcomes and drives up the cost of education, particularly with regard to attrition. It is estimated that “as many as one in three [students] frequently opt not to purchase required academic materials due to cost” (National Survey of Student Engagement, 2012). We know that for many community college students, the cost of learning materials can be as much as the cost of tuition. How is this cycle burdening schools with unintended costs from poorly prepared and under-performing students who don’t persist to completion?
It is only a matter of time before colleges must actively consider more efficient ways of meeting their students’ needs through alternative textbook and course material delivery platforms. If it is possible to provide complete availability of course materials, a robust used and rental marketplace, and access to free teaching materials like Open Educational Resources, then why are college administrators not more engaged in exploring alternatives to stocking textbooks in their physical stores?
In the end, we see the conversation about textbook costs as moving into a broader circle, involving the college CFO, provost, and president. College presidents have not been fully engaged in considering how schools meet this critical student need more efficiently. But since they are also under enormous pressure to cut costs and improve educational outcomes, the day when college presidents turn their attention to this key piece of student performance is surely close at hand.
We will soon share a comparable survey of college presidents and provosts to explore how their impressions of the issues raised here compare to those who, understandably, are primarily focused on the financial interests of their schools.
To learn more, sign up for our textbook delivery and bookstore services alerts.
As an education technology company that provides online bookstore services to schools and their students, Akademos has always had anecdotal information from clients and students regarding the changing landscape for textbook services. We sought to validate the concerns that college chief financial officers (CFOs) had expressed to us about the future of their textbook services given the challenges presented by a vast marketplace of external competition, and the requirements of meeting new digital delivery needs presented by growing online curriculum.
Thus, we commissioned the first comprehensive survey of college CFOs regarding the future of bookstore services, with the results published in March 2013 here in a white paper. Here is a snapshot of some key findings:
- 89% of respondents confirmed that students are increasingly turning away from campus-based bookstores in favor of third-party providers, citing, on average, 28% of students are shopping elsewhere.
- Respondents pointed to price as the primary reason students bypass the college bookstore (78%), with students’ inclination to purchase online a distant second (12%).
- Survey respondents indicated that on average, 56% of textbook sales are transacted with financial aid.
- Respondents ranked giving students access to high-quality, low-cost textbooks as the most important service institutions can provide regarding the sale of textbooks.
- 88% believe textbook costs impact student retention and persistence.
- 82% indicated that textbook sales have been flat or down over the past three years.
- 18% stated they believe textbooks will be sold exclusively in a school online bookstore, while 80% are of the opinion that their school will utilize both an online and brick-and-mortar store.
Overall, textbook delivery and bookstore services are only now becoming a prominent issue for CFOs (the topic doesn’t even come up on previous surveys about CFOs’ general responsibilities). This rise in priority is likely due in part to increasing attention to the costs vs. outcomes of higher education from students and their families, accreditation committees, and the government (e.g., HEOA). The question becomes whether the competitive and technical challenges of serving student-needs in an increasingly online world can be met by the current model, particularly by college bookstores that sell textbooks in a brick-and-mortar environment.
Competition from online, third-party providers is of major concern for the viability of the textbook business at campus bookstores. Students are leaving the school-sanctioned bookstore because of better pricing elsewhere, and this loss of customers is driving schools to more closely examine their textbook affordability, both for business reasons—revenue from textbooks appears to be in decline—and for educational reasons—charging students exorbitant mark-ups on course materials to help fund school initiatives is becoming an increasingly questionable practice in higher education.
Below is a summary of top outcomes and analysis from our survey on textbook delivery and bookstore services.
Textbook costs impact retention and persistence
The impact of college affordability on student outcomes such as retention, persistence and completion is becoming more evident, particularly in those programs where the cost of textbooks could exceed the cost of the course.
The majority of CFOs (89%) indicated textbooks costs do have some impact on retention and persistence. Given students are reporting that they do not buy all of their required books for a course, and graduation rates are tied to accreditation and other funding, textbook costs are joining tuition and fees as a potential cause of attrition.
Students are shopping outside the school-sanctioned bookstore for textbooks—predominantly choosing third-party, online retailers
Whether you are a college CFO, a faculty member, a student or parent, or just a member of the general public, you likely recognize that students are shopping online in order to find lower cost textbook prices.
Most CFOs (89%) confirmed that students are indeed shopping for textbooks outside of the school bookstore. What percentage of students shopping outside the school bookstore is too much? We think that is, and will continue to be, a central question in bookstore services. If you are a CFO reading this, do you know how many student customers are buying their books at your bookstore and how many are leaving?
CFOs in our survey reported that on average, 28% of their students are shopping elsewhere. Yet in the recent National Survey of Student Engagement (NSSE), between 25% and 33% of students reported not even buying required textbooks. So who is shopping at the school bookstore for their texts (see Financial Aid point below in this post)? In our experience, the portion of students perceived as shopping outside the bookstore is under-reported. The majority of schools are either not tracking this data, or not analyzing this data in an actionable way. Additionally, one-on-one feedback from school administrators across the country in the last year actually points to the contrary—that less than 30% of students are shopping in the school-sanctioned bookstore for textbooks. This discrepancy is surely a challenge to be reconciled by schools and their bookstore providers.
