I was recently interviewed by an industry analyst for Outsell about the higher education textbook industry. One of the things we discussed was where the textbook is going. Here are some of the elements I identified in that discussion, at least as they relate to history textbooks:

  • It will be native digital.
  • It will be Web-based. It’s too expensive to create special “editions” for different mobile devices like an iPad, so companies instead will create a Web platform that works across devices.
  • It will be a service, not a book: flexible, expandable, and constantly evolving. I’m not talking about new editions every 1-2 years, either, but a service that changes frequently throughout the semester with new content and features.
  • It will have primary sources as an essential component, if not the leading one.
  • It will be customizable by the instructor, who will assign only the parts that he or she wants to assign.
  • It will be interactive for both students and instructors, especially in the area of assessments.
  • There may not be a single authorial “voice,” but the content will still be authoritative and peer-reviewed.
  • It will make heavy use of analytics to deliver a more personalized, dynamic experience for students, and to provide faculty with new insight about how their students are learning.

What about Price? What about “Open”?

In the past few years, there has been a lot of time and money spent on the creation of free, open textbooks (or OER, for “open educational resources”) from companies like Flat World Knowledge and nonprofits like OpenStax. The movement is understandable, given the high cost of traditional textbooks. I have long wondered whether these “free” resources are sustainable. Flat World has just just come to the conclusion that they are not, but of course it’s a for-profit entity, so that was perhaps always to be expected. On the other hand, many faculty are passionate about OER, and so it does seem likely that some free textbooks will continue to be created. These may well be good resources—peer reviewed, well written—and will surely find an audience.

However, I feel that experimental digital textbook services of the future are more likely to come from for-profit entities, given the investment needed and the longer-term commitment required to improve and enhance the services over time. Thus, in my opinion, the textbook of the future (to continue with the ivory-tower theme that there will be only a single such entity) will be far more affordable than traditional textbooks, but it will not be free.

When Will the Future Arrive?

As the creator of Milestone Documents, a service that is built suspiciously close to the specs listed above (imagine that!), I would say that the future is now. Tongue only partly in cheek. In all seriousness, traditional textbooks still maintain a dominant position in the market, and I don’t see that changing terribly quickly. For one thing, the big publishers have a vested interest in slow change: they want the era of expensive textbooks (all published by them) to last as long as possible. For another, the market itself is notoriously slow-moving. At the recent American Historical Association annual meeting, the exhibit hall was still chock-a-block with books. Even many attendees insist on calling it a “book exhibit,” much to my chagrin. Our Milestone Documents booth was once again an odd duck here, with only a few fellow booths that were about something other than books: Alexander Street Press, Soomo, and BiblioBoard, to name a few. In the New York Times roundup of the meeting, Oxford University Press president Niko Pfund said that historians are “absolutely imprisoned in the format of the printed book.” I realize he was referring mainly to scholarly monographs and their role in tenure decisions, but the characterization doesn’t exactly fall apart when applied to textbooks.

Still, we are far from alone in working in this area. Many of the biggest publishers, from McGraw-Hill to Pearson to Cengage, are already investing huge sums to create next-generation learning services that include many of the features I listed above. Startups such as Knewton and Kno are also active on the scene, often working in concert with those big publishers. Here’s Jeff Young in a recent article in the Chronicle about these efforts:

“Major publishers have spent hundreds of millions of dollars in the past few years buying up software companies and building new digital divisions, betting that the future will bring an expanded role for publishers in higher education.”

As Young points out, many publishers are maneuvering their digital services to be not just a new kind of textbook but in fact a “course in a box,” and many are speculating that such efforts will converge with MOOCs—the online learning systems that are attracting so much attention. In this scenario, the textbook is submerged into a larger service platform.

While such consolidation may indeed happen, individual faculty will still be looking for excellent content and a service solution that lets them teach their courses as they want. I think this bodes well for a future textbook solution that is not a mere cog in a giant MOOC platform but something that can stand alone on its own merits.

It appears that college students are slowly coming around to the notion of digital textbooks. A new study by Bookboon notes that 58% of U.S. students prefer digital textbooks over print ones. Take a look at the infographic from Bookboon, however. There are some eye-opening stats:

  • More than 75% do not always buy the required textbooks.
  • Nearly 97% find textbooks to be too expensive. (Maybe the other 3% have parents who work for textbook publishers?)
  • More than 90% of the time, students need only a few chapters from an assigned textbook.

