In mid-May, Audible, a provider of digital spoken audio content, and Pearson Education, an educational publisher, announced a partnership to develop and distribute audio-only study guides to college students as a supplement to Pearson's textbook product line. Slated for release in the fall, this joint venture initially will offer "about 100 products in the top 50 collegiate courses," according to Gary June, CMO for Pearson Education. "The product, however, is not a straight textbook replacement; it's a supplementary product. Think of it like Cliffs Notes: You've done all the reading and you want an inexpensive way of refreshing yourself."
The overall market for collegiate textbooks has been estimated to be between $4-$6 billion. Of course, as June points out, "audio doesn't work for every single kind of course. I can't imagine an audio-only engineering course. It really works in humanities, social sciences, and business." June goes on to estimate the best case scenario for the size of the market for this particular content niche to be about $250 million.
Frances Himes Cairns, SVP of education for Audible, quantifies the size of the market in slightly different terms, which gives an idea of the size of the audience this initiative is trying to reach. "If you think about it, there are probably between 14 and 17 million students, who have $9 billion of expendable income, of which they spend 95%," she says. Not only that, "when we started researching students, I'd say a third of them are already using audio-only study guides in some format. For the other two thirds, once they're exposed to this they really like it." The audio products developed by the companies will be distributed by Audible and available for download to more than 130 Audible-ready digital audio devices, including iPods, other MP3 players, PDAs, and smart wireless devices.
The collegiate market appears to be particularly ripe for this type of content. "At least one in two students has some type of digital audio player," says Mark Argento, senior research analyst at ThinkEquity Partners, a research and invest banking firm focused on the knowledge economy. "There's definitely a market out there for study guides, or really any type of enhancement tool that that will allow students to consume and retain more content in a shorter period of time." In fact, Argento goes even a step further in defining the potential benefits of this product. "In terms of a college student, this is really a killer app," he says. "They're able to use their iPods to get a foothold to help study more in less time."
Both Audible and Pearson stand to benefit from their partnership, although each company will do so in its own way: "For Audible, the opportunity is to get in front of college consumers and educate them about their products early on," says Argento. Beyond that, "being able to brand or create content with a large media company such as Pearson makes them much more than a retail storefront, which actually pushes them farther up in the value chain." Himes Cairns expresses a similar sentiment about Audible. "We already serve very well as a distribution model," she says. "And in many cases that are soon to be announced, we are actually involved with the development of original content. That's an interesting place for us to be now and in the future. We don't want to be perceived as distribution only."
For Pearson, the benefit of this venture comes from a different angle, namely recapturing some of the estimated $2 billion spent annually on used books. The publisher doesn't really get any kind of revenue from the used textbook market, according to Argento. "Theoretically you can't trade in a spoken word audio track on your iPod. So this venture is really a whole other potential ancillary revenue stream for the publishers to augment the churn at the bookstore level that they don't get to benefit from."
What's potentially even more significant in this announcement for Pearson is the publisher's commitment to continue pushing the development of non-text content. "If you get a textbook today and all the stuff that comes with it, what you'll see is a large variety of media that's all disconnected," says June. "Once bandwidth gets developed, you'll start having an integrated text, audio, and video simulated environment. The next nontraditional new market will be the replacement of the textbook by the integrated content."
That's still a ways off, though, as the infrastructure to support this kind of integrated experience has yet to reach a critical mass. "It's an incredibly expensive process to do this right now," says June. "Plus, if you're going to create an all-digital product, you've got to know that every single student in that class has access to the same digital platform. That's not there yet, but I expect that will happen soon."
As this initiative moves forward, both Audible and Pearson Education have plans to expand the scope of their audio-only study materials. Audible is already in negotiations with several other major publishers to release audio learning materials of all types, with a definite emphasis on products dedicated to lifelong learning as well as those that would be relevant to the enterprise space for things like sales training. Pearson Education foresees its next line of products being aimed at the Barnes & Noble crowd, perhaps with subject matter akin to the Dummy series of books.
When the college study guides are released this fall, Audible and Pearson Education will be shooting for a price point under $20. "We're also pondering the ability to allow single chapters to be downloaded, sort of in the way that you can download a single tune in iTunes.