Further, a follow-up focus group indicated an interest in understanding how many of those students are purchasing the majority of their books at the school bookstore.
Cost is the biggest issue chasing students away
It is likely no surprise that respondents pointed to price as the dominant reason (79%) for students shopping elsewhere, with the belief that students are more inclined to purchase online as a distant second (12%). When you put these together, it confirms an overall trend we have heard from administrators and students alike: Students are increasingly buying textbooks on third-party websites because they can find better deals there than at the school bookstore. And, again, it is no surprise that school bookstores are experiencing challenges competing when you consider the costs of running a brick-and-mortar with limited or local inventory vs. an online operation with national inventory.
Access to high-quality, low-cost textbooks is the most important service schools can provide
The “most important service schools can provide students regarding the sale of textbooks,” as ranked by 53.5% of respondents, is to provide “access to high-quality, low-cost textbooks.”
Additionally, in the open-ended answers, textbook affordability was listed as the second most-cited concern about bookstore services (after staying competitive).
Used books are the most important resource to the future of schools’ bookstores
When asked to rank resources such as new, used, digital, rental, and OER (Open Educational Resources) in order of importance to the future of the school’s bookstore, nearly 80% of respondents ranked used books as number one. It is interesting to note that a majority of CFOs rated both supplying used books and supplying rentals as very important, yet revenue from new books is still outpacing that from both of these categories combined.
Financial aid, designed to assist financially-challenged students, is actually leading them to the most expensive options for textbooks
On average, new books make up approximately half of all textbook sales at respondents’ school bookstores. New books are also the students’ most expensive option. If our neediest students buy elsewhere, they are forgoing their aid. But, if they buy at the school bookstore, they are likely spending more than they need to on textbooks. This Catch-22 is contributing to both the rising student debt burden and mounting budgetary pressures on financial aid.
In the face of competition, schools still believe they will be in the business of selling textbooks out of a brick-and-mortar in the coming years
This might be the most surprising outcome of the survey. A majority of CFOs believe that their school will continue to sell books at their brick-and-mortar bookstore. Only 18% of college CFOs believe textbooks will be sold solely online. It is particularly surprising given CFOs recognize that cost is the biggest issue chasing students away, and that financial aid is binding students to shop at stores where costs are less competitive than online alternatives.
How feasible is it for schools to balance textbook pricing for their online bookstore and their brick-and-mortar store, particularly without unnecessarily inflating prices for students?
When the responses were posed to a focus group following the survey, some cited long-term contracts for brick-and-mortar services and the inability to consider alternative options until those contracts expire. The question then becomes, if the bookstore is not competitive in current times, how will long-term contracts affect schools’ ability to keep up with changing trends and technologies five or ten years into the future?
Staying competitive is a top business concern
What are CFOs’ top concerns in their own words? The open-ended answers revealed a consistent set of issues relating to textbook delivery/college bookstores, but staying competitive was the top cited issue.
What Can You Do? Best Practices Bookstore Services Audit
If you wish to further examine the issue of textbook affordability at your school, what can you do? We recommend starting with an audit of your bookstore practices, taking into consideration how the economic model is changing as well as how student preparedness affects overall student academic performance. We have put together the Akademos Textbook Affordability Best Practices Audit to assist you with evaluating both the health and the mission of your textbook practices. As always, you can also reach out to us directly to have a conversation about your textbook delivery mission and practices.
What do CFOs think about the future of textbooks sold in college bookstores? Our 2013 College CFO Survey on Textbook Delivery and Bookstore Services has been completed and posted to our resources webpage. Check out the summary in our Textbook Delivery infographic below. Or download the full report.
Students are Increasingly Buying eBooks, But Trend Has Yet to Reach Critical Numbers - We analyzed some students buying trends for course materials and noted that eBooks are steadily climbing as a portion of overall revenue year over year, but have yet to reach critical mass. It appears eBooks are seeing an increase later in the Spring term. My hypothesis is that students are buying the digital version of their required textbooks to help them study for final exams. Read more here…
Akademos-TextbookX Saves Students over $46 Million and an Average of 54% on Textbooks in its TextbookX Marketplace – We stand strong behind our bookstore services model. Moving textbook operations completely online helps reduce the cost of textbooks for students and improves efficiencies for administrators. Read more here…
Three College Students Win Akademos-TextbookX Intern Awards for Most Effective On-Campus Marketing – The inaugural year of our bookstore services internship was a success. Students at schools with virtual bookstores got the word out, telling students via social media, print, in-person, email and more, how they could save big money at the school’s own bookstore. Three interns stood out for their on-campus marketing efforts. Read more here…