The Reasons for Slow Digital Adoption Have Nothing to Do with Digital

There have been some ridiculous press reports in the past couple of years implying that students are cool about digital textbooks because of the digital platform. In reality, of course, the slow uptick in positive student opinions about digital textbooks has been due to other factors. First and foremost, many digital textbooks have been just as expensive as traditional printed ones. Second, most digital textbooks have been replicas of the printed versions. In those scenarios, why would any student choose a digital textbook over a printed one?

In light of this study, I was interested to see that some of the large textbook players have teamed together on an expanded pilot program to increase digital textbook use. The new textbooks will be provided by McGraw-Hill and delivered via the Courseload system. I think this is a positive development, and I’m glad to see other publishers working on lower-priced digital options. I’m also glad that they have come up with a Web-based platform. Nonetheless, I still think this particular model is unnecessarily limited for two reasons:

  1. It still relies on a traditional textbook paradigm: a straightforward narrative of a certain length (not too long) on a subject. This paradigm was created in part so that it could fit inside a printed book. It has its uses but also severe limitations. I’m convinced that the “textbook of the future,” by which I mean the one that will come to dominate in most subject areas, will be an exploded version that takes advantage of the digital environment. It can be much larger, it can incorporate many elements besides the linear narrative, and it can be constantly evolving.
  2. It cannot be customized to a professor’s wishes. Given the flexibility inherent in digital, textbooks should be able to be customized to the needs of each professor, by that professor. There should be total alignment between what the professor wants to teach and the material the students are presented with.

Moving Students from Faint Praise to Excitement

If you read between the lines of the infographic linked to at the top of this post, you still sense that students are lukewarm about digital textbooks—at least the particular kind under discussion. Who can blame them?

At the same time, I do think it’s possible for those of us creating digital textbooks to do so in a way that elicits something more than faint praise. We are certainly trying to push in this direction with our Milestone Documents service. Last week, one of the professors who assigns our site in her courses reported that on the first day of class, when she told students that they would not be using a textbook but instead a digital service that costs less than $20, the students applauded. It seems they were responding on two levels: 1) cheap; 2) not a “textbook.”

Will they still be so enthusiastic at the end of the term? We shall see. Our site is young and improving, and our list of planned enhancements is lengthy and growing. Has the word “textbook” taken on a negative connotation? Clearly it has. Can we publishers reinvent the textbook in a way that actually serves our customers (professors) and delights our users (students)? I think we can, and we must. After all, if three-quarters of your users are willing to defy their professors and not buy your product, you ought to see some warning lights on the horizon.

The education content industry (textbooks and beyond) is a strange place these days. There are generally two kinds of companies operating in the space right now: large conglomerates (think Pearson, McGraw-Hill, Cengage, Macmillan) and startups with outside funding. We are one of the very few outliers: small, bootstrapped, and not a startup. Not infrequently, as I look around at our competitors, I am struck by how weird we are.

But weird can be good. In fact, almost every day I am thankful that my company is small, especially in an environment that is begging for innovation. Begging? That word is not too strong when you consider that one in four students opts out of using the assigned textbook. In other words, a quarter of users don’t find enough value in their text to rent or purchase it.

Far from being a hindrance, being small and independent in any industry can fuel innovation. Here are just a few reasons why it works for our company and for me as the owner:

  1. I am accountable to no one but myself, my employees, and our customers. There are no investors pressuring us to deliver results so that they can cash out and no shareholders demanding a higher stock price.
  2. We can build for the long term. Without shareholders or investors, we can operate on whatever calendar we choose. Is it going to take us 3 years to be profitable with a new product or service? 5 years? As long as we have the capital on hand to make that decision, we can do so.
  3. It’s easier to pivot. With so many industries in the midst of upheaval, businesses of all shapes and sizes have to be nimble. The fewer stakeholders you have to answer to you, the faster you can change direction.
  4. We can create marketing campaigns of verve and boldness. While large companies can obviously create jaw-dropping marketing and advertising campaigns, they also by necessity have to walk a fine line: Anything too bold can set off a firestorm and potentially turn off customers and investors. By contrast, a small and independent business can say what needs to be said without packaging it in gauze.
  5. I can still have a life. When I started my company, one of my goals was not “Work 90 hours per week.” I didn’t long for 7-day workweeks, no vacations, and no time to spend with loved ones. I purposefully created a business that didn’t require those kinds of sacrifices. A different entrepreneur might well make different choices; more power to him/her.

 

Being Small Enables the Best Kind of Growth Strategy

Don’t get me wrong: I’m not suggesting that growth is bad. After all, growing your business is a big part of the fun.

