Friday, May 06, 2011

Amazon is Helping to Pop the College Textbook Bubble and College Bookstore Cartel Is Not Happy

Inside Higher Ed -- "College bookstores have been consistently losing ground to the Internet retail giant since it entered the textbook market. With its ability to buy in bulk, low overhead and employee costs, and partnerships with third-party sellers, Amazon has made itself one of the cheapest ways to get books and other retail goods.

So to "level the playing field," the National Association of College Stores, which represents more than 3,100 college bookstores, has picked a fight with Amazon – the world’s largest bookseller – over advertising claims made by the Internet giant. The claims, which can all be found on Amazon's textbook page, are that individuals can "Save up to 90 percent on used textbooks," "Save up to 30 percent on new textbooks," and "Get up to 60 percent back when you sell."


NACS and the 3,100 college bookstores it represents are threatened by the lower prices that Amazon offers students on the sale of textbooks, and the high prices it offers to buy back books. It is actively seeking to limit Amazon’s ability to advertise these prices."  

MP: The chart above shows the "college textbook bubble," which was partly the result of the fact that the "college textbook market was virtually oligopolistic 15 years ago. Most college towns had only the college-run bookstore and one or two independent shops," according to the Inside Higher Ed article.  Now that Amazon and other Internet booksellers allow students to compare textbook prices, the market has become “exceptionally competitive.” And the NACS of course would much prefer their old "cartel" status than face intense competition from Amazon.  

26 Comments:

At 5/06/2011 9:44 AM, Blogger Buddy R Pacifico said...

Barnes and Noble is also disrupting the textbook market with rental textbooks.

B&N textbooks can be rented for 60, 90 and 130 day periods. The rent includes free return shipping, unless the class is dropped within 30 days.

 
At 5/06/2011 10:13 AM, Blogger MaggotAtBroad&Wall said...

It's an example of Mises "consumer sovereignty" that you like blogging about.

What Amazon shoppers are doing to college bookstores reminds me of what Wal-Mart shoppers have done to mom and pop retailers.

Amazon and Wal-Mart are portrayed as the bullies in the press. But the real "bullies" are the students who decide not to buy their books at the college bookstores and the shoppers who decide not to spend their money at the mom and pops.

The students/shoppers decide which college bookstores will survive and which will fail with their dollar.

It's a twofer: 1) Schumpeter's creative destruction combined with 2) Mises consumer sovereignty.

 
At 5/06/2011 10:36 AM, Blogger harris66 said...

I remember back these many years, to college, and the fact that you couldn't buy used books from the year before, like in grade school and high school.

My college classes almost overwhelmingly required a new, different, textbook every year, sometimes every semester! Kept the college bookstore in the black, big time.

Long overdue for the colleges and their bookstore monopolies to take a major hit.

 
At 5/06/2011 10:54 AM, Blogger Walt G. said...

"Long overdue for the colleges and their bookstore monopolies to take a major hit."

College bookstores are considered a revenue source. Often when one revenue source decreases, another increases to replace it with no net savings. If total costs don't decrease, total revenue can't decrease.

 
At 5/06/2011 12:05 PM, Blogger Buddy R Pacifico said...

Maybe it's time for college bookstores to change emphasis away from texts. The name bookstore is probably outdated and so, should be convenience and school brand oriented.

ie. Harvard Experience Express, University of Arizona Attitude or Notre Dame Notions.

 
At 5/06/2011 12:15 PM, Blogger Walt M said...

What publishers have to quit doing is publishing just to add glitz. Yearly updates are not required when little underlying elements have changed.

I am reviewing a textbook revision and it is all superficial -- charts and pictures.

 
At 5/06/2011 1:33 PM, Blogger Walt G. said...

"Yearly updates are not required when little underlying elements have changed."

Do you want to buy a few semi-trailer loads of history books where Osama Bin Laden is not dead that are junk now? Books are like electronics--they are already out-of-date when you buy them.

 
At 5/06/2011 5:24 PM, Blogger Downtowndoll said...

This comment has been removed by the author.

 
At 5/07/2011 12:48 AM, OpenID Sprewell said...

There is another alternative to total revenue going down: bankruptcy. That's the outcome that's coming for the colleges, let alone their bookstores.

 
At 5/07/2011 3:38 PM, Blogger Ron H. said...

Walt M

"What publishers have to quit doing is publishing just to add glitz. Yearly updates are not required when little underlying elements have changed.

I am reviewing a textbook revision and it is all superficial -- charts and pictures."


