chapter 31 why college textbooks cost so much copyright © 2010 by the mcgraw-hill companies, inc....
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Chapter 31Why College Textbooks
Cost So Much
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
31-2
CHAPTER OUTLINE
• The Process• Market Forms• Technology and the Impact of Used
Books• When Price Does and Does Not
Matter
31-4
The Process• Marketing the Idea
– Identifying the Niche– Pushing it to the Publisher– Sample Chapters– Reviews
• Signing the Contract– Advance The amount of money paid to authors
typically counted against future royalties.– Royalties The amount of money paid to authors.
Typically paid on a percentage basis.• Drafting
– Complete Draft– More Reviews– Finished Draft– Editting
31-5
Marketing and Adoption• Marketing
– Mailed free to many (sometimes thousands) of faculty.
– Sales force on campuses • February and March for Fall• September and October for Spring
• Adoption– Faculty decide the book in the vast majority
of cases. – Sometimes a committee will decide on a
common book for a multi-section class– Neither typically know the book’s price
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Who Gets the GreenBookstoreMarkup,$31.25
Ink, paper,printing cost,$5-$10
Authorroyalty$14.06
$125
Publisherfixed expensesand profit,$69.69-$74.69
31-7
New vs Used
• Used books are typically price 25% to 33% less than new ones.
• A book only makes money for the publisher and author on its first sale.
• Bookstores make (about the same) profit selling new as used.
• Publishers will (usually) not ship old editions even if faculty request them.
31-8
Are New Editions a Scam?
• Economic Issues Change– New to the 2nd Ed
• Economics of Terrorism• Economics of War
– New to the 3rd Ed• Wal-Mart• Casinos• This chapter
– New to the 4th Ed• You Are Here• Economics and the Law• Economic Growth
– New to the 5th Ed• The Recession of 2007-2009• The Housing Bubble• International Finance
• Calculus Hasn’t Changed• Very little has changed in many new editions. • Publishers have to change editions to make money…and the used
book market has made this worse.
31-9
Other Reasons Textbooks Cost So Much
• Ancillaries – Cost Money
• Powerpoints ($5,000)• Testbanks ($5,000)• Instructors Manuals ($5,000)• Websites ($3,000)• Podcasts ($5,000)
– Faculty demand them • Faculty sales to used book dealers
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When Prices Do Not Matter
• Faculty Decisions– Faculty get the book for free.– Faculty do not typically inquire about
the price of books they assign.
• Student Decisions– There is little to no ability for students
to substitute one book for another. – Not having the book is a signal to
faculty.
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Where Will This Lead?
• Fewer Book Choices?• Textbookless classes?• Electronic books?
– Limited printing– Limited Access (IP specific; number
of accesses, etc.)
31-13
The Market Form
• Monopolistic Competition– Entry level books in most areas– Intermediate level books in many
areas• Oligopoly
– In a few upper division areas– Many graduate school areas
• Monopoly– Very narrow areas with small markets
31-14
Used Books and the Impact of the Internet
• The “May-August” Problem– Without the internet nearly all books had to
travel through a central clearinghouse like Columbia, Mo’s Missouri Book Services. (high markup)
– With the internet, books can travel from one bookstore to another without the middleman.
• The “December-January” Problem– Without the internet used books only circulated
in a single school. – With the internet a book can make it across the
country in 12 hours.
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