Online Learning’s 600-Pound Gorilla Tangos With Textbook Publishers
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.
