When we think about the distribution industry being disrupted, we tend to think about music and movies, whose physical media and vast shipment infrastructure have been rendered mostly obsolete over the last decade. To a lesser extent, we hear about print, and the effect of e-readers and web consumption on books and magazines. No one is making the change particularly gracefully, and the same can be said of the textbook business, which does millions of dollars of business every year selling incredibly expensive items to students — who likely consider them anachronisms.
Rice University, which has been pushing alternative distribution mechanisms for scholarly publications for years, has announced a new initiative, by which they hope to publish free, high-quality textbooks in core subjects like physics and biology via a non-profit publisher called OpenStax College. It’s the polar opposite of Apple’s iBooks textbooks, which, while they too help drag this dusty industry into the present, amount more to a new sales vector for the publishers than competition.
Rice and OpenStax aren’t the first people to propose open-source or free textbooks. There are collections here and there, like Flat World Knowledge and Apple’s iTunes U — but they’re decidedly short on the type of books a freshman might have to buy for their year of survey courses: Biology 1, Physics 1, Sociology 1, Psychology 1. And 11 Learning has a similar idea of collaboration producing a book, but their creation model may not be economically feasible.
And of course there are the many companies that want to remove textbooks from the equation entirely. Setting up textbook platforms on new devices like Kno and Inkling, making an environment for meta-curricular activities and non-traditional learning like Khan Academy, or virtualizing the whole education experience, something with which many universities are tinkering.
But textbooks are still big business, and their utility in the education system is difficult to argue with right now. So OpenStax splits the difference: fueled by grant money from a number of private foundations (i.e. not government grants), they’re putting together full-on textbooks, peer-reviewed, professionally laid out, and all that. These textbooks will be provided for free in file form. But supplementary materials — quizzes, videos, presentations, and the like, presumably — cost money.
It would be petty to call this a bait and switch, since the bulk of the material is being provided for free. And a savvy professor or TA can scrape quite a few supplementary materials from the web already, thanks to those post-textbook services already mentioned. Providing the meat for free and the potatoes for a price is perfectly reasonable.
What remains to be seen is the quality of the textbooks. So far OpenStax has signed up “in the low tens” of colleged and universities to use the books. Institutions probably are waiting to see how the next year or so plays out: everything is in flux and to commit to one platform over another when the true costs and benefits are still unclear would be a bad move.
OpenStax’s first textbooks, for physics and sociology, will be coming in March, with others following later in the year. A strange time to make a debut, in a way, as the school year is well underway and many intro courses won’t be offered. But it will give time for the creaking machinery of academia to notice, acknowledge, examine, and judge the OpenStax offering. It may be that they can demonstrate their agility in fixing, improving, and expanding the content on the fly, which could either impress or terrify nodding faculty members who use the same text for a decade at a time.
The survey was prompted by the news that a generation of “cord-nevers” and “cord-cutters” is forming — young people who don’t want to pay for cable TV because their laptops and mobile devices provide plenty of free video.
By late Friday, 910 votes had been cast and the result was overwhelming:
- One third of you (307) said you had already given up pay TV and were not going back.
- Only 94 voters said they paid for basic cable.
- Another 103 owned up to buying premium TV service.
- Those low numbers were equalled by the 95 voters who said they could not ever imagine watching regular TV again.
Here are the full results:
(The live poll is still open, incidentally.) Obviously, the poll is biased: It’s a self-selecting audience of people who are already getting their news from the web.
Meet the “cord-haters”
Having said that, it indicates that “cord-nevers” may not be the TV industry’s main problem. Rather, judging by the comment boards underneath both the poll and the original story about the death of TV, it is the “cord-haters”: People who actively despise traditional television with its clutter of irrelevant advertising and brainless programming. They are overjoyed that the web now offers an alternative way to watch shows and movies at a fraction of the cost.
The Credit Suisse report identified new technology as the culprit that is now eating TV’s business. But as far as B.I. readers are concerned, it’s not just about the ease of watching movies on an iPad. Rather, it’s that they find TV to be of such low quality that they just don’t want to watch any more of it. Only now has new technology allowed them to watch shows and movies without all of TV’s baggage, such as paying for 500 channels when you really only watch about 10.
