Textbook Publishing: An Ecological View

Steve Forman

Imagine an ecosystem in which the major organisms are faculty, students, textbook publishers, and bookstores. As producers, consumers, and decomposers, they circulate the nutrients of higher education up and down the food chain. The system has sustained a long-term equilibrium, with change coming in gradual, evolutionary form. But in recent years, some of the system's core conditions have changed, disturbing that equilibrium. Some observers see a crisis at hand, a version of global warming in which textbook prices are rising to dangerous levels.

As a longtime inhabitant, I can confirm that the system is troubled. To judge from the current controversy, though, one problem is a lack of understanding of a producer organism in the system--the publisher. To restore the system's integrity, a measure of mutual understanding is necessary. Toward that end I would like to explore the physiology of that ungainly organism, the textbook publisher.

I must admit that my own perspective may not be representative. The organization that has been my publishing home for more than twenty-five years is an exceedingly odd, even unique, creature. In a publishing landscape dominated by corporate conglomerates, W. W. Norton and Company is one of the few independent publishers left, and the only one that is both independent and employee owned. What difference does that make? It means we enjoy an unusual stability, with continuity in decision making that aligns the books we publish into a profile of the house. It also means we subsist only on the money generated by the books we publish and distribute. The decision making at Norton is primarily editorial, but in order to survive and grow we must pay close attention to the ledger of costs and revenues.

Norton is a two-armed creature that relies on flexibility, quickness, and experience to compete with the megacorporations of publishing. Trade and college are our two main divisions, and there are strong connections between them. Authors often migrate within the firm, first publishing a trade book and then a textbook, or the other way around. Often a single title can succeed in both markets, such as Jared M. Diamond's Guns, Germs, and Steel, or Jonathan D. Spence's The Search for Modern China, a textbook first published in the trade division and also a New York Times best seller.¹ The differences between trade and college from an editorial point of view are instructive. Despite the allure of trade publishing, I have found in college books a more challenging set of problems and a richer array of opportunities for editorial enterprise. The college market also operates in a reassuringly rational way. Much like the long baseball season that allows the good teams to prove themselves over a 162-game schedule, the large, fairly discriminating college market enables textbooks that are well crafted to succeed over time. The trade market does not display such rationality: it is a short three-out-of-five series in which anything can happen--and usually does. Good books are too often sent home early. But even then the discerning college market can come to the rescue: some failed trade books enjoy long and successful lives as paperbacks assigned in colleges.

This rationality encourages college publishers to shoulder the staggering investments in time and money required to launch an introductory textbook--years of work, millions of dollars spent before a single copy is sold. The trick is developing and publishing a book that hits its target or creates a new target worth hitting. How do we do this?

Publishers for elementary through high school (K-12) classrooms target huge state adoptions that are governed by clear and specific guidelines for coverage. Their approach is to produce heavily managed texts in which committees of authors write to specifications with little individuality. In Texas in 2003 an adoption of social studies texts for all grades represented a $233.7 million purchase. The books in consideration had to navigate an elaborate selection process that included a public hearing with speakers from seventy different special interest groups.²

College publishers enjoy more flexibility because of the structure of the college market. Most adoptions in the U.S. survey course, for instance, are made by individual instructors employing their own criteria in the choice of a text. In some departments a committee decides on the use of a single text in the survey, and those are the big prizes publishers lust after, but they are too few to skew publishing strategies in a meaningful way. This Jeffersonian cast to the college market also means that we do not face the ideological pressures that K-12 publishers do. College textbooks can show more individuality and still succeed commercially.

So why do we so often hear the charge that all textbooks are the same? In part it reflects a certain homogenizing effect in the way textbooks are developed and marketed, an effect that becomes more pronounced in a book's later editions. The market we enter may be large and diverse, but it does impose some limits on what we can do. The U.S. history survey course has undergone significant change in the last twenty-five years, with the field of social history maturing in a generation, but the Declaration of Independence still has to turn up on time, and Warren G. Harding has to put in a (brief) appearance. The basic chronology of American history is a given in a U.S. survey text, with the result that the tables of contents of most books look the same. Moreover, in the development of a text, the publisher and the author always draw on reviews of content by period and subject specialists--twenty to thirty in all--a process that makes for a more accurate and representative book but may also efface some identifying features. When this process is repeated over many editions, the homogenizing effect grows stronger.

