For those licensing images to textbooks National Public Radio published an interesting report recently that is
worth a listen. It was pointed out that prices for college textbooks are often over $300 and climbing faster than the cost of food, clothing, cars and even health care.
Part of the reason for this is that the person choosing the book (the professor) is not the one who pays for the book (the student). Thus, when publishers come out with a new text their sales people go to the professors and talk about all the new features they have added like online quizzes, slides, workbooks, CDs, etc. Most students don’t need, and will never use most of these features, but if the salesperson can convince the professor the book becomes a course requirement.
This is known as the “principal-agent” problem. The principal (professor) is able to make decisions that impact the agent (in this case the student).
As a result of this college book publishers are able to make 20% to 25% profit margins on the books they sell. However, when it comes to the school book division (K through 12) where city, county or state officials decide which books to purchase for their public schools the deciders are the buyers and the publisher’s profit margins drop to 5% to 10%.
As a cautionary tale, if you’re a parent with children in Elementary or High School don’t let your school system decide that parents should be paying for their student’s access to certain online teaching materials. If that happens the prices will certainly go up.
But back to the NPR report. College students are fighting back. Based on surveys by the National Association of College Stores a student’s annual costs for books have been going down. Here are some of the results:
| Year |
Average Cost |
| 2007 |
$702 |
| 2009 |
$667 |
| 2011 |
$665 |
| 2013 |
lower |
Students are buying fewer new books and selling them on Amazon or other online sites as soon as the course is over. There has always been a market for used books, but digital technology has probably made it more efficient. Consequently, publishers make what sales they can in the first year of publication. After that the title is dead.
Online
The publisher’s solution to this problem is online where each year they can charge the new students for access to the site. In theory, long range, it should be much more profitable. The publisher can also constantly update the product without having to release a totally new product.?
When the reporter David Kestenbaum interviewed David Levin, CEO and President of McGraw-Hill Education Levin did not want to talk about textbooks. He kept talking about Electronic Interactive Textbooks (EIT) as the way out of the big spiral of rising prices. Levin said McGraw-Hill has about 500 engineers building EITs and the company is spending about $150 million a year in electronic product creation. “We are plowing huge resources into creating a new set of instructional materials which help students and help instructors and do so at a much lower price than has ever been seen before,” Levin said.
Kestenbaum asked, “You really don’t want to talk about books any more.” Levin replied, “We don’t. It’s not very interesting to us.”
Photography Takeaways
There was no indication that a larger share of that $150 million a year would be allocated for visual materials. Based, on current usage fees and the fact that publishers insist on unlimited digital rights, forever, the per-picture costs will certainly be a lot lower than image creators have been used to when their images were used in books. And over time the publishers will certainly be making more money because they can charge a new fee each year.
Clearly, right now publishers have a lot of development costs as they ramp up the digital delivery of educational materials. At the same time they need to find ways to wind down the publication of books and get rid of the huge overhead costs of printing equipment, storage and shipment that have been part of the book publishing business.
As a result, they need to keep all costs for this new venture as low as possible.
Photographers should think back to the late 90s and early 00s when there was a similar transition from print to digital with all other types of printed products. Initially, the photo industry was willing to accept very low fees for digital uses as long as they were tied to a print use. The argument the publishers made was that they were just experimenting with this new technology, but they weren’t making any money off of it so they couldn’t afford to pay us anything.
However, when they did start making money the price for photo usage online had already been established. Prices for online use did not go up. The extra profit went to the investors, not the creators. In all likelihood the same thing will happen in the educational publishing business.