I’m just saying that being independent gives you freedom on many levels—to take risks, to innovate, to create the kind of company culture that you want. At the same time, there are significant downsides to taking another path. In his excellent “Thinking Entrepreneur” blog at the New York Times, Jay Goltz said it brilliantly:

“The words growing and business are often said together like soup and sandwich. Why would you want one without the other?… It makes sense — until it doesn’t make sense. It really comes down to priorities. Do you want to take outside capital and the ‘partners’ that come with it? Do you want to take on more risk? More employees? More travel? More stress? More potential aggravation?… I have learned one important lesson of entrepreneurship: Just because you can, doesn’t mean you should.”

Be in It for the Right Reasons

To my mind, the main reason to take a careful approach to growth and eschew investors if possible is that you can run your business according to your own guiding principles. What are the “right” reasons to be in business? Each owner has to answer that question for him- or herself. If one of those answers is “to become filthy rich,” that’s fine. But it might also be true that your reasons will include things other than money: freedom, flexibility, altruism, community, even sanity.

So I say: Be different. So what if your annual revenues would be the equivalent of a rounding error for your largest competitors? So what if Tom Peters is probably not going to write his next book about your company? Follow your own path. Let your freak flag fly high and proud.

iStock_000005832234XSmall

This is the final post in a series about the key pivots our company has made in the past few years. In part 1, I discussed our first major pivot: the decision to begin producing and owning our own content. That pivot led to the creation of our Milestone Documents series of reference books. In part 2, I explained our decision to wind down our reference publishing and focus instead on reaching educators and students directly via MilestoneDocuments.com. We spent the last half of 2010 redesigning the site, switching to a subscription model, and gearing up for a late 2010 launch. Alas, by the time of the launch, yet another pivot was practically begging to be made. This is the story of that pivot, which turned out to be critical.

The Adoption Model

Over the course of the fall of 2010, while working with our designers and developers on version 2.0 of our site, we began to mull over the possibility of marketing our site directly to college history professors as a textbook replacement. At first, it seemed a distant possibility. However, we decided to poll some of the scholars who had written our expert commentary to ask them whether they might use and assign a site such as ours to their classes.

To our surprise, a fair number of these historians responded positively to our inquiry. They loved the idea of having a large number of primary source documents to choose from, they liked the all-digital paradigm, and they were in favor of anything that might reduce their students’ textbook costs, which had soared to $100 apiece and beyond. We quickly settled on an approach in which we would give away the site to all students whose professors assigned it for the first semester. The idea was to let professors try it out with their students risk-free, and then—presuming the professors (and students) were pleased with the service—begin charging students a fee of $50/semester thereafter. At that level, we reasoned, the site would still offer a tremendous savings over a traditional textbook.

We quickly made plans to attend the American Historical Association annual convention in Boston in January 2011, where with very little notice we would attempt to launch our new adoption campaign to professors attending the conference. We had a large banner printed that said “Ditch the Textbook,” and we set up a couple of tables with computers on them.

Making a Splash

It’s hard to describe what an outlier our little booth was at that first convention. Amidst a sea of booths filled with books, ours was a spartan square devoid of “stuff”: no books, no brochures, just me and Andrea Betts with our computers and a cheeky, slightly outrageous banner that drew stares, guffaws, and occasionally even hostile responses from attendees (“I’m not ditching my textbook. I WROTE the textbook!”). However, more typical were the warm greetings, serious interest, and outright praise (“This is great. You are the future!”). We signed up a number of professors for semester trials that spring, and we made connections with many others who would later on become loyal customers.

Settling In for the Long Haul

By the end of that first semester, we knew we had a product that could succeed. Surveys of the professors and students using the site were almost uniformly positive. Most of our professors signed up to continue using the site in the fall term. At the same time, however, we realized that we had launched the site in a form that was not quite ready for prime time. It lacked any central organizing place where professors could interact with and direct their students. Our coverage in certain key areas was lackluster. The site didn’t offer professors enough flexibility in choosing which elements to assign to students.

And, very importantly, we realized that our price point was too high. Sure, $50 might be a bargain to students used to having to pay $100 or more for a textbook. But a number of our professors confessed that they preferred to assign our site not as a replacement to their traditional textbooks but as a companion to it. In those scenarios, we were making the crisis of expensive textbooks even worse.

Course Corrections

What has followed in the wake of that first semester more than a year ago is a series of course corrections. We added unique home pages for every class using the site. We added tons of new documents and new controls for professors. Finally, we dropped the price to $19.95 per semester.

