The iPad and the Dog that Didn’t Bark. (And the Dog that Barked too Soon.)

Posted on January 28th, 2010

The product Apple revealed yesterday was largely what most people expected. Called the iPad (well, that name probably wasn’t expected), it is slim and elegant, engineered with meticulous care to do a few things well: deliver the internet, display movies and photographs, play music and serve as an electronic reading device. The latter capability was revealed about halfway through Steve Jobs’ launch presentation, not quite an afterthought but lacking the marquee position of an A-list feature. As Jobs remarked several years ago when dismissing Amazon’s Kindle, people don’t read anymore; certainly they don’t buy books the way they buy music, movies and TV shows. Perhaps this justified the middling prominence of the iBooks application and its accompanying online bookstore, which aims (like the Kindle) to do for reading what iTunes and the iPod have done for music. And perhaps that explains why one of the day’s most significant announcements was made as little more than an aside. “We are also,” said Jobs, not sounding very excited, “very excited about textbooks as well.”

Perhaps Jobs soft-pedaled this announcement because he knew it wasn’t a surprise at all. The night before the iPad launch, McGraw-Hill CEO Terry McGraw spilled many of Steve Jobs’ beans in an interview with CNBC, breezily confirming that Apple was announcing a tablet computer running the iPhone OS, for which McGraw-Hill was collaborating with Apple to provide educational content. It might not appear entirely out of character for Jobs to lop McGraw-Hill out of his presentation, provided it had ever been included — Jobs famously dropped graphics chip vendor ATI from a keynote when they revealed upcoming Mac models before he could. And it prompts a mordant chuckle to imagine the look on Jobs’ face as he watched McGraw blithely steal his thunder. But I give Jobs the benefit of the doubt. It is likely that Apple’s negotiations with textbook publishers are still in progress, and that Apple will formally tout the iPad as an education tool at a later date. Because this arrangement is a very big deal — one that could potentially have a huge impact on both parties.

A little background. When pundits bewail (or laud) the impending “death of print,” the implied subject is usually newspapers and magazines, whose advertising-based revenues have proved impossible to replicate in the online space. To these publishers, the iPad and the devices that will succeed it offer a renewed hope that digital content can actually be monetized through subscriptions to iPad-native versions of their publications. College textbook publishers, though, are in a very similar predicament. Their revenues have been falling, but for a different reason. While newspapers struggle to compete against the resolutely free (as in beer) ethos of the World Wide Web, textbook publishers compete against a much more insidious foe: their own products.

If you went to college within the last few decades, you probably bought many of your textbooks used. Maybe you found it convenient to own a book where the key passages were already underlined and highlighted, but it’s more likely you simply wanted to save some money: generally about 40% of the cost of a new copy of the same book, if my addled memory serves me. No one can blame a student for wanting to save money, but buying used textbooks turns out to be a classic instance of a decision that benefits the individual at the expense of the collective — and ultimately, the individual herself.

Used books are bought and sold by used book dealers, not the original publisher of the textbook. When a textbook is released in a new edition, the publisher collects revenue for every copy sold of that edition. Then the academic term ends, and the used book dealer appears behind those long folding tables in the campus bookstore, buying back every usable copy of that new edition. Say for the sake of argument that the used book seller buys back 50% of the publishing run. (Note that I have no idea what the actual average is, or if there even is a reliable average.) The next semester, for every new copy the bookstore orders of that title, there is a cheaper used copy sitting next to it on the shelf. Students buy the used books until they run out, then buy the new ones. The publisher’s revenue from the book is half of what it was in the previous term, and the edition is not even a year old. Then that semester ends, the used book people come back, and the cycle repeats.

Run this equation a few times and you see the dilemma the publisher is in: its new product is quickly elbowed out of the market by identical but cheaper product from which it collects no revenue. (Just to be clear about this, because a lot of people don’t understand or believe it: used book companies have no relation to book publishers and pay them no royalties on any of the books they buy and sell.) That’s how it was when I was in school. Today, with the power of the internet, the publisher’s situation is much worse. Students can now visit eBay or Half.com if the campus bookstore is out of used editions. Some enterprising students have even ordered international copies of the same edition — priced considerably lower to compete in less affluent markets — and gone into business selling textbooks to their fellow students at a fraction of the domestic price.

