Of all of Professor Volokh’s posts on the topic of electronic books (I’ve come to just refer to them as digital books, or in the case of these posts, digitexts), the fourth is probably one of the most enjoyable, I think because the points made are directed not so much towards digitexts on dedicated, single-use products like electronic readers, but rather on why publishers should want to convert existing paper users to digitext.
As best as I understand the argument in the fourth post, we must determine what would motivate a student to buy a digitext. According to Prof. Volokh, the answer is price. Volokh argues that books can be had cheaper on Amazon or at college bookstores (because they buy and sell used text books), thus, there is no incentive to go with digital unless the price is lower than used print. So how do we lower price? Publishers must see the benefits of going digital, namely, killing off the secondary market for casebooks. The death of the secondary market will herald both cheaper (per semester) casebooks, greater margins for the publishers (who are selling new casebooks every year), and higher royalties for the authors. Thus, publishers should sell electronic books at prices for less than used print to incentivize students to switch.
What interested me most (and got me to thinking more about the post), was his conclusion:
Of course, if publishers can persuade instructors to adopt e-book-only textbooks, then the competition will be absent. Publishers could continue charging high prices for the e-books, because the used paper books won’t be an alternative. And of course the selection decision is made by law professors, while the cost has to be paid for by law students. Still, I assume that professors will be at least mildly interested in saving their students money, and will react to the student annoyance that would likely be created if the professor’s decision makes students pay more for e-textbooks than students have historically had to pay for used paper textbooks.
If the end of the argument is that publishers could continue to charge high prices (which in most publishing contracts, the publisher has the exclusive right to set pricing), then there isn’t much hope. When I reached this paragraph, I felt the hostage’s optimism: someone will save us, I just know it, and it’s only a matter of time. Altruism is not a business model. It never will be, particularly in the law school casebook market, and particularly when you consider that recent speculation has put Thomson Reuters legal at 13.4 billion dollars, a four-fold increase over its current 3.5 billion dollar evaluation. The American Casebook Series and University Casebook Series does not help the mothership get there by discounting its products.
My quick assessment is this: price is not (and cannot) be the only incentive to purchasing a digitext, and killing off the secondary market is not the only incentive to creating a digitext ecosystem (and selling digitexts in it). To understand the market, we need to address the two fundamental questions raised by Professor Volokh’s post: (1) what would motivate a student to buy a digitext, and (2) what would motivate a publisher to make them available? Because I think the second question informs the first, I’m going to address them in opposite order.
Why make digital casebooks?
Professor Volokh hit the nail on the head with his assessment that publisher’s have an incentive to eliminate, once and for all, the secondary used book market. There are a lot of reasons for this, some of which have to do with “First Sale Doctrine.” The extension of Professor Volokh’s argument is that DRM’d digitexts could be sold on a semester or year subscription basis (depending on the class) and time out on a specific date. Thus, there is no “book” to resell to a student enrolled in a class using the same text the following semester or school year. Larger net profits are built in, and consequently, the publisher stands more to gain. And I do think this is one reason for making digitexts, just not the kind of “electronic books” that Professor Volokh is envisioning.
A digitext ecosystem that provides greater benefits over the current paper system would encourage students to purchase digitexts. At a minimum, we’re talking about the ability to highlight, annotate, facilitate outlining, share notes with study groups, and receive updates from the professor on important case developments, real-life forms, videos, etc. All of which are beyond the current abilities of even the most advanced eReaders. The system itself has to speak to the student, not just price. A cheaper electronic casebook is of no value if the student has to buy a piece of dedicate hardware to access it and the hardware is of limited functionality. The ecosystem is king.
But are new profits enough to compel publishers to create this new ecosystem? Perhaps, but there are some other compelling reasons for creating digitexts and a corresponding ecosystem: teaching law students to become subscribers, and gathering law student personal data.
The law student market is difficult to crack. They are captive, but elusive. They are a consumer class that we can exploit because they fall into one of the fundamental marketing categories: fear sells. If it will help you ace the course, then it’s worth the price of admission. In most cases anyway. But as a consuming class, they tend to be POSPs, that is, point-of-sale-purchasers, so getting them to be subscribers and provide reliable, long-term data is difficult. But the digitext ecosystem has the ability to capture them.
If I, as a publisher, could get a student to purchase a digitext in my ecosystem, the odds are that I will be given a validated e-mail address, billing address, phone number, school, year of graduation, and a host of other very valuable information to exploit later, with targeted advertising. For example, if the course is a semester long, I might be able to advertise study aides to help you with the final. Now, if it’s a course, say contracts or torts and the student thinks they will need their marginalia or other notes or highlights later, say when studying for the bar or while clerking, perhaps I can sell them a three-year (low-cost) subscription for access to the information they’ve saved. Or perhaps, there are several casebooks in my ecosystem they would like, then they could purchase a per-semester or per-year subscription to the digitexts. Either way, I’m teaching them to pay for information and services on a monthly or yearly basis. And this is the holy grail of online services, particularly because law students become lawyers, and lawyers become users of content. The sooner they learn to pay on a revolving basis the better. And that goes for everyone in the legal publishing business.
So, price + subscribers + data = incentive for creating digitext ecosystem. Amiright?
Why buy digital casebooks?
In my description of the digitext ecosystem above, I gave part of the answer to this question. The system itself must compel a student to want to participate. And if the early reports are to be believed, the eReader experiment is not working. A more robust system is necessary, and in an earlier post, I said as much.
But for the law school market, a good-to-great ecosystem only gets you so far. And this is where we come to Professor Volokh’s most important statement about this whole debate: can the publishers persuade the professors to adopt digitexts? The only reason students will buy digitexts is if their professors tell them to do so, or at least suggest that the digitext will offer some advantages (e.g., teacher tips, notes, recent case developments) that traditional print does not. Until that happens, it’s unlikely that electronic books, eReaders, digitexts, or anything like them will take firm hold in the law school market. No matter how many incentives there are for doing so.
[Image (CC) by ScottBowling]
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