Steven: The thing I hate about TV is you only watch a couple stations 99% of the time, but you pay for 150+ stations.
dargoola: This year I cut most of the digital premium channels with on demand add-ons because I never have time to watch them.
There’s a core Of TV channels I watch but it’s shrinking. I’m getting more of my news from the Internet, i blog a lot, and spend more time socially on the net. But TV is still it for the pure pleasure of vegging out and being entertained.
realchuck: I’ve stopped paying some 5 years ago. I installed a ‘seedbox’ with a friendly 3rd-world country hosting provider and just leech torrents (automatically). It costs me some $50 per month including unlimited traffic. So I get TV-shows on the next day, auto-downloaded, and any blu-ray movie – also on the next day. I don’t have to respect any delays imposed by the assholes in the industry.
flubber: TV will fail because of the parent companies and advertisers. How many infomercials do we need?
How many times do they need to cut to commercial during a football game? Quite frankly I do not watch a lot of TV anymore because the amount of real content being aired is a joke and the amount of commercials is just downright insulting. I download everything or watch it on the net.
Dean Wormer: The traditional TV folks are stuck. But they think this is about Netflix, Hulu etc. It’s not. Their product stinks. It’s been this way for years and its getting worse. Hulu is just methadone to get you off the crack pipe.
Krissy: Let us be real here, most regular network TV on now is pure unadulterated shite.
iWonder: Cable isn’t what it used to be. I had cable primarily for channels like Discovery, Science and History but now it seems those networks are being overrun by the same trash programming that took over the big networks a decade ago. Cable isn’t worth it now, 150+ channels and nothing worth watching, that’s why I’m done with it.
jasno: I abandoned broadcast TV because of the incessant commercials. Even on the discovery channel it’s too much. Worse, the commercials are pretty much never for anything that I might possibly buy. For example, I am never going to buy a Chevy Silverado pickup, or any truck, but I have been subjected to about 97,391 commercials for pickup trucks.
Some readers defended TV, saying it still played a useful role in their lives:
rusty syringe: Gave it up for awhile but came back this year. Direct TV’s free Sunday Ticket offer was to good to pass up.
Frank Castle: I’ve tried all the streaming services and the image quality is crap. With Comcast I have a crystal clear 1080 signal with Dolby digital sound. I have no desire to gather everyone around the laptop to view a show. All these services also are geared to the solo viewer. What do you do when Mom wants to watch HGTV, I’m watching a game, the kids have on disney channel. Your telling me running all those sevices seperately is going to be cheaper then another cable connection?
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If you’ve ever tried to explain the concept of “make new friends but keep your old ones” to a five-year-old, you have a pretty good perspective on how many high-growth businesses approach customer acquisition and retention. Growing businesses tend to spend so much of their time and money acquiring new customers that they often overlook their best source of growth: retaining and growing their existing customer base.
One of our clients has more than 90 percent of its resources–people, marketing budget, etc.–focused on creating millions of new customers a year. Their business model is based on monthly recurring feeds, much like the cable or wireless industries. Customers come in and they stay…until they don’t. An analysis of the client’s historical data shows that the average customer stays for an average of 2.5 years. Because their customer acquisition cost is lower than their expected customer lifetime revenue, they reach a break-even point in less than two years. So it’s a great business, as long as they keep generating new customers, right?
Wrong. The problem is that as the management team’s growth expectations increase, it gets increasingly harder to acquire more customers. As a result, customer acquisition costs go up and the quality of customers, in terms of how long they stick around, goes down.
To solve this growth dilemma, the client needs to ask three key questions:
- What revenue growth will we achieve if we keep our existing customers for just one additional month, on average?
- What will it cost us to do this by, say, improving customer service or adding customer benefits?
- How does this growth compare, both in magnitude and cost, to acquiring new customers?
The answer for our client will be the same as it is in almost all businesses. It’s cheaper, easier, and more effective to retain current customers than it is to acquire new ones. In fact, if this business can retain all of its customers by just one additional month on average, they can achieve an additional 3 percent of annual growth. If they can retain their customer base for four additional months, they can create double-digit growth–without adding a single customer.
It’s simple math–something that even a five-year-old might understand.
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Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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