About three or four years ago, right around , prices started to come down significantly. This service, she noted, can often cost less than a single textbook. But these ostensibly affordable options come with some drawbacks. Trident Technical College, the biggest technical school in South Carolina, is a perfect example.
The institution has a contract with Pearson that requires it to guarantee 12, inclusive access enrollments in the calendar year. The real challenge is getting professors, who are ultimately responsible for which books get assigned, to adopt the free options. As Vitez noted, an increasing number of universities are replacing full-time, tenured staff with adjunct professors. These books come loaded with vetted, preselected supplementary material and homework assignments that can be graded online.
They require a much smaller time investment from underpaid instructors. The rising cost of textbooks, then, is a sign of one of the greatest paradoxes of higher education: As everything from tuition to housing to books gets more expensive, the people who are tasked with making sure students receive a good education are being forced to do more work for less money.
The result is a world where students and professors alike struggle to get by. Our mission has never been more vital than it is in this moment: to empower through understanding. Financial contributions from our readers are a critical part of supporting our resource-intensive work and help us keep our journalism free for all.
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Profit margins probably differ from company to company and book to book. They are a closely guarded secret. Of course, at Purdue in the figures would have been smaller, but the principle the same. The fact of modern campus life is that used book companies buy up textbooks on one campus, warehouse them, and ship them to wherever the book is being adopted, and therefore prevent sales of new books. Consider what this means. The textbook company that invested hundreds of thousands of dollars — maybe millions for introductory textbooks — to sign, develop, review, produce, market, and distribute a book over several years is denied its just profits.
The author or authors who wrote the book over many years are denied their royalties. Meanwhile, huge profits are made by the used book companies who did nothing whatsoever to create the product. They are true parasites, deriving profits with no investment and no value added to the product while damaging their hosts.
The issue here is similar to that in the movie and recording industries for pirated products that are sold very cheaply, denying the companies and the artists their profits.
One major dissimilarity in these cases is that pirated movies and music are illegal whereas the used textbook market is legal. There have been proposals to change this state of affairs.
For example, one idea is that when used book companies resell texts they would pay the original textbook company and author a royalty. The high price of textbooks is the direct result of the used book market.
A textbook is customarily used for one semester and unlike the old days students rarely keep their books now but sell them back to the bookstore more on that anon. Therefore, the same text might be used by three to four students, but the textbook company and author profit the first time a book is sold and not thereafter.
It stands to reason that textbooks must be priced aggressively, because the profits from the repeated sales will not go to the authors and companies that actually wrote and produced the books, but rather to the companies that specialize in buying and selling used books. Frequent revisions also add wear and tear on the authors who must perpetually revise their books.
Most fields of psychology hardly move at such a swift pace as to justify two- to three-year revision cycles of introductory textbooks.
The famous textbooks of the s and s were revised every eight to 10 years or so, but after the used textbook market gained steam, revisions became frequent.
Moreover, because of the used book market, profitability of many companies was hurt and they became ripe for takeovers, which further consolidated the market. Other changes have also affected the market. College and university bookstores used to be owned by the school and operated as a service to the students and the faculty, but those days are past on most campuses.
Another pernicious trend: After universities relinquished their hold on bookstores, the bookstores aggressively raised that the percentage markup on the net price paid to the publisher on new books. Thirty years ago a standard rate of markup was 20 percent and publishers provided list prices on their books because markups were standard. I can recall the great hue and cry that arose when textbook stores started marking up books by 25 percent.
Publishing companies now sell the bookstore the books based on a net price and the bookstore decides on the list price, often marking up the books 30 to 40 percent in the process. The profits go to the company owning the store and the company pays the college or university for the right to have a monopoly business on campus.
However, many students have now learned that it is cheaper and given the huge lines sometimes easier to buy textbooks from other sources like Amazon. Let me give you a concrete example.
If books are not sold, they are returned to the company for a full price refund. Yet the story gets even worse because of the used book problem. After the student uses the book and if it is in pretty good condition , the bookstore will buy it back from the student at a greatly marked down price, somewhere between 25 and 50 percent. After buying it, the bookstore will mark it back up dramatically and resell the book. In fact, the primary reason bookstores prefer selling used books to new books is the much higher profit margins on used books.
So, on the second and third and fourth, etc. The textbook company that invested large sums into developing the book and the authors who invested time and energy and research into writing it receive exactly zero on these resold books.
If this sounds bad, it actually gets worse. Another insidious influence in the textbook industry is the problem of sales of complimentary copies. In order to market their wares to professors, it is customary for textbook companies to give out free copies of their books.
All of you who teach basic courses in the psychology curriculum receive such books. This is just another price of doing business for the book companies. However, many of these books find their way into the used book market because some professors sell books to scavengers from the used book companies who search through university campuses seeking to buy complimentary copies. Now these companies are soliciting professors to sell their complimentary copies by e-mail.
I never sell my complimentary books, of course, because I believe it unethical to sell for profit something I was given by a company in good faith. However, apparently many professors do sell their books. Now the textbook company gets hit by a double whammy: The book they produced to give to a professor for possible adoption enters the market and takes away a new book sale in the marketplace!
What can you as an individual do about the used book problem and the rising cost of textbooks? Although student life at university is generally enjoyable, one aspect that blemishes the experience is the astronomical cost of textbooks.
As many students head back to university this year, they can expect, over a typical three or four year undergraduate course, to spend thousands of dollars buying all the recommended textbooks. The explanation lies in the market forces behind these costly items.
This restricts other parties apart from those licensed from publishing the textbook and thwarting the sale at market competitive prices. To be efficient, economic theory stipulates products should be sold at their marginal cost.
The price should be set at the cost to the printer to produce the last or next copy of a textbook. Unfortunately for the average student, copyright policy has been in place since the 16th century and has been radically strengthened in the last thirty years. Modern textbooks are protected by ancient monopolies because we feel authors deserve an appropriate income from writing a textbook due to it being a creative work composed of information that has aspects of a public good.
The information itself, in economics terms, is non-rival and non-excludable , though the textbook is the physical embodiment of the information as a private good. If textbooks are produced without a copyright, nothing stops an entrepreneur from copying and selling it at market competitive prices. Due to this, no initial publisher would enter into a contract to pay an author a considerable sum to produce a textbook as competitors can replicate it without having to pay the author.
To recoup the funding to the author, the contracted publisher has to charge a price higher than its competitors, thereby rendering itself unable to effectively compete.
There are problems with this method of ensuring textbook production. The markup from marginal to monopoly price functions as a consumption tax, resulting in a deadweight loss.
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