As Book Prices Drop, Big Publishers Push Into Software and Edtech

8/4/14Follow @gthuang

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“go beyond what a traditional textbook can do,” Diaz says. “The industry as a whole is going through a huge period of transformation.” He sees the educational publishing model moving from print and e-books to software platforms with “more like a service or license model.”

In any case, the trend seems clear: the price of textbooks is going to come down, even as online tools and materials promise more interactivity and feedback from students and teachers. It all amounts to a huge challenge for both publishers and tech companies.

Let’s take a closer look at Cengage Learning. The 5,500-person company made $1.7 billion in revenue last year, and emerged in April from nine months of bankruptcy, following a private equity buyout in 2007. The vast majority of Cengage’s business is in higher ed, and its customers are primarily college students and their parents, not professors or departments. Now the publishing firm is trying to remake itself as a technology and services provider.

Michael Hansen, Cengage Learning CEO

Michael Hansen, CEO of Cengage Learning

In the traditional print model, says CEO Hansen (pictured), “you put it on a shelf, and you didn’t care how people were using the content. With the advent of digital, our ability to reach out and interact with our users has exponentially increased. The industry as a whole, and Cengage also, was somewhat late to the party.” Now, he adds, “it’s not about the print to digital, it’s embracing what the user does with our content.”

To that end, Cengage has embarked on a major effort to understand the workflows of college students and professors, through interviews about things like how kids study, how much time they spend on homework and test preparation, and what kinds of work they do on mobile devices. One thing the company found was there are big differences between subjects—American history versus accounting, say—in the types of content professors want to use and how pupils prepare. Also, students typically still prefer reading book chapters in print, but they do things like test-prep questions or video simulations on mobile devices and computers.

The results of such studies have been enlightening to publishers. “As an industry, we have ignored the student for decades,” Hansen says. “It’s a lot more work than it used to be. But it’s more fun work, in a way.”

Digital and interactive tools mean publishers and tech companies can also get real-time feedback from students and educators—if they can unify their product offerings and make sense of all the analytics. Cengage, for one, has rolled out a “personal learning” software product called MindTap. It’s an online platform where professors can combine readings, videos, apps, and assessments to provide a richer, more cohesive content stream for their courses.

Hansen would be among the first to admit that publishers have a long way to go in understanding their customers—and using technology to do that better. “We need to build products that students want to buy, and that they see as necessary for their education—while continuing to ensure that products meet the needs of the faculty,” he says in a follow-up e-mail.

I asked him how big a threat open content is to the company’s core textbook business, given that’s where the digital-media world seems to be heading.

“Open source content is not something I would consider to be a threat,” Hansen says. “We’re working with partners every day to explore ways to make useful content available alongside our own authoritative content if that is what faculty and students want. The key is finding ways to engage students in the materials, whether traditional course material or open content, and making this information accessible to learners in ways that best support the goals of the faculty and student.”

What does all of this mean for the future of education? So-called “blended” approaches to online and offline learning are being tried at all levels, and best practices are emerging. Meantime, the majority of U.S. college students already use some component of non-traditional instruction or materials. But the field is wide open, and a land grab is underway for the hearts and wallets of students, teachers, and administrators.

Bhatt, Blackboard’s CEO, emphasizes that the education industry “needs a leader in technology.” The question is whether that leader in digital will come from the established software world, or the edtech startup community, or maybe—just maybe—the big publishers.

Hansen’s bet, of course, would be on the latter. “We don’t have a magic crystal ball to tell us if or when digital will completely take over,” he says, “but we know that digital is the future.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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