These actions are not additional “pivots” in my mind but something less radical. Every business, especially an upstart like ours that is pioneering a new approach in a digital format, has to make constant improvements and enhancements to find the sweet spot where customers (professors) and users (students) alike are thrilled with the service and loyal to it. That’s exactly what we’ve done. And while we are still working hard to find our way to that elusive sweet spot, we are getting closer every day.

So what’s ahead for our service? Are there additional pivots in store? One should never say never, but my guess is that we have only just now joined the battle, and it took those 3 initial pivots to find the battlefield. Our service has matured to the point where it is a viable choice for a sizable and growing number of educators—not only at the college level but also at the high school level—and our challenge is to do the hard work of telling our story, reaching out to customers, and making our product ever better. First came the pivots, laying the foundation. Now comes the execution, building upward toward the sky.

 

This is the second post in a series about the key pivots our company has made in the past few years. In part 1, I discussed our first major pivot: the decision to begin producing and owning our own content. That pivot led to the creation of our Milestone Documents series of reference books. We had a great time producing those sets, and they were well received by critics and customers alike. And yet, a couple of years into that effort, some clouds began to appear on the horizon.

Hat tip to our managing editor Ben Painter for finding the video clip. I suppose I play the part of Ross, only shorter and with no hair.

Recession Times

In 2010, on a rainy evening in Ann Arbor, Michigan, Andrea Betts (our former vice president) and I convened a gathering of informal advisers and friends, all veterans of the reference industry, to help us brainstorm about the future of our Milestone Documents product line. The talk naturally settled on the troubled state of the library market. It had been hit hard by the recession, and many of us had begun to think that in an era of chronic public funding shortages, it might never recover. One person in the group made a startling pronouncement:

“If I were you, I would spend at least 10% of my time thinking what we would do if the library reference market disappeared altogether.”

As we had only just begun our drive to build a business as a full-fledged reference publisher, this was sobering indeed. And yet the notion struck a chord on a couple of levels. First, it was clear that the market WAS under severe pressure and that the trouble might be not merely long-lasting but indeed permanent. Second, we faced a practical dilemma familiar to many small businesses: Go big or go home. That is, in order to increase our profile in the marketplace and make a larger splash, we needed to invest substantial funds not just in new products but also in new marketing and advertising efforts.

What Do We Want Our Company to Be?

The issue of where to invest our limited funds dovetailed with another dilemma: Leaving aside the troubled market, did we even want to be a reference publisher in the long run? Having created a cohesive body of content around a topic that we excelled at and loved, not just collectively as a company but individually as well (my own college degree was in history), did we really want to reinvent the wheel repeatedly for new products on new topics? That, after all, is standard procedure for reference publishers.

The full answer revealed itself only much later. But even at that time, we made the conscious decision not to abandon the brand we had worked so hard to build (Milestone Documents) but instead to double-down on a side experiment we had begun in 2008, around the time our first reference set was published: selling our content directly to individual students and educators via the Web, as opposed to reaching them through an institutional middleman (the library).

MilestoneDocuments.com

From the beginning of our Milestone Documents content effort, we knew we wanted to dip our toes into the direct-to-consumer market. Thus, in early 2008, we hired a web developer to create a simple e-commerce site where students and teachers could purchase our content by the article for a few dollars each. We thought we might see incremental revenue from this effort, and we wanted to experiment with a paradigm that others in our industry were talking about but hardly anyone was doing. For our part, we had nothing to lose by experimenting.

By 2010, when we were seriously questioning whether to continue as a reference publisher, we knew there was a market for our content via the direct-consumer model. But we didn’t really know how big that market was. Our Web sales had been extremely modest, but at the same time our site was very rudimentary, and we had done no outreach whatsoever. Also, most of our content was not yet on the site; we hadn’t yet added the content from our other sets that had subsequently been published. We felt that we hadn’t really given the direct model a fair shake.

In the end, faced with investing in a new reference set or giving our direct model a more serious chance to succeed, we decided on the latter route. It was perhaps a riskier move, but we were increasingly convinced that it was the only viable long-term strategy. If the library market was in permanent decline, we obviously had to move quickly into another market.

In the last half of 2010, we hired a new design firm to overhaul the look and functionality of the site and a new development firm to beef up the back end. And we made another crucial decision: We would switch the site from a per-article sales model to a subscription one built around monthly or annual plans.

MilestoneDocuments.com 2.0 was launched in December 2010. And the rest, as they say, is history. Right?

Not so fast. By the time of the 2.0 launch, we had yet another pivot staring us in the face, daring us to reconsider our strategy yet again. Did we have the energy to pivot once more? Did we have the resources? In the next installment, I’ll tell the story of pivot #3.