Published on January 21st, 2012 |
by Richard Cartwright
Is this Apple’s plan for the textbook market?
Looking at Apple’s education announcement and the later statements by McGraw-Hill CEO Terry McGraw that; 1. school boards would have to pay the $14.99USD “pilot pricing” per year per student and. 2.a paper text book costs $75.00USD per book and is replaced once every five years or so, and that Mr. McGraw expected to make money on “volume”, I had to wonder how Apple was going to knife the publishers? There has to be a plan to take out the publishers, because it is in Apple’s corporate DNA to screw the old school content providers. They almost have to, because the scheme as presented has absolutely no cost savings to cash strapped American school boards, and the prospect of a huge investment into the Apple ecosystem.
Here is how I think it is going to play out. In the US, publicly funded schools are generally overseen by the various states and each county and or city has its own school board that is for the most part funded by local taxes. Apple is going to point out to the state oversight school boards (if the states don’t figure it out on their own) that they can create their OWN textbooks using their own state university resources (ie graduate students) Essentially, once the primary texts are done, its just a mater of updating and revisions. For example, the American State of Tennessee has 971,524 students enrolled in K-12. (Think of it as Grades 1-13) The cost of one Apple iTextbook at say $15.00 USD would be $14,572,680. Admittedly, the number includes the entire group of K-12, but, I could see using iPads in kindergarten even if they were not issued to students below 3rd or 4th grade. Assuming 6 courses per student per year and figure 6 textbooks (at least-don’t forget lab books in upper forms)per student, per year, doing the iMath comes to at least $90USD a year. per student, not counting the cost of the iPads. However, if the schools create their own content, even at market cost there is about a five year break even for the cost of an iPad. Over, $14 million US dollars would pay for a lot of work study time to do the basic research and writing of the texts All that has really stopped many state school boards from doing their own textbooks was the economies of scale for for publication.Take out the printing costs and its a whole new match. One the textbook publishers are likely to lose.
Commentators have mentioned that nothing was said about university level textbooks. I suspect not only that was deliberate on Apple’s part, it is where textbook publishers will start feeling the heat. Uni professors love to inset their own spin on the texts they use, even to almost writing their own. In the US, college textbooks are hitting $200USD a book in many subjects. Whilst UK textbook costs are usually 20-50% lower in the US, everyone is looking to cut costs. Not to mention the potential savings on classes where you get a lecturer who almost never uses the book, but often has other material to read. In the college setting, an iPad based textbook ecosystem could pay for itself in the FIRST TERM. The idea of updated content is particularly appealing for technical subjects. From the university’s perspective, there would not be any real need to issue iPads, students would be expected to buy them.
Where is Apple in all this? Selling a lot of iPads. Where are the textbook publishers? Trying to steal the pudding of the record companies at the home for obsolete business models.