Web publisher's ads offer textbook case for cost-cutting

• Article
• Comments ()
• Click-2-Listen
• Videos

By

Textbook prices are soaring into the hundreds of dollars, but for some courses this fall, students won't pay a dime. The catch: Their textbooks will have ads for companies including FedEx Kinko's and Pura Vida coffee.

A small Minnesota startup called Freeload Press will offer more than 100 titles this fall -- mostly for business courses -- free of charge. Students, or anyone else who fills out a five-minute survey, can download a PDF file of the book and store it on their hard drive to print.

The model faces big obstacles. Freeload doesn't have a group of well-known textbook authors across a range of subjects, and it lacks the editorial and marketing muscle of the "Big 3" textbook publishers -- Thomson, Pearson and McGraw-Hill -- in the $6 billion industry. Its textbooks don't come with bells and whistles, such as online study guides that bigger publishers have spent millions developing to lure professors, who assign textbooks and are the industry's real customers.

The St. Paul company's numbers are modest so far: 25,000 users have registered, and 50,000 books have been downloaded for courses at schools ranging from community colleges to the University of Michigan. But the company says it is rapidly adding titles and will have 250,000 textbooks and study aids in circulation by next year. It also has signed agreements with three small, specialty publishers to make their textbooks available the same way and is in negotiations with others.

Current customers "are primarily business instructors, so they understand there's a quid pro quo here," said Tom Doran, Freeload's chief executive officer. "When we walk over to the social sciences and humanities, I expect there will be more [resistance]."

As to objections that textbooks shouldn't have ads, Mr. Doran notes that ads already appear in academic journals. He says Freeload's ads won't be distracting, will be placed at natural breaks in the material and won't push products such as alcohol or tobacco. Schools with other concerns could customize their standards. For instance, Brigham Young University, founded by Mormons in Utah, could nix ads for caffeine products.

What Freeload has going for it is arriving at a time when textbook publishers are under pressure to moderate prices. A government study found textbook prices have risen at twice the rate of inflation since 1986 and that the average student at a four-year college in the 2003-04 academic year spent $900 for books and supplies.

A new Connecticut law requires that textbook sellers tell professors what their books will cost students, and other states are considering similar measures. Cost complaints come not just from students and parents but also teachers. A 2005 study by the National Association of College Stores Foundation found that 65 percent of students don't buy all the required course materials, which means many probably aren't learning the material, either.

Students "are saying, 'To heck with it. We'll try to wing it,' "said Jack Ivancevich, a longtime University of Houston professor who helped found Freeload.

Publishers answer criticism by saying textbooks are expensive to produce and note they are clobbered by the rapidly expanding secondary market for resales in bookstores and on the Internet. Publishers get nothing from those sales, so they essentially have to recoup their investment in one year's worth of sales.

The industry also is exploring ways to use technology to cut distribution costs and prices. Thomson, for instance, is making "Ichapters" of textbooks available, similar to the ITunes model for music. But so far, publishers have resisted selling ads.

Susan Badger, chief executive officer of Thomson Higher Education, said her company tested the idea with focus groups, in biology, but the professors were adamantly opposed.

A Canadian subsidiary of McGraw-Hill briefly rolled out an ad-based model, but dropped the plan last year.

Mr. Doran says McGraw-Hill's experiment failed because it didn't use the ad revenue to reduce prices enough to get students' attention. As for faculty, Mr. Doran said, he realizes not everyone will go for it.

Ultimately, whether Freeload changes the industry or fades away probably will depend on its ability to attract popular textbook authors. Fordham University professors Frank Werner and James Stoner had each written several finance textbooks for traditional publishers, but after their latest was dropped by one company after a merger, they took it to Freeload.

"I was pretty disgusted with the basic textbook model," Mr. Werner said. Textbook authors, he said, often waste time making pointless revisions just so publishers can justify putting out new editions.

"That didn't seem like an ethical thing to do, and it seemed like a ... waste of time," he said, adding there is no need to do that with Freeload.

The professors at the New York university assigned the Freeload book to their class last year and said it was a hit. The students include "lots of working-class kids trying to get through college," Mr. Werner said. "To ask them to go to the bookstore and spend $150 is pretty wasteful."