Chapter 31 Why College Textbooks Cost So MuchCHAPTER OUTLINEYou Are HereThe ProcessMarketing and AdoptionWho Gets the GreenNew vs UsedAre New Editions a Scam?Other Reasons Textbooks Cost So MuchWhen Prices Do Not MatterWhere Will This Lead?Making Money=SellingThe Market FormUsed Books and the Impact of the InternetRising Tuition and Textbook CostsChapter 31Why College Textbooks Cost So Much Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin31-2CHAPTER OUTLINE•The Process•Market Forms•Technology and the Impact of Used Books•When Price Does and Does Not Matter31-3You Are Here31-4The 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–Editting31-5Marketing 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 price31-6Who Gets the GreenBookstoreMarkup,$31.25Ink, paper,printing cost,$5-$10Authorroyalty$14.06$125Publisherfixed expensesand profit,$69.69-$74.6931-7New 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.31-8Are 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.31-9Other 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 dealers31-10When 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.31-11Where Will This Lead?•Fewer Book Choices?•Textbookless classes?•Electronic books?–Limited printing–Limited Access (IP specific; number of accesses, etc.)31-12Making Money=Selling31-13The 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 markets31-14Used 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.31-15Rising Tuition and Textbook
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