Why Was CourseSmart Offloaded?

This week’s news that the publishing educational joint venture CourseSmart has been acquired by Ingram’s Content Group should be not a surprise, but raises some interesting questions about publisher's joint ventures.

Some six years ago whilst speaking at the National Association of College Stores (NACS)  conference in Minneapolis, I was drawn to a cluster of delegates who were busy taking notes and sat apart from the delegates. I spoke to them afterwards and discovered that they were all from CourseSmart and they were obviously sent to press the delegates’ flesh. On being asked what the CourseSmart service was and what it wanted to be when it grew up I found I got different answers. Maybe that is where their problems lay. Later there were several rumours that some members of the joint venture want to go their own way. I also remember presenting to an industry group in the UK who were looking for an alternative to CourseSmart, but many were being reined in to supporting it by their larger brothers and sisters in the US. It is interesting that some members of the venture spread their bets and also backed competitive services as well as their own offers.

The big question is why publisher digital joint ventures either wither or get passed on? Maybe they feel that they are not core business, or that they don’t have the skill base, or maybe they bleed cash? Recently we have seen ventures such as Bookish and Anobii fail. Unlike others CourseSmart had the perfect parentage, access to the content, potential direct to market sales channel, yet it moves on.

CourseSmart was formed in 2007 by Pearson, Macmillan, Cengage Learning, John Wiley & Sons, McGraw-Hill Education and Pearson. It started off as a digital inspection service then quickly morphed into a providing digital textbooks in the higher education market and lately has offered its content and platform to a wider audience. It’s technology was driven be Pearson and some say that was probably the start of many of its internal challenges. Others will say that the base technology was restrictive and did not meet many of the market’s demands.  

In Ingram Content Group's Vital Source Technologies, Inc., it has probably found a good home and it clearly offers Ingram extended reach under the Vital Source platform as well as potential increased access to and opportunities with publisher digital distribution.

Dumbing Down of Textbook Publishing?

The textbook market has always offered high reward and with it high risk. Many have tried to corner the market including the big technology giants, chains, publishing joint ventures and new start-ups, but it remains, like its students and their courses - diverse.

Now Google has joined Amazon, Apple, Microsoft in its intent to go after what they all regard as ’low hanging fruit’, but what often turns out to be not Golden Delicious apples but high hanging and sour crab apples.

Of course Google believe that its new Nexus 7 Tablet is 'perfect for students', and therefore intends to stuff a special educational section of its Google Play store with textbooks. Its "comprehensive" selection of titles will be available for purchase and for rental over six-months periods and cover works from the five major textbook publishing houses. Just to add some spice Google is promising that they'll be at discounts of up to 80%. Google’s partners are Pearson, Wiley, Macmillian Higher Education, McGraw-Hill and Cengage Learning.

Given that textbooks are expensive an 80% discount would look attractive. The high cost is regarded as the reason why used textbooks and textbook rentals have been booming of recent years and this together with the entry of all the major technology giants has been heavily impacting the major textbook publishers. On one hand the used and alternative marketplace is stealing sales and on the other they are often have high discount terms being dictate to them.

One way the likes of Pearson and McGraw-Hill Education are trying to address this is to create a new model aimed at developing online versions of their texts that often have interactive features, and then selling the students access codes which expire at the end of the semester. However, persuading students to go digital isn't straightforward and according to research firm Outsell, only 27% of the textbook spend in US secondary schools and colleges was digital.

Pearson is undeterred and are restructuring to emphasize online content. Cengage Learning, has stated its intent to emerge from its recent bankruptcy filing more focused on digital. McGraw-Hill Education, has acquired an equity stake in one software company focused on digital learning and acquired another.

Just to confuse the issue further, the major publishers have created a joint venture called Coursesmart which was set up to offer a joint direct market service to promote and sell digital textbooks. However when one’s parents are spreading their bets it’s not surprising that it has become somewhat of an ‘also ran’.  

Some would say that the publishers are pursuing a multi-channel strategy others would suggest that it is less of a strategy and more of, ‘every which way but win’ and that to compete against yourself and your investment is at best questionable and not wise dot com.

But is digital a forgone conclusion?

In a survey last year by the National Association of College Stores, some 77% of college students said they preferred print to e-books. Another survey, by the research firm Student Monitor, found only 14% of students had classes that required online texts and only 2% bought the majority of their books in digital format.

So is it down to cost and availability through alternative markets or does physical textbook still serve the students’ needs better? One thing that is certain is that both the publishers and technology companies are betting on digital and are trying every which way to win the market. The alternative is seen by them as more used and second-hand Textbooks and stolen sales. Some may argue it’s a choice between a rock and a hard place.

Letter From America III

I was honoured to be invited to speak in Minneapolis at the National Association of College Stores (NACS) Innovate 2008 conference. The focus was about how the members could gain competitive advantage through technology. Campus stores are being squeezed by many and also face lots of new digital challenges.

The issues that face all campus stores are many and complex but are no different to those facing all bookstores. There are many questions:

Who are their customers?
How do they engage with their community?
Are student customers for life or just for a short time and why can’t they retain the customers past student life?
What do their customers want?
What is the size of their market and their percentage of this?

Once they have established where they are they have to decide where the want to be and how they get there. It is not about digitisation nor is it about technology – it’s about retail. The campus store is not dead it is merely changing and adapting to new opportunities. Will it survive – I believe so but it will be different and will be built on its existing relationships with its community and its publishers.

The following are the digital recommendations I left them with to consider:

1. Adopt Digital Drop Ship as the model to engage all bookstores into an effective channel for all publishers. Some would argue that the aggregators do this today but look at the exclusive models and demand more. You need an inclusive, integrated and independent model that is inclusive not exclusive and builds on the relationships you have today not one that merely put someone else between you and your supply.

2. Widgets. Ask yourself how you can maximise this within your environment to sell more books. You could even use them in-store to qualify stock you don’t carry. If I am right and they become ubiquitous, how are you going to manage them? I believe the association has a clear role to play to make sure the right widgets are created and distributed to its members in a way that they can be fully exploited and increase revenues today. Don’t wait for someone to sell you the package do it yourselves. Solutions here need to offer both development and be built to be ‘out of the box’

3. E Inspection copies. I believe you are integral to the process today and going forward. If you aren’t plugged into the process, where will the sales go? Only by working collectively and with others will the real benefits on offer here be realised. After all the reviewers are your customers, the students are your customers and the books are what you should be selling, so why wouldn’t you work with others to secure it?

4. Print on demand offers much but is a significant change. It may work in one store but not in another today. However if you became the first movers and viewed it as a local resource could it secure a bigger market. If you wait someone will do it first. That may be a competitor, a print shop, a library, even a coffee shop. What being a follower mean to your business and community relationships.

5. 508 is my last suggestion. This is not an individual store option today as much as a co-operative one which could provide high visibility, take away a painful exercise for publishers, provide a real service and relationship link to the thousands of disability officers and the solution is not difficult not expensive.

You can read the full presentation at http://www.value-chain.biz/Brave%20New%20World%20ii.htm