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Required reading: here’s why textbooks are so expensive

Although student life at university is generally enjoyable, one aspect that blemishes the experience is the astronomical cost of textbooks. As many students head back to university this year, they can…

University textbooks are expensive for a reason. Textbook image from www.shuttestock.com

Although student life at university is generally enjoyable, one aspect that blemishes the experience is the astronomical cost of textbooks.

As many students head back to university this year, they can expect, over a typical three or four year undergraduate course, to spend thousands of dollars buying all the recommended textbooks. If you’re a student with no money, this can only make matters worse, especially since the cost can’t be bundled into your HECs loan.

Most books aren’t so expensive, so why are textbooks different? The explanation lies in the market forces behind these costly items.

A matter of markets

Textbooks cost so much because the author’s work is protected by a government-granted monopoly on the product, in this case, a copyright. This restricts other parties (apart from those licensed) from publishing the textbook and thwarting the sale at market competitive prices.

To be efficient, economic theory stipulates products should be sold at their marginal cost. The price should be set at the cost to the printer to produce the last (or next) copy of a textbook.

If this were so, textbooks would cost between $10 and $20 a copy. Instead, students are slugged $100 to $200 a copy.

Unfortunately for the average student, copyright policy has been in place since the 16th century and has been radically strengthened in the last thirty years.

Modern textbooks are protected by ancient monopolies because we feel authors deserve an appropriate income from writing a textbook due to it being a creative work composed of information that has aspects of a public good.

Two wrongs make a copyright

The information itself, in economics terms, is non-rival and non-excludable, though the textbook is the physical embodiment of the information as a private good. If textbooks are produced without a copyright, nothing stops an entrepreneur from copying and selling it at market competitive prices.

Due to this, no initial publisher would enter into a contract to pay an author a considerable sum to produce a textbook as competitors can replicate it without having to pay the author. To recoup the funding to the author, the contracted publisher has to charge a price higher than its competitors, thereby rendering itself unable to effectively compete.

A copyright “fixes” this problem by eliminating competition altogether, allowing the publisher to charge what the market will bear, resulting in monopoly pricing.

There are problems with this method of ensuring textbook production. The markup from marginal to monopoly price functions as a consumption tax, resulting in a deadweight loss. The price increase can be considerable: a textbook with a marginal cost of $20 now costs $200, resulting in a relative markup of 900%.

In effect, the government intervenes into the economy via granting copyrights, thereby allowing a private party to levy a tax upon consumers.

The long con

This leads to another inefficiency: in the pursuit of profit, a publisher will issue a next edition of a successful textbook annually (perhaps even half-yearly), adding to its content, which changes page numbering and invalidates the previous edition making it near impossible to sell.

It is common for students today to purchase textbooks that are over half a thousand pages long, in the tenth edition. There is no way that the typical student uses a fraction of the content in their overpriced textbooks, which they have difficulty selling to the next intake of students because the publisher has now released the eleventh edition.

The con is further entrenched by the nature of group learning. Even though students pay for the textbooks, lecturers decide what textbooks should be used (patients purchasing medicines their doctor has prescribed face the same issue). Accordingly, a free market cannot exist as consumer choices are determined by other factors.

If students knew enough about the subject matter to determine the difference between similar textbooks, they would know enough to not have to attend university in the first place. Students cannot participate properly in learning if they purchase dissimilar textbooks on the same topic, and editions of the same textbook may have differing content.

A public solution

Fortunately, there is a way around the system of public subsidy, private profit that is the textbook industry. The simple solution is for either government or universities to fund the production of textbooks directly, and place the content in the public domain.

Some other means will be required to fund textbook production, rather than relying upon a privately-levied tax paid by consumers.

Economist Dean Baker, in the aptly-titled report Are Copyrights A Textbook Scam? Alternatives to Financing Textbook Production in the 21st Century, argues that the current method of financing textbook production through copyrights is an inefficient anachronism, and badly needs to be overhauled. The report also details some of the non-monetary benefits that accrue to both students and teachers.

Baker proposes a new system whereby a relatively small sum of taxpayer revenue is divided and allocated to ten competing firms with a mandate to finance the production of textbooks, which are then placed in the public domain. Firms’ performance is subject to audit at a regular interval (five or ten years), with the worst two performers removed and replaced by new firms. This arrangement can be run side by side with the current copyright system, allowing for a relative test of the two forms of government intervention.

Regardless of how a taxpayer-financed system is set up, the benefits of placing textbooks in the public domain are obvious. Textbooks can be sold at marginal cost, without gouging students or limiting the pursuit of knowledge.

Given that many use laptops and tablets, textbooks can be downloaded for free as electronic reproduction of information is costless, also saving on the material used for hardcopies.

Without the perverse incentive to continually alter content and issue new editions, textbooks will be leaner and more manageable. Teachers are also advantaged as they can choose content from different freely available sources in order to maximise learning outcomes in the classroom.

Modern problems from an ancient source

In this day and age, it is profoundly odd that textbook production continues to be protected via a 16th century economic mechanism that has no place in a technologically advanced, information-driven economy where every student and teacher has Internet access and is computer literate.

