Disruptive Models for Higher Education Publishing

Welcome to this morning’s Daily Research Update. If you want more context for this research, take a look at our Education and Technology Trends for 2011. You may also be interested in our Weekly Research Index, or you can follow our live, daily research on our Current News page.

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Disruptive Models for Higher Education Publishing

I see that Flat World Knowledge has closed a $15 million round of funding to expand its list of titles. The round was led by Bertelsmann and will allows Flat World to expand its catalog of titles beyond a focus on business and economics to include books for the 125 most popular courses on college campuses.

If you’re not yet familiar with Flat World and its business model, you soon will be. Its “open” approach and disruptive cost play are already being emulated by other small publishers and will have a strong impact on the market over the next three years.

Flat World’s model is to provide books for free online, but they sell print-on-demand (POD) softcover editions at prices that deeply undercut the general textbook market. They even provide Creative Commons licenses for their content that allows instructors to modify the texts with attribution, while retaining the right to commercialize the modifications.

By the way, they also provide better incentives for their authors.

The standard line from traditional publishers is that Flat World is no threat, that their list is too narrow to have an impact, and that they lack the sales force to compete with the big publishers.

Translated? The Flat World business model scares the bejeebers out of us and we hope they’ll go away because we’ll never be able to compete.

Unfortunately, the situation for traditional publishers is much worse than traditional publishers think. First, Flat World is one of several new publishers that will likely inherit the future — digital-first houses that provide POD products and offer everything at much lower prices (including student ancillaries). The digital-first workflow gives these new publishers efficiencies (present and future) that traditional publishers will not be able to compete with in 5 years without radical overhaul. In other words, the new publishers can make good money on lower sales figures and at lower prices.

In addition, the disruption of these digital-first publishers is amplified by the growing open textbook market in Higher Education. This includes new initiatives such as the Open Course Library being developed for Washington State community colleges, the Open Access Textbooks initiative in Florida, and traditional digital repository efforts like MERLOT.

These “open” textbook movements (I’m including the Flat World model here) are growing rapidly, primarily digital, and will account for 10% of the total textbook market within three years. That’s more than a little disruption and will indeed have a big impact on traditional publishers.

Of course, the shift to digital and more open models opens the door for many new product and business models as well. We should all pay particular attention to the notion of content as a service as well as content disaggregation.

Missing the Mark in Higher Education

Earlier in the week everyone was up in arms because we discovered that many students were not learning as much as they should in traditional colleges and universities. The bigger problem, however, may be that institutions may be pointing students in the wrong direction when it comes to future employment.

The chart below shows current university enrollment and 10 year trends from the Bureau of Labor Statistics. Notice that there appear to be too many enrollments in biological science programs and far too few in computer science.

Now, we know there are and will continue to be jobs in health care, and career colleges and for-profit institutions have traditionally targeted this area with much of their recruiting and training. According to a new report, however, the focus in on lower level assistance jobs and non-critical professions such as massage therapy. “Julie Margetta Morgan, report co-author and policy analyst at the think tank, noted at a discussion Thursday that for-profit education’s largest contribution to the health care workforce are graduates in medical assisting. The next largest health care program in the for-profit sector is massage therapy. Of all the health care credentials awarded at for-profit institutions in the 2008-09 academic year, 78 percent were at the associate level or below.”

Next Week

Remember that next week, in addition to my regular research updates, I’ll also be featuring a series of posts related to a student survey we conducted with the help of Eduventures in November. I’ll be addressing several important trends that you won’t want to miss.