Phoenix
Rising
Online
Learning's 600-Pound Gorilla Tangos With Textbook Publishers
FROM PUBLISHING
TRENDS (OCTOBER 2003)
By ANN KIRSCHNER
The
University of Phoenix, an Arizona-headquartered,
for-profit institution offering degrees in adult-education
staples such as business administration and information
technology, may seem an odd candidate to be turning
the world of higher educational publishing upside down.
Yet as the nation’s largest accredited university —
163,627 current students (72,230 attending via the Internet),
17,200 instructors, 128 campuses in 26 states, and Internet
delivery worldwide — there’s good reason why publishing
insiders are calling Phoenix the Wal-Mart of
the higher-ed world (as in: “The second biggest mistake
you can make is selling to Wal-Mart. The biggest mistake?
Not selling to Wal-Mart.”). “Phoenix is a major player,”
explains Gordon Freedman, e-learning consultant
and CEO of textbook solutions firm TextCentric.
“Publishers are lining up to compete for that account.”
Yet in a tale familiar to trade publishers (Barnes
& Noble, anyone?), one of textbook publishers’
major customers is now in a position to become their
big-time competitor, a prospect surely being contemplated
at giants such as Houghton Mifflin, McGraw-Hill,
and particularly Pearson, the largest educational
publisher. How this predicament plays out among the
established industry players — between traditional publishing
models and new digital learning paradigms — will point
the way, at very least, to the future of higher-ed publishing
in America.
Phoenix, widely recognized as the company that invented
for-profit education (and which was green-lighted last
week to open a campus in New Jersey), may represent
a smidgen of the 16 million students enrolled in higher-ed
programs in the US. But by leveraging infrastructure
across its entire student base, and centralizing curriculum
development, it has become the first vertically integrated
higher education company. That is, Phoenix controls
both content and distribution. When it adopts a textbook
or other learning materials, for instance, its curriculum
design experts select the materials for all sections
of a particular course. Student feedback is available
and solicited continually, especially about the university’s
online learning tools, which are fast becoming the centerpiece
of its entire educational mission.
Textbooks:
‘Just Not Working’
And
here’s where it starts to get interesting. “As a product,
the beautiful, four-color textbook is just not working,”
says Beth Aguilar, Phoenix’s VP of Academic Publishing,
explaining that such an artifact offers none of the
flexibility required for Phoenix’s ambitious online
learning programs. So who needs textbooks? Behold “rEsource,”
the first comprehensive learning platform for students
and faculty, which Phoenix is rolling out after four
years and more than $10 million in development. A sort
of central nervous system for students and faculty,
rEsource weaves together in one online location the
essential course administrative tools, content, and
student services. From its well-designed interface,
students can check the course syllabus, download a textbook
chapter, submit an essay for a free advance edit before
submission, and assess their understanding of the material
they are studying. It is textbook, library, departmental
office, and student writing center rolled into one.
Student response has been overwhelmingly positive, and
though Phoenix will introduce e-commerce links directly
to publishers for online purchases, experience shows
that few students are interested in buying a hard copy
in addition to building their digital libraries.
When selecting content, Phoenix demotes the textbook
from its place at the core of the curriculum and breaks
it down into modular units that can be assembled, updated,
and reassembled. “In a world of digital assets, the
goal should be to assemble the richest, most flexible
variety of sources,” says Craig Swenson, the
University of Phoenix Provost. “The textbook is an arbitrary
assemblage. Digitize it and I’ll pick out the pieces
I need.” Now, instead of buying a whole textbook, Phoenix
negotiates for rights only to the parts it wants. Copyright
ownership is “unchanged,” says Aguilar. “But we would
like to own a lot more content than we do.” In January,
Phoenix will take a big step in that direction by launching
a “developer portal” through which it will solicit and
manage content from its thousands of faculty members
— or authors anywhere. As this content will be purchased
directly from authors, it will also presumably cost
less than content licensed through third parties with
editorial and marketing overhead. “We can create a lot,
but I don’t see us getting away from licensing other
third party content,” Swenson says. “On the other hand,
we would be silly not to leverage the intellectual capital
in our faculty on a work for hire basis and own it.”
