Can We Put an End to the Textbook Racket?

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The College Board estimates that the average full-time student, at all types of colleges, spends about $1,200 per year on textbooks. University of Illinois Library

This article first appeared on the John William Pope Center for Higher Education Policy site.

Paying for college is not like paying for other goods and services. The eventual customers, college students, may not always feel the impact of rising college costs. Instead, parents and taxpayers often subsidize much of students’ tuition.

However, any student today could point to at least one area in which the price tag is clear and the impact on them is immediate: textbooks.

Headlines abound about astronomical rises in textbook prices. In August, numerous outlets reported that textbooks prices have risen more than 1,000 percent since 1977. Mark J. Perry of the American Enterprise Institute wrote in July about “the $400 college textbook.” That price is on the high end of the scale, but no student who has spent time in a 2015 college bookstore would be very surprised to hear the figure.

The College Board estimates that the average full-time student, at all types of colleges, spends about $1,200 per year on textbooks.

Conversely, books for the general public are cheaper than ever. Thanks to technological advances that have drastically reduced the costs of materials, production and distribution, books that were once accessible only to the elite levels of society can now be purchased at negligible cost or downloaded for free by anyone.

Yet, the market pressure that has lowered the price of books in general does not appear to apply to textbooks. Is there something special about this one category of books that has hindered the downward pressure on prices?

One key factor that separates the textbook market from the trade (popular) book market is that textbooks have a reliable, captive customer base. Whereas publishers and authors of conventional books must satisfy the customer—the reader—directly, publishers and authors of textbooks endure no such burden. If they can persuade a university or professor to require a book for the professor’s class, they need not please the end user at all.

Professors are often not concerned about or even aware of the prices of the books they assign. Students are beholden to a professor’s textbook choices once they have registered for a class. Professors often even assign their own textbooks, presenting a possible conflict of interest: their royalties versus what is best for the student.

The disconnect between seller and buyer has enabled publishers to adopt cartel-like pricing for textbooks. Economist Logan Albright writes that this is “one of the very rare real world cases in which the price elasticity of demand is nearly zero.”

In other words, demand for textbooks stays more or less constant despite the books costing consumers more and more. Publishers don’t have an incentive to lower prices.

Publishers also offer some plausible defenses of high textbook prices. One is that it costs more to publish a textbook than other books; textbooks feature expensive charts, graphs and images, as well as supplementary materials such as videos, instructor manuals and study guides.

Furthermore, writing the initial edition of a textbook is often an extremely labor-intensive task for faculty.

It may be costlier to produce a textbook than a trade book, but it seems there is more going on to explain the astronomical prices—an instructor manual may raise a book’s price, but not by hundreds of dollars.

Additionally, publishers only make money from new books, so they release new editions as often as possible, even when doing so seems unnecessary to everyone else. This is done in part to fend off competition from used booksellers, who could otherwise capture a large share of publishers’ revenue by selling at much lower prices.

In a recent essay for Inside Higher Ed, Naomi S. Baron gives another explanation of the rising prices. She recounts her experience at a Book Manufacturers’ Institute conference where she discovered that publishers respond to lower book sales by doing smaller print runs; this raises per-book production costs, which raises prices, which in turn causes students to buy even fewer new books.

In response to the problem, various state governments and the federal government have passed laws to curb textbook prices. The Higher Education Opportunity Act of 2008, signed by President George W. Bush and taking effect in 2010, created new federal regulations requiring publishers to disclose textbook prices to professors. It also requires that colleges disclose prices to students in time to allow them to shop around.

Yet such legislation may be the wrong approach. Economists Don Boudreaux and Roger Meiners pointed out in a Pope Center commentary that, despite the law’s purpose of “decreasing the costs to students,” the textbook provisions of the Higher Education Opportunity Act are likely to have the opposite effect. The mandates, they wrote, will increase compliance costs. If so, the eventual cost will be borne by the students.

The mandates are also proving too difficult (or unpopular) to enforce. A recent article by the Columbia student newspaper, the Daily Spectator, reported that less than half of Barnard College courses are in compliance with the law—five years after it went into effect.

While the government may not be able to do much about decreasing textbook prices, the market has found various ways around price increases.

Common ways for students to acquire required textbooks more cheaply include renting (from either the campus bookstore or a third party), borrowing from the library, buying the e-book instead of the print version, buying online and buying from local used book retailers instead of from the campus bookstore.

Various colleges have tried a system called a “textbook reserve,” a library-style system in which students reserve a book for a few hours before relinquishing it to another student.

But some of these innovations have not really taken off. According to a study by Student Monitor LLC in 2013, only 10 percent of students rented textbooks, and half that amount used e-books. A drawback to both of those options is that students are not allowed or able to highlight or take notes in the margins, a commonly recommended study technique.

Students may also turn to the overseas “gray market” that ignores U.S. copyright laws. A 2013 Supreme Court case ended favorably for Supap Kirtsaeng, a Thai bookseller who sold cheap foreign textbooks to American students.

Survey data over multiple years show that many or most students have even balked at buying required materials because of price. Some students respond to this with another grey market tactic: using PDF versions of a book, shared by a classmate who either scans it from a print version or pirates it from the Web. Still others go without the book at all, hoping to pass a course without it.

One idea that has excited the higher education community but has not yet become viable on a wide scale is open textbooks. Open textbooks are those licensed under open copyright licenses and often made freely available to the public. Professors can often personalize books to their liking, and they can come in any format: print, e-book, or audio.

A 2014 report by the United States Public Interest Research Group (PIRG), a consumer protection organization, estimated that students could save $100 per class using open textbooks instead of traditional ones.

The report recommended that colleges replicate open-source textbook initiatives housed at the University of Minnesota and the University System of Maryland, as well as Washington State’s Open Course Library, funded by the Bill and Melinda Gates Foundation. A company endorsed by student PIRG groups, Flat World Knowledge, hosts more than 110 digital textbooks on its website. It originally hosted its textbooks for free, but changed its policy in 2012 due to financial concerns.

The State University of New York system also has an open access initiative, in which it calls on participating libraries to publish its own textbooks.

Sen. Dick Durbin (D-Ill.) has sponsored multiple bills creating a federal grant for open textbooks. The legislation has failed under both Democratic and split congresses and is probably unlikely to pass under the current Republican Congress.

The extent to which innovations such as open textbooks, textbook reserves and skirting textbooks altogether and sticking to primary sources will disrupt the textbook market is still unknown. But the speed at which new means of delivering written information are appearing suggests that textbook publishers’ best days are behind them.

Harry Painter is a writer at the Pope Center.