(We’ll get back to the iPad in a minute, I promise.)

Publishers have tried to combat this trend in two ways. The first is to revise textbooks more often, in order to render the used editions obsolete. But few academic subjects warrant such frequent revisions, and students and faculty alike balk at this strategy: students for the obvious financial reasons, and teachers because a new edition forces them to rewrite their tests and lectures. The other approach has been to load new textbooks with goodies that used books don’t have: PowerPoint notes, study guides, practice tests, even multimedia and interactive software. The trouble with this is that not every product appeals to every student, meaning a whole kitchen sink of add-ons has to be thrown in to appeal to as many students as possible, thus raising the cost of the book (further, as publishers have already had to raise prices to make up for the revenue they’ve lost) and forcing even more students into the arms of the used book seller.

How to get out of this impasse?

Textbook publishers need a form of digital textbook that can be registered to a single owner and that expires a set time after being activated. This not only solves the problem of used books, it saves them the massive cost of printing, warehousing and shipping textbooks. It allows them to recruit talented authors with the promise of greater royalties — and perhaps most importantly, offers the real prospect of reduced textbook prices, as efficiencies can be passed on as savings to the student. Everybody wins.

The problem holding back this happy state of affairs is the same one facing newspapers and magazines: reading a digital text on a laptop is simply not as convenient, effective or rewarding as reading and holding a physical textbook. As a piece of technology, the book is actually quite difficult to improve on: it’s compact (reasonably), requires no power to use and can last forever if treated with care. You can write in it, shove notes in it and use it to fight off a CIA assassin. Students need a digital textbook that benefits them, not just the publishers, and no one has yet succeeded in making one.

Enter the iPad. From the demo given of an interactive iPad edition of the New York Times, it is easy to see the device’s potential for digital textbooks. All the multimedia, online access and bookmarking features a student could ask for, along with the portability of a slate of plastic and glass that weighs a pound and a half. One could argue that few people actually need to carry their entire reading libraries around with them all the time, but the few who do are college students. In addition, students could carry their notes and their term papers in progress, as well as have constant access to their professor’s online course management site, all from the same slim device.

The Kindle cannot do this. For one thing, its screen, however good it may be for reading, is not equipped to reproduce the pedagogy of a modern textbook, which increasingly has come to resemble the USA Today weather map (imagine that on an iPad) in its colors and 3-D effects. For another, the Kindle is too specialized. You can bookmark your texts, annotate them and look up words, but you can’t instant message your classmate, navigate a complex website or type notes during a lecture. Textbooks are only the beginning of the classroom experience, and Kindle is unequipped to recognize that reality. (I will also say that, in the little time I’ve handled it, I have found the Kindle quite underwhelming: slow, lacking in customizability and embodying a distinctly last-century aesthetic. One further benefit to adopting the iPad on campus: students will want to own them.)

The benefits for textbook publishers then become obvious: here is a device that might finally usher in the digital textbook as a viable product. The benefits for Apple are less crucial, but still not to be taken lightly. For one thing, it will deal a crippling nut-shot to Amazon’s foray into the hardware business and position Apple as the top-selling e-book manufacturer — within, I would guess, a very short time, say 12 months after release. (Amazon still refuses to say how many Kindles they’ve sold. Bet that Apple will not be so reticent.) For another, universities represent a very nice market for hardware sales — especially hardware that’s mandated by the school’s curriculum. Whether students end up bringing the devices to campus themselves or leasing them from the university, Apple could end up putting a lot of iPads into a lot of hands. And beyond that is the prestige: Apple is proud of its heritage as a favorite of educators, and building the first great digital learning device of the 21st century is not something Steve Jobs takes lightly. (Note his strained and slightly bizarre affirmation that Apple’s goal is to combine technology and liberal arts, the latter a term you rarely hear outside of a college curriculum.)

So while Jobs’ launch of the iPad was comprehensive, it ignored one of the device’s biggest potential uses. I expect this will be corrected. At some point this year — I have no inside information, and am simply surmising — Apple will formally launch the iPad as a digital textbook reader, announcing its partnerships with loudmouth Terry McGraw and other educational publishers, demoing all the incredible things that an iPad textbook will be able to do, and most likely touting an agreement with one or more major universities to conduct pilot studies of iPads on campus. One lucky class at Stanford or Berkley or somewhere will be issued a new iPad along with their student ID. And what may turn out to be the iPad’s most significant role will truly begin. Small wonder Terry McGraw couldn’t wait to talk about it.