New
Points on Pearson’s Compass
Educational
publishers — no strangers themselves to the growing
importance of digital content — are not exactly quaking
in their boots. For starters, few textbooks are published
today without accompanying websites and ancillary material
on CD-ROMs. And while for-profit institutions have adopted
a centralized curriculum, says Will Ethridge,
President of Pearson Education’s Higher Education,
International, and Professional Publishing Division,
a similar shift by the traditional institutions is unlikely
for reasons of academic freedom and educational integrity.
Outside of the for-profits, “the instructor is responsible
for the quality of the education, and they need to choose
the content,” he says. (Not surprisingly, the for-profit
leaders take a different view of the faculty role. “Of
course, professors want complete flexibility in ordering
books and creating curriculum,” counters Swenson. “The
trade-off is the high cost of textbooks.”) Still, publishers
are heeding the call for more flexible textbook formats.
Ethridge sees custom publishing as a general trend,
and Pearson has grown its custom publishing business
significantly over the past few years, although it does
not break out custom publishing revenues as a separate
piece of its new textbook sales.
Yet pushed by customers such as Phoenix, publishers
are adapting to the need for digital delivery, trying
to retain as much control over their materials as possible.
Pearson’s strategy is to “deliver the content in multiple
fashions, so that we reach the market in as many ways
as we can,” says Ethridge, adding that “at the end of
the day, it still has to be strong content,” overseen
by editors who maintain the vision of the work, and
then accommodate the customer’s particular needs for
formats or other specifications. Moreover, Pearson has
introduced Compass, its own student portal, as
its bid for the electronic, disaggregated future. Compatible
with Blackboard (the most commonly used course
management platform), Compass integrates what its website
describes as “pre-loaded quality content” from textbooks,
learning objectives, and assessments in one place. Professors
have the option of buying Compass separately, or bundled
with a textbook. Ethridge acknowledges that Compass
aspires to the same goals as rEsource, though he cautions
that “we’re not in the content management business.
We want to stay in the business we are in now. But this
meets a need.” In his view, the portable and readable
textbook will remain an essential component of classroom
teaching until “devices become so light, screen resolution
so strong, that the reader experience will be better.”
But
there are other factors shoving the industry toward
a leaner, digital future. Times are tough these days
on many college campuses. Although enrollments are growing,
institutions are struggling to maintain services and
instructional programs as state budgets for education
shrink. “This is the first time in my career that I’ve
seen budget issues affect academic programs in higher
education,” observes industry veteran June Smith,
Executive Vice President of Houghton Mifflin’s College
Division. Calls for reform from Washington are growing
louder, as the No Child Left Behind Act begins to force
educators toward technology-based assessment and accountability.
Perhaps most importantly, competition in higher education
is stronger than it has ever been. Online learning programs
are gaining academic credibility. Established large
programs at public institutions such as Penn State,
U. of Maryland University College,
and U. of Massachusetts have been joined
by for-profit players such as Capella University
and others to push towards more than 1.6 million online
students this year. Thomson’s Universitas
21, the global network of 17 universities in 10
countries, including U. of Virginia, McGill,
U. of Edinburgh, and U. of Hong Kong,
is already planning to pilot a series of “high-profile
electronic books.” All the while, textbook publishers
are getting blasted over pricing, as the cost of educational
books and supplies has soared 238% over the past two
decades, the New York Times recently reported.
Now that 20% of students are no longer buying all their
required texts, groups such as the California State
Assembly’s Higher Education Committee are looking into
“the possibility of using the collective buying power
of California’s state colleges and universities to negotiate
with publishers for lower prices.”
Industry experts agree that the shift to a digital curriculum
will take years, even decades. At what point will the
balance tip from publishers to their customers — and,
dare we say it, the textbook fade away? “That’s just
a point on the continuum,” says Kaplan College President
Robert Greenberg. “We’re certainly moving towards
that point. At some places, the textbook has already
been removed, whereas at others, it remains. The ball’s
in play.”
Ann
Kirschner is the founder of education, media, and technology
consultancy Comma International.
©2003
Publishing Trends
