I wonder if anyone in the textbook industry has read last week’s news that Yahoo! Music is shutting down, just about bringing to a close the era of DRM for music. DRM tends to fail for numerous reasons, as well documented on the web — technological problems, customers’ skepticism, etc. At the end of the day, it’s hard to argue that DRM actually helps consumers at all — why should I buy something with DRM when it’s likely to not work on my iPod or successfully transfer onto my next computer?

But just because DRM failed for music, we shouldn’t immediately assume DRM will fail for textbooks. They are dramatically different industries, so let’s look at some of the factors behind the business decision of entering the digital delivery area for textbooks.

Context for textbook publishing:

• Textbooks are required for most high school and college classes, and the industry enjoys semi-captive, semi-monopolistic audiences.
• There are clear leaders for textbooks — Kandel’s Principles of Neural Science textbook is better than all the other competitors, in my opinion, and frankly I’d pay basically any price for Kandel’s book. It’s used by both Stanford and Yale medical schools, for instance.
• Publishers seek to print new editions frequently since the used book market does not funnel any money back to them after the initial purchase.
• Publishers are increasingly trying to come up with “added value” services like online course websites or DVD/CDs with quizzes, etc. to complement the printed textbook.
• Publishers aren’t putting enough effort into making good added valued services — although a physical CD may be attached, there isn’t any real incentive for anyone to care since the production values are so low.
• More and more content is available outside of printed form; truly cutting edge science classes often work only off of academic journal articles, for instance.
• Online coursework websites are helping professors coordinate digital delivery of PDFs of academic journal articles or PDF photocopies.

My observations/beliefs about student behavior:

• Students tend to prefer to buy used books since there is essentially no difference between a brand new book and a book that’s only been read once.
• Students know they are likely to resell their book back to the bookstore after using it, so students are less likely to highlight or underline text so they can get a better price back later.
• Students are on a budget and have little-to-no income, so paying $300-400 every three months is seriously shocking and horrifying each quarter.
• Students know that publishers aren’t making substantive changes when they up-rev a book to a new edition; quite literally, students compare the old and new edition and simply don’t see much or any differences.
• Students don’t get any value out of online textbook “companion” websites — the real companion to a textbook is the professor and class they are attending, not a website. I only logged in to an online textbook website once and was sorely disappointed — why even bother charging for it?
• Students don’t get any value out of attached CD/DVD content, even for programming classes. Seriously, why wouldn’t I get that type of content online from somewhere else anyhow?
• Students are mad enough about textbook prices that the topic gets significant amounts of coverage in college newspapers, and have tried to create small marketplaces or businesses to facilitate used book sharing/selling. According to the NYT article sited above, students are even scanning whole textbooks and illegally sharing them using BitTorrent! (That is a huge amount of effort!)
• Professors are increasingly sensitive to textbook prices and turning to PDFs of journal articles for the latest content.

Given this landscape, I understand why textbook publishers want to try DRM and digital delivery. Their revenue model is presumably not growing as quickly as it used to since the digital world is offering alternatives (PDFs and journal articles), used book reselling is ubiquitous, and their customers — students and professors — are cognizant of the tricks publishers use to make money (new editions that aren’t any better than the previous copy, CDs and DVDs that nobody looks at, and companion websites that don’t lead to any meaningful learning).

The problem with DRM for textbooks boils down to a single question: “How does DRM help the customer?” Frankly, it does not — the student no longer can resell the book to recover some of their temporary investment, and the cost to buy a book is really going to skyrocket.

The NYT article quotes several prices for an O-Chem textbook by John McMurry:

• New: $209.95
• Discounted (through Amazon?): $150
• Used: $110 and up
• Digital with DRM: $109.99

The above doesn’t paint the whole picture, however. A used textbook will cost me $110 to buy, but then I can resell it back for $75 or so I’d guess. So, the overall outlay is only $35 for the quarter. That means that the digital DRM version costs $75 more for me without adding any extra value for me!! In fact, I’m paying $75 more for something that is likely to stop working at some point when the digital license service dies or expires!

So my initial thought is that DRM for textbooks is a terrible idea that hurts students and doesn’t give the customer any added benefit. And that means DRM is likely to not succeed as an idea in its current incarnation.

I think there is still a big opportunity here, however, but it would require a rethinking of how publishers make money. The publishers could try to decimate the used book market by offering DRM copies at an actually competitive price.

What if DRM textbooks cost $25 only? I’d end up choosing the $25 DRM copy instead of the net $35 cost for a used textbook… maybe. The publisher doesn’t have to maintain huge infrastructure for printing and distributing books, they don’t need to print new editions every 2 years and go through the hassle of creating new content, and they capture 100% of the revenue every year instead of just 100% the first year only.

There’s something to be said for a print copy — there is a huge difference between a print copy vs. a digital copy, as compared to a MP3 vs. CD that performs the same for your ears. The music still comes out of the same headphones, whereas the text hits your eyes in different ways.

Nonetheless, I’ll venture that DRM textbooks at a price point of $25 are seriously competitive and potentially a big win-win situation for both publishers and students. Now that’s the definition of satisfying the needs of your customers, not simply profiting off of them!

PS: I think there might be an interesting opportunity for academic presses to step up, or a new non-profit to step up now, and promote the express goal of facilitating learning through the dissemination of knowledge without seeking to hit revenue growth metrics. Is this all just a byproduct of public companies seeking to grow at 20% a year and now finally finding a saturated and unhappy market? What if that academic press or non-profit did offer DRM textbooks for only $20 each? That would be pretty amazing.