Digital Asset Pricing in the Textbook Market

Abstract

The U.S. college textbook market is in the midst of a seismic shift: publishers are creating new products, students are demanding more sophisticated digital content and instructors are just beginning to experiment with easily customizable, low-cost “open” textbooks. Although this industry has been picking up digital content in various forms for decades, their main revenue driver has always been print titles, a basic business fact that is poised to change permanently by 2020. The ongoing changes in product, profitability and market expectations drive home the importance of digital asset pricing in the textbook market. Textbook publishers are now grappling with the challenge of developing untested products at uncertain costs in ambiguous markets while their bread-and-butter print sales are expected to decline, and overall profit margins rapidly shifting below their feet. Changes in this market - both at the supplier and consumer level - can affect educational quality worldwide. Recognizing this fact, this thesis explores the conditions of the textbook market, both historically and in the present day, and the implications of certain market changes over the course of time. It also examines current pricing trends for digital assets based around single “source” textbook products (complete e-textbooks compared to their print-version counterparts). Using this information, with an eye on changing adoption trends and a focus on revenue management, it offers pricing and product recommendations to help publishers think ahead about how to maximize revenue over a product’s life cycle as digital goods approach and eventually usurp new print sales.