In part, though, the charge that all textbooks are the same suggests that the viewer is not looking closely enough. Recall Ronald Reagan's observation in opposing the expansion of Redwood National Park in 1966: "A tree is a tree. How many more do you need to look at?"³ As a city boy I am tempted to concede Reagan's point--so let us look at another analogy. A jazz standard such as "Skylark" has been performed by many different artists. Although the basic song structure remains the same, the Sonny Rollins version is different from Miles Davis's, each personal and unique. Part of the appeal of publishing new texts in American history is the challenge of taking the standard core of the course and molding it into something new. It takes an author with command of the field--one who combines a solid grounding with a distinctive vision--to do this.

Of course, there is no guarantee than an author's vision will align with the demands of the market. The fun for editors is in working toward a reasonable overlap between those things. That may call for modifications in the author's approach, but the market can be malleable too, sometimes in ways that are hard to predict. Build it and they will come: the right text, with effective marketing and sales support, can crystallize and mobilize what had previously been a nebulous market demand. The wrong text, however, can be a very costly failure. So some publishers opt to place their bets squarely on the market and have found commercial success with what are essentially paint-by-the-numbers textbooks. It is an approach that characterizes any number of consumer-goods industries. But it is a bit like betting heavily on the favorite to show: the upside is limited, and with a stumble the downside is still significant. And there is not much joy in it.

Publishers are moved to hedge their bets because the risks in launching a new introductory text are so high. Before the first copy is printed, the publisher has spent more than a million dollars on author advances, grants, and plant costs (cartography; photo research, permissions, and processing; other artwork if needed; copyediting; book and cover design; typesetting; proofreading and indexing; paper, acetate, and electronic ancillary costs). Manufacturing costs (paper, printing, and binding) add another couple of hundred thousand dollars to the entry fee. Advertising costs can equal that, with the main item being the free copies of the text that we send as samples to instructors. For a new survey text published in one-volume cloth and two-volume paperback formats, we give away upwards of six thousand to eight thousand copies. We also give away instructor's manuals, computerized test banks, transparencies, Web site entries, and cd-roms--all significant components of the total cost of publishing a survey text.

Those are the direct costs of books sold, forming the big hump a book must overcome during its edition life if it is not to be doa, a total loss, a nightmare in write-offs. To be a success it has to soar over that hump by a comfortable margin because it must also contribute to the indirect costs of running an effective publishing operation. Those include warehousing and distribution, selling and travel expenses, editorial expenses, salaries, and other administrative costs, including ever-escalating health insurance premiums. After a due contribution to indirect costs and taxes, a successful text will yield a net income that we can invest in new projects.

How does the price of a book relate to those costs? Consider a new survey text priced at $89.05 on the shelf at the campus store. That retail price, which the student pays, represents an average 30% markup by the bookstore from the net price set by the publisher--in this case, $68.50. The bookstore gets $20.55, or 23.1% of the retail price, which the stores hold to be their margin. (There is very little risk for the store in this commerce: bookstores can return every unsold new college book to the publisher for a full refund.) The direct costs of publishing this survey text come out of the net price as follows: A royalty set at 15% of the publisher's net price would yield the author $10.28, about 11.5% of the retail price the student paid. Plant and manufacturing costs (including ancillary costs) account for $15.95, or 17.9% of the book's retail price. Advertising, including free copies, accounts for $6.53, or 7.3%. Indirect costs, such as those I mentioned above, account for $30.48, or 34.2%, and taxes another $1.84, or 2.1%. Of the $89.05 retail price this leaves $3.42, or 3.8%, as net income for the publisher.⁴

A used copy of the same book on the shelf will cost students $66.79, a 25% discount on the new-book retail price. The bookstore will have paid anywhere from 10% to 50% of the new-book price to obtain the used copy. At the highest buy-back price, the bookstore pays the student $44.53 and earns 33.3% on the resale of the book (compared to 23.1% on a new-book sale). The author and publisher, having created the commodity itself and the content that is the basis of its value, realize $0.00 in this transaction. There are no payments from bookstore to publisher or author on the sale of used books.⁵

The vision of on-campus student buyback fills me with nostalgia. These days a massive and efficient national market fills new adoptions on one campus with used books from another. Google "textbook buyback" and you will get more than one hundred thousand entries, ranging from Web sites for Amazon and Barnes and Noble to sites for BooksIntoCash.Com and the Bowdoin College bookstore. The University of California, Irvine, bookstore page offers as book-buyback categories "The Good Ones," "The Not Bad Ones," and "The Dreaded Additions to Your Personal Library." BooksIntoCash.Com helpfully describes history as "a broad subject including historical ideas, . . . historical events, . . . civilian thoughts and theories, . . . and the history of a great deal of things. History can truly be an exciting subject." Not exciting enough, however, to warrant holding on to your books: the site buys new copies of textbooks at 30% of the average retail price. Like many other buyers of used textbooks, BooksIntoCash.Com offers to buy instructor's copies as well, including those clearly marked "instructor's edition" or "free copy."⁶ A dismayingly large number of those copies we give away to instructors are in turn sold into the used-book market.

