Tuesday, January 24, 2012

Textbooks plus = big dollars . . .

I found this follow-up to the Apple announcement last week on textbooks interesting. I knew that publishing textbooks is a lucrative business, but not to the scale I learned in this Alexander Russo post. In it, he shares a chart and an article from Epicenter that followed the announcement giving some insight into the publishing world.

The biggest publishers in the world today are education publishers.

It’s not even close. In 2009, Pearson’s Education division alone brought in more revenue than any other book publisher besides number two, Reed Elsevier, whose biggest businesses are Lexis-Nexis and Elsevier Science.

Education publishers dwarf trade presses. Only the top trade press, Random House (itself owned by Bertelsmann) is bigger than Cengage, the little-known education publishing division that Thomson spun off in 2008 before merging with Reuters.

To bring this closer to home, since 2010 we have purchased new math materials in grades K-12. These purchases totaled about $609,000; huge for us, but in the big picture we are a very small piece of the pie. In other words, there are millions of dollars to be made in each state every year as districts are on different textbook review cycles and this is only for one content area.

So, why would Apple not try to take a bigger cut than the 30% figure they reached with three of the top publishing firms?  The article puts forth the following thinking.

But Apple has literally billions of other reasons to play nice.

Let’s suppose you don’t really care about textbooks. Pearson also owns Penguin, the world’s second largest trade publisher. They also own the Financial Times and a 50% share of The Economist.

That’s the same Penguin that partnered with Apple to help launch iBooks along with the iPad. And that’s the same Financial Times that proved publishers could bypass the App Store’s 30% cut and still grow their subscriber base on iPhone and iPad.

The article goes on to share some further insights into this world.

Their giant size and reach throughout the education and media landscape gives these publishers advantages and disadvantage. One disadvantage: they move slowly. One big advantage: You cannot outflank them.

One after another, Apple, Inkling, Barnes & Noble and other digital publishers have given up trying to outflank academic publishers. Now we will see whether Apple’s spotlight can get them to move.

It would be nice if Apple could have taken a bigger bite out of this behemoth, one that would make it easier for school systems and students to access current content.

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