On The Digital Reader, Nate Hoffelder has some details from a study suggesting that the adoption of digital textbooks is in trouble, and piracy is up considerably. Nate places the blame on the rising cost of textbooks in general. He includes a chart that shows textbook prices have been increasing at a considerably higher rate over the last 35 years than the consumer price index, the housing bubble, and even health care. He quotes a contact who notes that prices on core textbooks, the ones that most students have to get, are especially prone to price increases.
It looks like the textbook market is stuck in a feedback loop: the more prices go up, the more people pirate. And the more people pirate, the more publishers feel like they “have” to raise their prices in self-defense. (Not that they ever seemed to need an excuse before piracy came along.)
I’m sure there are plenty of factors that prevent it from being a perfect analogy, but I wonder whether this might have some predictive power for piracy in trade publications? Thanks to data that came out during the Apple trial, we know that after prices shot up when agency pricing was imposed, sales fell. (Basic economics, there.) We don’t know (or at least, there didn’t seem to be any evidence presented at trial) whether piracy accordingly increased, but I would bet it did. At least some of those people who didn’t buy the book would be inclined to go out and pirate it to read instead, or even just do it out of spite.
When agency pricing is permissible again, will the publishers try to use it to raise their prices again? It doesn’t even necessarily matter if they can’t use an MFN clause; since they’re the ones controlling the price anyway, they can just raise it uniformly everywhere. And will that lead to more piracy?
Of course, one of those important differences is that people aren’t being forced to go out and buy the latest King or Grisham, but college students have to have their textbooks. If they can’t afford to buy bread, they’ll go out and steal their cake.
Whatever happens, it’s going to be interesting. You hear, from time to time, people making noises about the apocalyptic scenario of all the publishers being driven entirely out of business by piracy, and gosh, what will people read then? But in the digital textbook world—or, for that matter, even the print textbook world, given that it doesn’t matter to piracy whether the source is print or electronic—it looks like there’s at least a possibility that might actually happen if this textbook price bubble continues.
Remembering my days as a student, paying for books felt like the last of my purchasing priorities!
I think publishers need to remember that without an educated population, the sale of books will fall regardless of being taken over by e-readers and such-like. Students should be looked upon as investment, if they don’t begrudge buying books during their education then they are likely to have a positive outlook on reading for their whole lives.
The textbook market doesn’t work the same way as the trade market does. The relevant difference is a thing called price elasticity. In the trade market where consumers decide whether and what to purchase, an increase in price is quickly met with a decline in the quantity demanded. That market is demand elastic. In the textbook market where consumers are not the ones who decide whether and when to buy (the professor does), an increase in price has little effect on the quantity demanded. That market is demand inelastic.
In the textbook market, the decision to purchase is made by someone other than the person who pays and is the reason why it is often referred to as a “broken” market and one of the main reasons why textbooks have gotten so expensive.