The effect of all this is to choke down new-book sales in the second semester of a book's life. With the average college book resold three to four times, the used-book market stifles new-book sales by the second and third year of an edition. Although it has gathered force in recent years, this decomposing process has been part of the ecosystem for a long time, and the inhabitants make their adjustments. For oxygen-needy publishers, revised editions clear the market for a brief time at prices that reflect costs and market conditions. We at Norton offer instructors discounted packages consisting of textbooks and monographs on our list, or ancillary materials such as readers or study guides. Those measures have helped maintain an equilibrium of sorts. But other types of change in the system have shifted the publisher's niche in relation to the instructor's, increasing the costs publishers must shoulder and feeding the current controversy over textbook prices. Notable change has come in three broad areas: technology, teaching conditions and practice, and student culture.

The arrival of digital technology has enriched the teaching and study of history. The Web makes it possible to convey the sights and sounds of the past and to offer a vast array of traditional documentary sources with speed and convenience. Students can go to the Web site for a textbook, listen to the thrilling cadences of Martin Luther King Jr.'s "I have a dream" speech, and find a rich sampling of writings, speeches, music, and images of the freedom movement. Those riches come at the cost of steep permission fees and additional authoring fees for the necessary pedagogical elements.

The first edition of Eric Foner's Give Me Liberty! An American History features a dedicated student Web site replete with hundreds of primary-source documents, images, audio selections, and video material gathered specifically to supplement the text, including an extensive taped interview with the author on the book's major theme.⁷ Much of that material is also provided to adopters free on a cd-rom for use in illustrating lectures, preparing handouts, and generating other course materials. (We pay another round of permissions for that use.) Another cd-rom gives instructors the materials they need for course management with the text in use. In short, the publisher now offers not only the basic text for a course but an extensive array of multimedia materials to enhance the text and enrich the course.

The demand for those materials arises in part from a second basic change in the ecology of higher education: the massive shift in the academic work force away from a full-time or tenure-track faculty. According to a 2001 U.S. Department of Education report, 70% of the 1.3 million members of the instructional work force in higher education were either part-time adjunct faculty, full-time contract faculty, or graduate student employees. Adjuncts alone accounted for 35% of the total.⁸ This development has many important implications for everyone involved in higher education. Time-strapped instructors and budget-conscious departments increasingly rely on the course-support materials publishers can provide. Textbook prices reflect the attendant costs.

The third, and perhaps the most disturbing, recent campus phenomenon is that students are increasingly willing to opt out of the purchase of books entirely, whether new or used. More students are arriving on campus unconvinced of the utility or inherent value of books, a stance the cynical rhetoric of the used-book industry reinforces. This may be related to a broader cultural trend revealed in Reading at Risk, the summer 2004 report of the National Endowment for the Arts. The report documents a steady decline in literary reading by Americans over the last two decades, a trend especially strong among eighteen- to twenty-four-year-olds.⁹ We all should do what we can to stem this tide. Publishers have launched efforts to show students how best to use their books and ancillary materials. Faculty can help by making active use of the textbooks they assign. The often unspoken condition for student resentment of textbook prices is the underuse of those books in the classroom.

The murky complexity of our ecosystem belies the reductive picture conveyed in the public controversy over textbook prices. The title of the recent California Student Public Interest Research Group report, Ripoff 101, purports to say it all; it does not. That and many of the news reports on the issue ignore or misconstrue the conditions and the ways in which publishers operate. Instead of coming to grips with the operational details, they blame publishers for discretionary and unreasonable increases in textbook prices.¹⁰ The charge of publisher profiteering is not only wide of the mark; it is an obstacle in the path to a solution. If we remove that unwarranted assumption from the current debate, then we can see the degree of convergence in the interests of publishers, professors, and students.

And that is a starting point for a constructive set of responses to the current situation. A number of publishers are beginning to offer lower-cost and lower-price versions of their textbooks. Norton has been taking this approach for twenty years with George Brown Tindall and David E. Shi's America: A Narrative History, and it has been a considerable success.¹¹ Almost all survey texts are available in lower-priced brief editions, and a growing number are coming out in "value" editions. Those are one- or two-color books with fewer illustrations and maps, no pedagogy, and no supplements. We and other publishers are also experimenting with low-price online versions of our introductory textbooks. We will see in coming years whether the market shifts decisively in this no-frills direction. There may develop a sequencing of formats akin to the hard-cover-to-paperback sequencing of trade books, in which an initial publication of a text in full uniform is followed by a stripped-down, low-price version.

