Flat World and the Real World of Textbook Publishing

Aug 11, 2010

I like free as much as the next guy. But here at EContent, we are painfully aware of the impact of giving away too much milk: The price of cows drops to near zero. And by milk, I mean content. And by cows, I mean content. So it was with great interest I read "A sustainable future for open textbooks? The Flat World Knowledge story" in firstMonday, written by Brigham Young University doctorial student John L. Hilton III and Flat World's Chief Openness Officer David A. Wiley (a professor at Brigham Young). The paper examines Flat World's business, including Alpha and Beta testing with students and faculty from a variety of community colleges and universities.

In essence, Flat World proposes a freemium e-textbook model. The company offers the content for free and supports itself through the sales of printed books, audio editions, and ancillary materials. The company emphasizes flexibility for professors—which some other digital textbook suppliers have done--in terms of allowing single chapter use or the development of custom textbooks from a variety of sources. Flat World also emphasizes flexibility for students as well, offering a variety of format including PDF, audio, and yes print (which it says about 50% of students still opt for). 

Not surprisingly, the firstMonday paper reports that the model is viable, though this seems entirely based upon the positive feedback it got in terms of the content itself. This is good to hear in that despite a dire need to reduce the cost of textbooks for most college students, nobody wants that to require reducing the quality of their educational content. Unfortunately, the paper is sorely lacking in financial realities for the tests it ran on its products. While this paper has a reasonable academic method and tone, it fails to deliver on its title for me: I want to know if the model can play out profitably in practice.

The company's president and co-founder Eric Frank kindly filled in some of the bottom-line blanks for me (though Wiley said an expanded version of the paper is coming soon). The company is a VC-backed for-profit endeavor and he is confident that in "a couple more years out from today, we should be black." Already, he reports that Flat World titles are reaching profitability in two to three semesters. He points out that unlike traditional publishers—which have almost identical up front costs as Flat World—his company was "born digital" and that, despite the ability to output books in a vast array of formats, "production costs are dramatically lower."

"The bigger issue," according to Frank, "is how you earn your income." Despite digital distribution, he says they don't see much piracy because free and low cost editions--combined with the likelihood that a professor will customize and change texts every year--make it much easier to invest in legal editions. He also points out that while traditional publishers with much higher prices earn the majority of their revenue the first year a book is sold, Flat World sees a much steadier revenue stream. These days, a steady stream is nothing to scoff at. The real trick, of course, will be if this model turns the tide of textbook publishing.