Media Company Looks to Profit from Education

The Association of American Publishers estimates the K-12 textbook market approaches $3 billion in the United States, with an additional $4 billion spent on teacher guides, testing, and reference material. So it should come as no surprise that companies other than traditional publishers are looking to grab a piece of that pie.

Discovery Communications, which owns the Discovery Channel, Animal Planet, and TLC, is doing just that with the introduction of a line of digital textbooks called Techbook that will provide video, virtual labs, and downloadable content, according to a report in The New York Times.

“It’s kind of perfect for us,” Discover Communications CEO David M. Zaslav told the Times. “Educational content is core to our DNA, and we’re unencumbered—unlike traditional textbook publishers, we’re not defending a dying business.”

Tough words perhaps, but education publishers are not going to concede their turf without a fight. Pearson, McGraw-Hill Education, and Houghton Mifflin Harcourt have all introduced digital educational products and recently teamed with Apple to sell high school textbooks through its iBook store.

“Over the last 10 years alone, we’ve invested $9.3 billion in digital innovations that are transforming education,” said Will Ethridge, CEO of Pearson North America. “One way to describe it would be an act of ‘creative destruction.’ By this I mean we’re intentionally tearing down an outdated, industrial model of learning and replacing it with more personalized and connected experiences for each student.”

In the meantime, Discovery has a staff of 200 working on its Techbook project. The cloud-based technology works on any hardware a district might be using and will cost about $38 per student for a six-year subscription, compared to the $70 average price for a traditional textbook.

“Television is always going to be our primary focus, but we’re incredibly excited about the business potential of the Techbook,” Zaslav said. “Education is an area of solid, sustainable growth.”

Techbook is only targeting K-12 students for now, so it’s just scratching the surface of education’s “business potential.”

MHE Offering LearnSmart Directly to Students

McGraw-Hill Education announced plans to make its LearnSmart adaptive learning program available directly to students in time for fall 2012 classes. The plan, an effort to open new revenue streams for the company, is the first time MHE has marketed and sold technology directly to students.

“Making these study tools available directly to students—and their parents who want to help them succeed—signals a new era for our business as we work to ensure that more students are getting the most out of their college education,” Brian Kibby, president, McGraw-Hill Education, said in a press release.

Use of LearnSmart has grown to more than 40 introductory courses since it was introduced in 2007, with MHE reporting more than 800,000 students use it to answer questions each day. But many college store professionals view publishers bypassing them in favor of selling directly to students as a threat instead of just “good business” on the part of the publisher, according to Mark Nelson, chief information officer of NACS and vice president of NACS Media Solutions.

“On one level, it is a threat, but if stores were providing sufficient value to publishers, particularly on the digital side, the publishers would have no need to go around the stores,” he said. “Stores have good mechanisms when it comes to print, but their mechanisms for handling new business models and technologies are inadequate.”

Another issue is that MHE plans to continue to sell the product in campus stores as part of the McGraw-Hill Connect online course-management platform, which combines digital learning with class materials. But rather than a call to arms, Nelson sees the news as an opportunity for stores to work with publishers to define better solutions.

“Publishers themselves would be stronger working with us,” he said. “If stores want it to stop, then they must more effectively demonstrate value. Complaining or continuing to do things the way they have always done them or resisting change does not do a whole lot to get the publishers to alter their practices.” 

Beyond the Bookstore for Publishers

Yet another sign that it is time for stores to change many of their traditional ways of doing business.  A recent article encourages publishers to increase sales and profit through non-bookstore marketing, particularly in light of the trend toward decreased unit sales in print books from traditional outlets.   Here is an excerpt from the article:

“Given the choice, there are advantages to focusing only on non-bookstore marketing.  Here you can sell your content in any format – e-books, printed books, audio books or booklets.  You can also sell it in many more places, including retailers, libraries, corporations, schools and associations.  And in nonretail segments, book sales are sold on a non-returnable basis and you are generally paid more quickly.  If that were not enough, even more benefits accrue through special sales.” 

Here are ten reasons why the author says publishers should invest in the non-bookstore markets.  You can read the details of each recommendation in the article.

1) Compete in a marketplace larger in size than the bookstore segment.

2) Experience growth that is virtually limitless.

3) Take your titles to the potential buyers rather than waiting for them to go to a bookstore.

4) Reduce the competition.

5) Minimize discounting since buyers do not have immediate access to competitive pricing.

6) Sell books on a non-returnable basis.

7) Stimulate increased exposure. 

8) Increase your flexibility in negotiations

9) Improved cash flow, since some businesses purchase your products at list price.

10) Do what you do best.

Now I am sure many stores could articulate reasons back to publishers to encourage continued investment in the channel.  A couple obvious arguments come to my mind, however, that is not the thrust or focus of this posting.  The point here is that stores that want to succeed in the future must look at the trends and begin transitioning to new markets.  Continuing on a path to merely extend or defend what we have always done is a fast path down the spiral of decline.  We must rethink our value, or not be surprised when those who were once our partners are suddenly our competitors.  To paraphrase Wayne Gretzky once again, we must learn to skate to where the puck will be -- not where it is now or has been in the past. 

Amazon's latest marketing effort

Amazon is offering $5 off on items if you take a picture of that same item at any brick and mortar store and you purchase through their online store.  You are permitted to three items on Saturday December 10^th.

Here is a not so happy indie bookstore owner, who writes in PW,  

“To encourage people to snoop at other stores and report back  . . .  so they can keep their prices competitive is pathetic.  Here’s what I do: I pay sales tax, I donate thousands of dollars to local schools, charities, Little Leagues, church pie suppers, school trips, Geobee prizes, etc.  I support my community and that means going to local stores and buying things there. Price is not the only factor for me”

In response to this promotion some indie owners have started an Occupy Amazon movement on the same day.