Even more peculiar is that this form of gouging students is not discussed.

Although monopolistic pricing and rent-seeking is a godsend for publishers and a handful of elite academic authors, there is no reason why this inefficient system should be tolerated.

Join the conversation

23 Comments sorted by

  1. Geoffrey Edwards

    logged in via email @gmail.com

    Thanks for this article.

    Am I correct in guessing that this phenomenon is more prominent in vocationally focused courses? I comment on the basis of a very limited data set - population me - but I will persist.

    I began my tertiary studies in a BAppSci Physiotherapy. Some twenty years ago in my first year the required text for one unit of many - authored by the lecturer and best described as "This slim volume..." - was approximately $120 dollars. The library held only one copy.

    Like most, I did not buy it. We effectively just said FU, and photicopied the whole thing.

    Later on when I studied history I did not encounter anything like this. The required text, if any was in fact nominated, were generally primary sources available cheaply in Penguin. There were quite often recommended texts, but their aquisition was not neccesary. One could do quite well without consulting them.

    Is this experience individual?

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  2. Michael Duff

    Public Servant

    The cost of textbooks is a disgrace but I'm not positive it is the author's copywrite that is to blame.

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    1. Michael Duff

      Public Servant

      In reply to Michael Duff

      The finger should be squaring at the education providers who coerce students into buying set text without protecting them by ensuring they are available in the cheapest formats.

      *apologies for double post

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  3. Nick Fisher

    Programmer & Analyst, pt student

    I like the idea of an alternative to the current situation but I can't follow your reasoning on copyrights leading to monopoly prices due to lack of competition: there is plenty of competition in the textbook market between publishers producing textbooks for the same subject eg. for 1st year uni/college chemistry there are half a dozen or so choices. Also while lecturers may set the prescribed text for their course there are many universities offering similar subjects so there are many lecturers…

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  4. Chris H

    Psychologist

    Well there is a problem with text book costs and the constant edition changes are ahead of the relative value of the added material - even in the face of emerging development of best practice in some areas. (My partner returned to study after a few years off, and is required to use a newer edition of the same text book she used 3 or 4 years ago. The science hasn't changed, but she is nonetheless required to get the new edition of the book. Between us we now have three editions of this mandatory text…

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  5. Keith Allan

    Emeritus Professor of Linguistics at Monash University

    Having written a textbook or three I can assure you that most academics do not make enough from royalties to fund more than an occasional cup of coffee. From discussions with publishers I have come to recognise that their overheads are high. Many books and journals are subsidised by institutional purchases (libraries etc.).

    It should be cheaper for books to be replaced by texts downloaded on a subscription basis and printed by the reader. However, the prices charged for individual journal articles by publishers are (normally) outrageously high.

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  6. Robert McDougall

    Small Business Owner

    in the Australian context, the main reason they are so expensive is due to parallel import restrictions and international distributors geographic price structures.

    i.e. i used to sell books, i had to buy them from an Australian publisher. all of them were published in the UK with the RRP in GBP. I could pick up exactly the same titles from the UK at a retail price of around half my Australian wholesale prices.

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  7. Adam Ryan

    Safety and Training

    Textbooks are unnecessary.

    Unless assignments or tutorials referred to questions in the textbook, I would never buy one. The majority of the time I'd have to go out and find my own references for assignments anyway as they had some minimum. Plus they had a strong reference for peer-reviewed articles over textbooks.

    To my view, lecturers who base their whole course around a single textbook and force their students to buy it are just too lazy to assemble all the required information sources and assessments themselves. When I see the $2000 odd price tag of a university unit thats basically a reworked $150 textbook with a couple of assignments I get severly annoyed...

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    1. Rob Crowther

      Architectural Draftsman

      In reply to Adam Ryan

      I took the opposite view to you.

      My thought was the book is the complete discussion. The course that does not use the whole book is one that has cut the eyeballs out of the subject to suit the standardized semester. That pretty much means my opinion is all units are missing something.

      My general outlook was to learn the material and the results would drive from that. I have a feeling that you are much more focussed on the numerical result then me.

      As for the $2000 price tag – well yes. The MOOC thing is starting to put a dent in the University stranglehold of higher education.

      As for the $150 book – you do know how to get them without paying don’t you.

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  8. Dale Bloom

    Analyst

    This newspaper article is a little old (at 5 years) but it states exactly the opposite to what has been written by the author.

    “Textbook writers are being asked to sign contracts with minimal or no royalty payments and also to sign away copyright, allowing the publisher to reprint texts digitally.”

    http://www.theaustralian.com.au/news/publishers-screwing-textbook-writers/story-e6frg6no-1111115916111

    Someone can do a whole course in a so-called Australian university, and never use one textbook written in this country.

    If a university has minimal or no Australian content, it would be false advertising to say that the university was an Australian university.

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  9. Dave Smith

    Energy Consultant

    Philip,

    The root cause of the problem is not copyright but information asymmetry between students and course organisers. The student does not know how to save money on textbooks and the course organiser at best doesn't care and at worst is conflicted: where it is his own, or an affiliate's, textbook that is required.