Actually, textbook buyers can correct this problem almost instantly if they choose to do so.

You didn't mention the purpose of your review, but if it includes input to buying decisions, the solution is partly in your hands.

 
At 5/07/2011 3:51 PM, Blogger Ron H. said...

Walt G.

"Do you want to buy a few semi-trailer loads of history books where Osama Bin Laden is not dead that are junk now? Books are like electronics--they are already out-of-date when you buy them."

We Don't know what type of textbooks Walt M is referring to, but do you seriously consider history texts to be "junk" just because they don't mention bin Laden's death? Give me a break. Couldn't the prof. or TA merely mention the update so students wouldn't be confused by it's absence in their book? Give people a little more credit. Surely this isn't a show stopper.

 
At 5/08/2011 8:09 AM, Blogger George Phillies said...

Few books become obsolete. The periodic table of elements you can actually study chemically hasn't changed a great deal recently. F=ma rules.

And when I taught a totally new course in a totally new area, and wrote my own pair of books (with a co-author), I went to print on demand (electronic, $6; print on paper, close to $20). University Faculty are also puzzled as to why textbooks are so expensive.

Mind you, the books I choose for my freshman physics courses do run (new) $50-$70.

I would, however, say that students who buy books and sell them back -- especially when the books are available second hand -- are missing one of the points of a college educaiton, namely building up a core professional library.

 
At 5/08/2011 8:13 AM, Blogger George Phillies said...

ON a different note, you have missed the interesting predicament that private schools have found for themselves. Need-Based financial made means that -- somewhat clumsily -- when tuition etc are changed, need is recomputed, and for the large fraction of students on financial aid there is then almost no return on increasing tuition, because the aid goes up approximately to match. The yield per student on a large tuition bill is much smaller than might be expected.

 
At 5/08/2011 3:16 PM, Blogger Walt G. said...

"Give people a little more credit. Surely this isn't a show stopper."

If your competition does not update their textbooks, you don't have a problem. Someone always sells something newer, better, or cheaper. Yours is junk when that happens.

 
At 5/08/2011 4:32 PM, Blogger Ron H. said...

Walt G.

"If your competition does not update their textbooks, you don't have a problem. Someone always sells something newer, better, or cheaper. Yours is junk when that happens."

You assume that an instructor would require students buy the new textbook. Would you require it? Would a 1 page addendum explaining that bin Laden is dead not make the old textbook just as relevant? Seriously, now.

Perhaps you could ask students to add a note at the front or back of the book explaining the update. They could even title it "addendum".

Alternatively, you could print up and distribute an addendum you thought would make the old textbook whole.

Everything in the old textbook about bin Laden would still be relevant, except for any references to present tense instead of past tense. Don't you think students could overcome such a hurdle without spending $100?

Allowing the use of Kindle editions would eliminate this problem entirely.

I don't know about you, but I usually check the publication date of a book before I read it, so know the historical context.

Come to think of it, today's students don't really need to read about bin Laden's death in their history books, they likely are quite familiar with the story.

 
At 5/08/2011 4:44 PM, Blogger Walt G. said...

"Come to think of it, today's students don't really need to read about bin Laden's death in their history books, they likely are quite familiar with the story."

That's just an example of how quickly printed media becomes obsolete. History is just one of the fields that changes quickly.

Yes, I believe the change is rather irrelevant, but I will not be buying those books for full price. I don't pay full price for day-old bread either. If I have a choice between a $100 book that is current and a $100 that is not current, all else being equal, I will buy the current one.

I love my Kindle!!!

 
At 5/09/2011 3:01 AM, Blogger Ron H. said...

"Yes, I believe the change is rather irrelevant, but I will not be buying those books for full price. I don't pay full price for day-old bread either. If I have a choice between a $100 book that is current and a $100 that is not current, all else being equal, I will buy the current one."

I think you are missing my point. Pretend you teach at a local community college. There are currently new and used books available in the school bookstore. Will you require your next class to buy a newer book that includes only such trivial updates as the death of bin Laden, or will you allow them to buy books currently available, which have already been paid for by the bookstore?

 
At 5/09/2011 6:13 AM, Blogger Walt G. said...

Ron H.

I don't have to pretend I work at a community college, I do. I am currently choosing my books for fall 2011. We had a lot of codes/laws change Jan. 2011 for the classes I am teaching. I will not pick books for my classes that do not have those updates.

