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Pearson Did Things By The Textbook But The Customers Had Ripped It Up

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http://www.independent.co.uk/news/business/analysis-and-features/pearson-did-things-by-the-textbook-but-the-customers-had-ripped-it-up-a6750856.html

The US Federal Reserve keeps on putting off raising interest rates because inflation remains below its 2 per cent target. Try telling that to the average American student.

Tuition costs on this side of the pond are sky-high and rising fast, but the price of textbooks is in the stratosphere and on its current trajectory it is heading for deep space. According to official data, textbook inflation since 1977 is 1,041 per cent– almost four times the overall rate of inflation. The rise in tuition costs is not far behind.

So how come Pearson, the 171-year-old British educational publishing giant, is in such a funk? Betting (almost) everything on growth in the US education market looked a good idea 10 years ago, when Dame Marjorie Scardino was busy leading Pearson to multiple years of double-digit growth. Those days are long gone and Dame Marjorie’s successor as chief executive, John Fallon, has a Herculean task to turn things around.

Over the past couple of years Pearson has been able to offer the City almost nothing in the way of guidance beyond repeated profit warnings. In short, its guidance has been along the lines of, “we don’t know what will happen”. Uninspiring at best, a sure-fire “sell” signal at worst.

Pearson’s share price has halved since May and there is little for shareholders to cling on to other than the long-term hope that Mr Fallon can repeat some of Dame Marjorie’s magic and find a rich seam in a global education market that should still offer growth.

..

Pearson’s growth was fuelled by several key developments in US education: the rise of the “for profit” college system; the introduction of “common core” teaching methods; and the idea that students would ignore the cost of textbooks because the headline cost of higher education is tuition fees. All three of these pillars of the house of Pearson are under existential threat, and along with them the company’s status as the dominant education publisher.

For-profit colleges, of which there are thousands, have enjoyed stellar growth over the past 20 years but are now dropping like flies. Enrolment at the University of Phoenix, the largest among them, has halved. Another large for-profit group, Corinthian Colleges, filed for Chapter 11 bankruptcy earlier this year.

The criticism is that for-profit education companies encourage students to enrol (and take out large loans to do so) and can create unrealistic expectations about their earning potential post-graduation. Unfortunately, many employers look unfavourably on degrees from for-profit universities, and as a result many graduates are struggling to find work and repay loans.

http://www.housepricecrash.co.uk/forum/index.php?/topic/191497-the-high-price-of-academic-text-books-a-way-to-stop-the-proles-from-reading-them/

HPC thread on cost of academic text books

http://www.theatlantic.com/business/archive/2013/01/why-are-college-textbooks-so-absurdly-expensive/266801/

You thought the rising cost of college tuition was bad? Then check out the rising cost of college textbooks. The American Enterprise Institute's Mark Perry has put together this nifty chart showing the egregious, 812 percent rise in the cost of course materials since 1978, as captured in the Bureau of Labor Statistics's consumer price index data. The price of all those Intro to Sociology and Calculus books have shot up faster than health-care, home prices, and, of course, inflation.

AEI_Textbook_Inflation.jpg

Academic Publishers will tell you that creating modern textbooks is an expensive, labor-intensive process that demands charging high prices. But as Kevin Carey noted in a recent Slate piece, the industry also shares some of the dysfunctions that help drive up the cost of healthcare spending. Just as doctors prescribe prescription drugs they'll never have to pay for, college professors often assign titles with little consideration of cost. Students, like patients worried about their health, don't have much choice to pay up, lest they risk their grades. Meanwhile, Carey illustrates how publishers have done just about everything within their power to prop up their profits, from bundling textbooks with software that forces students to buy new editions instead of cheaper used copies, to suing a low-cost textbook start-ups over flimsy copyright claims.

Got to love running a business on the model that students won't care about the price, some text books are stupidly expensive. There are a couple I'm interested in but new they are currently retailing for around £90 and some 2nd hand aren't far off that price. It's not a shock that students have decided they are too expensive to buy.

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Got to love running a business on the model that students won't care about the price, some text books are stupidly expensive. There are a couple I'm interested in but new they are currently retailing for around £90 and some 2nd hand aren't far off that price. It's not a shock that students have decided they are too expensive to buy.

Ummm ... aren't libraries the main buyers of the more expensive books? The £90 ones ain't for regular students.

FWIW, when I published a textbook with a Pearson-group publisher, they told me that breakeven would be about 1000 sold, while 10000 would make it a bestseller. And those numbers were for a mid-priced book anticipating much higher sales than a £90 reference.

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Some certainly were - or at least for first years. My first year (back in the early 90s) was dominated by lots of courses, with lots of book recommendations by lecturers (usually their own work) which were described as essential. £30 was a cheap book. Some ran to £50. Some would diligently photocopy them for around £20. No-one was so naive in the second year. They were beautiful books (except for one which had an optically active cover) but also usually near obsolete within a few versions limiting secondhand trading. Pre-WWW days you had no choice as the library likely had a single copy - usually permanently on loan to the relevant lecturer. Looking back it was a right racket.

Nowadays I daresay there is a brisk trade in torrents. This is one situation where I'll happily say stuff the IP owner as the parasite is in danger of killing the host.

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Ummm ... aren't libraries the main buyers of the more expensive books? The £90 ones ain't for regular students.

FWIW, when I published a textbook with a Pearson-group publisher, they told me that breakeven would be about 1000 sold, while 10000 would make it a bestseller. And those numbers were for a mid-priced book anticipating much higher sales than a £90 reference.

The copy of Stryer we were expected to buy was £60 back in 1988. And we were supposed to get half a dozen others at equally silly prices. The library was a nightmare because whilst they had a section you couldn't remove there'd be someone hogging all the course books and hiding them so they had exclusive access.

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The copy of Stryer we were expected to buy was £60 back in 1988. And we were supposed to get half a dozen others at equally silly prices. The library was a nightmare because whilst they had a section you couldn't remove there'd be someone hogging all the course books and hiding them so they had exclusive access.

Ha, my edition of Stryers Biochemistry was the one with the optically active cover. Even the spine was impossible to ignore if you walked into a room.

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I've just come back from a work conference where one of the themes was disruption. The idea that someone could along with an idea that would break your business model overnight.

Thinking about it though businesses allow this to happen through a combination of greed and implicit cartels. If the books weren't priced so high, if there wasn't a nudge and a wink between academics to list each other's books and there had been an adaptance quicker to e-books then Pearson would not be in this mess.

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I've just come back from a work conference where one of the themes was disruption. The idea that someone could along with an idea that would break your business model overnight.

Thinking about it though businesses allow this to happen through a combination of greed and implicit cartels. If the books weren't priced so high, if there wasn't a nudge and a wink between academics to list each other's books and there had been an adaptance quicker to e-books then Pearson would not be in this mess.

The vast majority of the books aren't priced that high.

You might get a cover price of £30 or $40 at today's prices, before being discounted for the real world by the likes of Amazon.

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