    This problem could be simply fixed by the government mandating that required text books must be provided FREE to students, with the costs recovered through tuition fees and thence through HECS. Since universities compete on fees, course organisers then have an incentive to minimise the cost of text book provision: by using free sources, by using old editions (recovered from ex-students), by negotiating better deals with publishers and so on.

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  10. Meg Thornton

    Dilletante

    As a long time student, I've learned the first rule of uni textbook acquisition is this: don't buy *anything* until you've attended the first lecture in the course and read the course handbook. If you buy the textbooks before you attend the first lecture, you may well discover you're working off an outdated list in the bookshop's possession which came from the previous course co-ordinator, and you've therefore wasted your money entirely because the current course co-ordinator has decided they're…

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    1. Robert Parkes

      Senior Lecturer in Curriculum Studies

      In reply to Meg Thornton

      I am in general agreement with with Nick Fisher's comments earlier. I can't see how copyright leads to monopolies. This logic only holds if you assume that anyone who wants to, should be able to copy and sell an author's work, with no regard for the author (or in your solution, create a government cartel of companies that are allowed to legally print the same work, hopefully for different prices). This sometimes happens now with books that are out of copyright, and prices tend to reflect production…

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    2. Robert Parkes

      Senior Lecturer in Curriculum Studies

      In reply to Robert Parkes

      Sorry Meg, my post was supposed to be reply to article, not your post directly. Clicked wrong reply. *apologies*

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    3. Chris O'Neill

      Victim of Tony Abbotts Great Big New Tax

      In reply to Robert Parkes

      "I do think there is a solution, and it is one I've been experimenting with with a colleague. That is to offer ebook texts at reasonable prices."

      Why is it, I wonder, that this solution doesn't take off? Especially for editions that would have a small "print run".

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  11. Rob Crowther

    Architectural Draftsman

    Is this a middle aged problem?

    For example, kids do not buy music when the artist is a zillionaire.

    Do young adults buy books or do they ‘obtain’ them like they do with music?...or do they not bother?

    Is it just some middle aged people who never read the ‘Art of War’ and/or have meekly yielded to societal structure that play the publishers game without question?

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  12. Gavin Moodie
    Gavin Moodie is a Friend of The Conversation.

    Adjunct professor at RMIT University

    This article claims that 'Most books aren’t so expensive', that textbooks are different and that they cost so much because they are protected by copyright. But of course almost all books published less than 50 years ago are protected by copyright.

    This issue has been considered extensively in the US and the article would have been much better had it considered even some of the discussion and attempts to cut textbook costs in the US.

    Essentially, you can have a somewhat cheaper introductory chemistry textbook if your university's introduction to chemistry uses the same text as many others, and you can have a much cheaper textbook if all universities use the same text. That is, cost is the price of diversity.

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  13. David Zyngier

    Senior Lecturer, Faculty of Education at Monash University

    I stopped getting my education students to buy or use textbooks 5 years ago - I found that as they had free access through our library to all the research articles that textbooks are based on it is better that they learn to do their own reading & research.

    Textbooks are too often simplified and boring diets of pre-digested food!

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    1. Gavin Moodie
      Gavin Moodie is a Friend of The Conversation.

      Adjunct professor at RMIT University

      In reply to David Zyngier

      Getting students to read articles is great, but I suspect it depends very much on the subject and its level. I don't know how I'd teach the standard core first year subject contract law that way, and the normal alternative to a text - reading and analysing a large number of cases - would be an inefficient way of learning the principles of contract law, which are rather more codified than other areas of law.

      Of course one doesn't have to resort to the standard textbook. Several years ago the ANU law school used to maintain on a publicly available web site COLIN, which was a combination of syllabus, lecture notes and text 'book' on contract law with hyperlinks to cases, legislation, articles and other useful and interesting resources. I always used to refer my students to it and as far as I could see would have been an ideal replacement to a textbook. Of course it would have been very time consuming to maintain and I suppose it has been taken down after its champion moved on.

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  14. Will Uther

    Artificial Intelligence Researcher at UNSW Australia

    I think there are a number of interesting lessons here for lecturers.

    i) Why are you so dependent on specific content that a specific revision of the book is required? Is this really an issue?

    ii) I like the concept of making text supply a university issue so that the person with the choice and the person with the cost are aligned. I don't think it practical in practice.

    iii) I think open texts are also a great idea. I think they'll come. See http://en.wikibooks.org/wiki/Main_Page

    iv) For my course I didn't teach directly from any text. I offered a variety of texts that students could use for background and further reading. This approach means that there is still competition for the textbook suppliers. (It was also good for my course because I didn't know of any single texts that matched the course content well.)

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  15. exchangify.com.au

    exchangify.com.au

    You are absolutely spot on. The textbook industry is running a monopoly and uni students are either not buying their required textbooks as they can't afford them or they are forking out on average $800 per year on textbooks. Textbooks that a year later are seen as worthless due to not being the newest edition. The sad thing is that many uni students in Australia live below the poverty line. How do uni students manage? Thanks again for an excellent article.

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