The Xplanation

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What the Kindle Textbook Rental Program Portends for Higher Education

Almost as soon as the press release hit the Internet yesterday, I began fielding questions about Amazon’s new Kindle textbook rental program. What does this mean for publishers? How will this affect textbook prices? What impact will it have on institutions and their students?

While the general answer to all of these questions is “We don’t know yet,” there are a number of projections I think we can make based on current market trends. Before launching into those projections, however, let’s take a quick look at what the Kindle textbook rental program actually offers.

First and foremost, it is a digital rental program tied to its Kindle e-reader devices and apps. On their site, Amazon boasts “tens of thousands of textbook titles,” and that students can save up to “80% off the list price of the print textbook.” While a bit of searching shows that Amazon apparently has yet to deploy textbooks from some publishers, the rental price and subsequent “savings” for the student are based on the length of discount is based on the length of time the student selects for the rental period.

We can see from the example below that the actual process of finding and renting a Kindle textbook is built seamlessly into the overall Amazon ecosystem, which is a big advantage for the company. This means that students can find their textbooks the same as any Amazon book, and see the rental option easily as part of the format listing that is displayed with the book.

If the student decides to rent the Kindle version of the book, he or she can set the rental period easily as part of the purchase process. In the case of the Intermediate Accounting textbook shown in the image above, I set rental periods of 73 days (beginning today and ending September 30) and 43 days (beginning today and ending August 31). The rental price for the longer rental period was $51.52 while the shorter rental period was valued at $42.44. As an existing Kindle customer, I can then finalize my transaction with a single click and have it delivered wirelessly to my Kindle device or one of my other devices n which I read Kindle e-books.

As with all things Amazon, the transaction is based on low cost, simplicity of the transaction, and ease of product delivery and access. The e-textbook themselves have the same bells and whistles as other Kindle e-books, meaning that there is no particular design affordance provided for textbook layouts or for the learning context in which they are used.

All of which brings us back to what this means for the market. While I repeat the caveat from above — “We don’t know yet” — I do think there are some basic projections we can make.

1. This will push the sales of Amazon’s forthcoming tablet device — E-reader devices are stuck in a gray scale world while many textbooks depend on color images. Amazon learned this through their pilots with the Kindle DX. Amazon could have released this program a year ago but it would have only served to boost sales of the iPad. The company has waited until it can launch its own color tablet in order to help promote the device and tout its usefulness in education.

2. This will boost the adoption of tablet sales in education — Since last fall, I have been projecting a 20% tablet penetration in Higher Education by fall 2012. The single biggest “educational” factor driving the adoption of these devices will be easy textbook access. With Amazon joining the fray, we can expect a significant percentage of college students reading their textbooks on tablet devices within another year.

3. This will speed up the availability and sales of e-textbooks — In many ways, Amazon is late to the game. Direct-to-consumer competitors like Barnes & Noble and Kno have already made forays into the e-textbook space and these initiatives, along with those by major distributors, have put increasing pressure on publishers for title availability. With the end game ultimately being to sell more product, Amazon’s entry onto the e-textbook marketplace will intensify the pressure over time and the availability of more e-textbook titles through more channels will continue to drive sales of digital.

4. This will drive agency pricing by textbook publishers — Unlike trade publishers, textbook publishers in general have not adopted agency pricing. Fears of Amazon trying to gain increased market share through price cutting will likely change that. Expect to see a number of textbook publishers move to agency pricing before fall 2012.

5. This will have an impact on student purchase behavior — Last fall, a third of college students deferred their textbook purchases past the first week of school, with most citing the desire to determine whether or not the textbook would actually be used in the course. The Kindle textbook rental program will be particularly attractive to these students with rental period adjustment feature. Expect other companies to mimic this feature for setting custom rental periods on the fly and expect students to use it.

6. This will speed up Google’s entry into the e-textbook and e-textbook rental market — Google launched it’s e-reader program last year and has an active interest in the overall education space. With Amazon’s move, expect Google to launch a competitive product within the coming academic year (fully available by fall 2012). will launch their e-textbook “rentals” in the coming academic school year.

7. This will put pressure on the textbook rental market (print textbooks) — In addition to hastening the adoption of e-textbooks in general, the flexibility, ease and immediacy of the Kindle rental program will have an impact on the current rental market that focuses on print textbooks. We all knew that the current rental market for print textbooks had a limited life span, and digital rental is the biggest influencer on that market. That said, Chegg and others will simply shift to digital rental programs so don’t expect this to affect the major rental programs too adversely.

8. This will have an impact on self publishing in Higher Education textbooks — Barnes & Noble has a decent self-publishing program, and that is being folded into NOOKstudy. Amazon’ self publishing program is much larger, however, and it allows authors to reach a larger buying audience. These programs, along with new ones that will pop up in the coming 18 -24 months, will drive higher levels of interest and participation in DIY publishing for learning materials in Higher Education.

Suggested Reading

Amazon Launches Kindle Textbook Rentals | AllThingsD

Amazon Adds Kindle Textbook Rentals, Promises 80 Percent Savings | News & Opinion | PCMag.com

Why Did Jeff Bezos Wait So Long To Get Into Textbook Rentals?

Kindle textbook rentals arrive; used can still be cheaper