I can't ask my students to spend a lot of their hard-earned money, $100-$200, on a book that does not apply to 2011. The world changes quickly, so our curricula and books need to reflect that change if our students expect to compete in the job market with those who stay current in their field. Some things are only trivial to someone else.

 
At 5/09/2011 10:08 AM, Blogger Walt G. said...

Ron H.

You do know college bookstores do not generally stock textbooks? They buy by the semester and send back the ones not sold for credit shortly after the semester begins to keep inventory carrying costs low (just-in-time).

The bookstores then start the cycle over again the next semester. There is no stock of low-cost or old books just sitting around in the store waiting to be sold.

 
At 5/11/2011 10:28 AM, Blogger Fred Garvin said...

I wish health care costs and college tuition had been represented on the chart. These markets(including the textbook market) are all artificial. A majority of the consumers in these markets don't pay for the products and services directly... A third party does. It's like comparing the price of car insurance with the cost of an F-16.

I'd also refer readers to look at PSO and MHP income statements. These "oligarchs" make less than 9% margins.

The main beneficiary of the rise in college-related costs is the bureacracy itself. Not saying this is right or wrong, but if you're "following the money," the college stores, publishers, amazon, and the students don't have it.

Oh, Amazon can't "buy in bulk" for college textbooks. Pretty sure this is aginst the law.

 
At 5/11/2011 11:18 AM, Blogger Tom said...

I find it interesting that everyone is so quick to jump on college bookstores as the source of the problem with textbook pricing. They are not the problem. It is the publishers that continually raise prices and release new editions.

How many of you folks have actually been into your local college store and had a conversation with the manager and found out what the margins are and what they actually make? I'm guessing few of you. Textbooks are actually one of the most, if not the most, thinly margined items in their store.

Also, comparing the "online garage sale" atmosphere of peer to peer
websites like half.com, amazon.com and others is not really a fair comparison to brick and mortar stores with actual overhead. Kind of an apple/orange comparison in my opinion.

Textbook prices are bad, but to leave blame at the feet of college bookstores neither fair nor instructive.

 
At 5/11/2011 3:55 PM, Blogger pwhitney said...

Professors are[or should be]the most important resource to students.

College bookstores do not select the textbooks..the faculty do. You can only operate a Cartel if you control everything.

As such, the faculty are the only customer to a publisher, not the college store.

Too many faculty depend on the publisher to develop course curriculum,testing materials,and on-line services. This dependency is creating the textbook marketplace.

There is a great deal that the faculty can do to lower the cost of course materials.

 
At 5/12/2011 10:47 AM, Blogger Walt G. said...

"There is a great deal that the faculty can do to lower the cost of course materials."

Will it really matter to total cost?

As an instructor, if I use a book that cost $100 and is inferior to a $150 book, how do I know the tuition or fees will not be increased by the $50 amount to maintain a revenue balance and still be stuck with an inferior book to teach the class?

I have to choose a book(s) that meets my needs to achieve my teaching outcomes. College administration and students will have to do their part to control costs through their market. Too expensive? Simple: Don't buy it.

 
At 5/12/2011 2:16 PM, Blogger Jeff said...

I manage a small college bookstore at a small community college in California. Most small college bookstores are not a revenue source for the college. In fact they are barely holding on. Publishers are pumping up the cost of textbooks at an alarming rate. Bookstores do not pick the books and must pay what the publisher charges. Both Amazon and Half.com are the middle man between students that have a book to sell and students that need a book. It is the internet version of the college bulletin board where students advertise books they would like to sell. That is why Amazon says it can sell used books for up to 90% off. Of course the book that is 90% off will be in very poor shape. Practically falling apart. Unfortunatly Amazon does not put that in their advertising. I would say that the bookstore is the victom of this fight. We have no controll of the cost publishers charge us. Our mark up goes to pay for all our expensis. People need to realise that college bookstores are non-profit.

 
At 5/14/2011 4:16 AM, Blogger Ron H. said...

"Oh, Amazon can't "buy in bulk" for college textbooks. Pretty sure this is aginst the law.

Against the law? Why would it be against the law? This sounds wrong.

 
At 5/14/2011 4:22 AM, Blogger Ron H. said...

"Textbook prices are bad, but to leave blame at the feet of college bookstores neither fair nor instructive."

When I buy a textbook - or any book for that matter - I shop for a cheap price. I don't really care about the sellers overhead, or any other cost to the seller. My only concern is the cost to the buyer - me.

You may have noticed that brick & mortar bookstores appear to be on their way out, as physical, printed books may be in the future.

 

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