Some colleges are bringing back textbook rental systems that formalize the workings of the current system: students essentially rent books now, effectively paying not the retail price but the difference between it and the buyback price. Rental systems lower textbook costs to students by creating a chain of payments for access to a book. If we can assume that the initial purchase by the campus store is for new books, rental systems might also benefit publishers. They do, however, limit the flexibility of faculty in choosing books.

According to one informed estimate, the used-book industry will soon pull in $1 of every $2 spent on college textbooks.¹² With a massive secondary market occluding the atmosphere and a host of rising costs sending temperatures up, the ecosystem of college publishing is no doubt under stress. There are practical adjustments to be made, as we have seen. Publishers will respond to actual book-ordering and book-buying decisions by faculty and students, and we might even arrive at a new equilibrium. But with the system configured as it currently is, will it be sustainable?

Steve Forman is a senior editor and vice president at W. W. Norton and Company, where he works on college and trade books in history. After earning an M.A. in American history at Harvard University, he joined Norton in 1978 as a college traveler. In 1981 he began work as an editor on America: A Narrative History by George Tindall, first published in 1984. Since then he has attended more history conventions than he can hope to count.

For their generous readings and useful suggestions on this article, the author wishes to thank Drake McFeely, Stephen King, Marian Johnson, Julia Reidhead, Ed Barber, Dan Bartell, Jon Durbin, Sarah England, Gary Kornblith, Carol Lasser, Paul Goldstein, Stephanie Herrold, and Charity Robey.

¹ Jared M. Diamond, Guns, Germs, and Steel: The Fates of Human Societies (New York, 1997); Jonathan D. Spence, The Search for Modern China (New York, 1990).

² "Pearson Education Storms the Alamo. . . ." Educational Marketer, Aug. 4, 2003.

³ Politics, President Reagan <http://wais.stanford.edu/Politics/politics_presidentreagan.htm> (Nov. 15, 2004).

⁵ These figures also reflect an average according to the standard textbook buyback Web sites. The rationale for the absence of royalty payments on the resale of goods, as opposed to that of rights, warrants further scrutiny. Why, for instance, can a single copy of The Great Gatsby be resold umpteen times without payment to the rights holder on any of those sales, whereas each use of a passage from the novel requires permission and a payment to the rights holder? The argument from practicality--that it would unreasonably clog commerce to require book purchasers to negotiate a price with rights holders as well as booksellers--is easy to remedy. And the economic argument that the publisher and author capture the full value of the good on its first sale is clearly inaccurate.

⁶ Amazon, Sell Your Stuff <http://www.amazon.com/exec/obidos/subst/misc/sell-your-stuff.html> (Oct. 26, 2004); Barnes and Noble <http://barnesandnoble.com> (Oct. 26, 2004); BooksIntoCash.Com, Sell Textbooks <http://www.booksintocash.com> (Oct. 26, 2004); Bowdoin Bookstore, Textbook Buyback <http://www.bowdoin. edu/bookstore/annex/buyback.html> (Oct. 26, 2004); The uci Bookstore, Buyback <http://www.book.uci. edu/ coursebooks/faqs/buyback> (Oct. 26, 2004).

⁷ Eric Foner, Give Me Liberty! An American History (2 vols., New York, 2004-2005).

⁸ American Federation of Teachers, Academic Staffing Crisis <http://www.aft.org/topics/academic-staffing/> (Nov. 15, 2004).

⁹ National Endowment for the Arts, Reading at Risk: A Survey of Literary Reading in America (Washington, 2004) <http://www.nea.gov/pub/ReadingAtRisk.pdf> (Oct. 26, 2004).

¹⁰ Merriah Fairchild, Ripoff 101: How the Current Practices of the Textbook Industry Drive Up the Cost of College Textbooks (Jan. 2004) <http://calpirg.org/reports/textbookripoff.pdf> (Oct. 25, 2004).

¹¹ George Brown Tindall and David E. Shi, America: A Narrative History (New York, 2004).

¹² Kevin Nance and Mike Thomas, "The End of Books?," Chicago Sun-Times, July 22, 2004 <http:// www.suntimes.com/output/lifestyles/cst-nws-insight22_book.html> (Oct. 26, 2004).