Tags: Amazon, Apple, books, college, education, iPad, Kindle, publishing, reading, Steve Jobs, textbook, used books
Filed under Articles, Essays |

4 Responses to “The iPad and the Dog that Didn’t Bark. (And the Dog that Barked too Soon.)”

1. Game’s The Same… | alert nerd. Says:
   January 28th, 2010 at 4:19 pm

   [...] ANY games? I agree with my pal Dan Wiencek who sees the big picture for the iPad as primarily in the realm of education. Apple already has relationships and a track record in the education world, and the appeal for both [...]

2. The Bin–1/29/10 | alert nerd. Says:
   January 29th, 2010 at 9:43 am

   [...] friend Dan Wiencek’s write-up of the iPad as digital textbook is probably the best piece of writing we’ve seen so far covering the [...]

3. Brian Bridges Says:
   February 5th, 2010 at 10:23 am

   Spoken as a true representative of the publishing industry. Your thesis, that users are somehow gaming the system by buying used books, could be taken further. How about we put timers on cars, so that they expire after a certain time. People who buy used cars are certainly cheating Detroit or Japan out of valuable sales. Think of all the jobs we could create or innovations Detroit could add if only greedy consumers could be stopped in their tracks.

   Students and faculty are fed up with the current system and high textbook prices. Renting books, with fixed expiration dates, doesn’t help. take a look at current pricing structures for rental companies, and the limitations they attach to their rented books, and you might see that the consumer does not benefit. The digital age and DRM-enabled books empower publishers and take rights away from consumers.

4. Dan Says:
   February 9th, 2010 at 1:10 am

   Well now, if people bought cars for three months and sold them back again, I could see where that analogy might apply. (Actually I couldn’t, but no worries.) Fact is, college textbooks are very much a unique beast, and not easily compared to any other consumer product.

   For one thing — germane to your point about consumers’ rights — students have no choice about the books they buy: whether to buy a book at all, and which book to choose. Both decisions are made for them by their instructor. Letting students pick between Book A (new) and Book A (used and cheaper) may be better than nothing, but it is a Hobson’s choice; unlike in a typical competitive market, used book sales put no downward pressure on book prices, and the marketplace ultimately doesn’t benefit. (FWIW, I don’t favor abolishing the used book trade and I don’t blame students for using it — I simply wanted to point out the economic implications of the practice.)

   For another, producing higher ed content is not something that can be done openly and collaboratively (a la free software), nor by small, nimble startups outflanking the big boys by marketing direct to the consumer (like self-produced musicians). Making books takes an enormous investment of time, money and talent, a top-down production model that will never change. That means that textbooks (or textbook content, if you prefer) will always be an expensive proposition to produce, and that expense is going to have to be absorbed by someone. It’s either the students or the government (i.e., all of us), take your pick. (Don’t ask the university — they just roll the cost back into tuitions.)

   And for yet another, textbooks have a very short useful life. Most students get through the semester and want nothing more to do with their textbooks. An auto-destructing car is absurd; an auto-destructing textbook (for the majority who want it) makes a lot of sense … provided the incentives are there.

   As I tried to make clear in my essay, the rising cost of books hurts both students and publishers. Digital textbooks potentially are a great solution to publishers, but even more so to students. Imagine having a textbook that can be updated every month, every week, when new developments occur within your discipline. Imagine a digital learning device that combines course content with email, web access, multimedia viewing and search. And the goddamn thing only weighs a pound. I’d take that over a textbook any day of the week. (Scratch that — I’d take that over five textbooks. That one pound gizmo holds your texts for your entire courseload.)

   I admit pricing would be a concern. At least initially, the first digital textbooks would be pretty pricey until the development investment could be spread across more titles. Competition between publishers will help. Consumer vigilance will certainly be required. But even with those provisos, it sounds a lot better than the status quo.

   And besides … it’s not like the publishers won’t sell you the book if you want it.

   I appreciate your taking the time to comment.

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