Pearson announces move to digital-first

Pearson, one of the world’s largest educational publishers, recently announced that all of its U.S. higher ed titles will be released in digital-first format. The announcement comes as Pearson takes steps to regain profitability in a market that has become increasingly price sensitive.

For Pearson, digital-first is a departure from the traditional publishing model in which final drafts are handed off to a compositor who lays out pages that are then sent to be printed. Once a print edition is produced, a second production process swings into gear to create a digital book, either by outputting to PDF format or by transforming text and media into a digital format that is uploaded to a cloud-based learning platform.

Digital-first reverses the traditional publishing model by directly processing the author’s final draft into digital format. Students are encouraged to purchase the digital version, with an option to rent a printed copy at a somewhat higher price point.

In a press release, John Fallon the CEO of Pearson explained, “Our digital-first model lowers prices for students and, over time, increases our revenues.” The company plans to offer digital textbooks for an average price of $40 and a “full suite of digital learning tools” for about $79. Students will be able to rent a print version for about $60.

No doubt because of its size and leadership position in the textbook publishing industry, Pearson’s digital-first announcement drew a good deal of media coverage and speculation, even though the digital-first concept is not new. About 500 of Pearson’s higher ed titles are already produced in digital first format. Other publishers, such as Flat World, are actively using a digital-first model. The announcement leaves a number of questions about how the new process will affect authors’ workflows and royalties.

The press release stated that digital-first titles would be “updated on an ongoing basis driven by developments in the field of study, new technologies, such as artificial intelligence, data analytics, and Pearson’s own efficacy research.” Clearly there could be advantages to having an ability to update works with current examples, easily correct errors, and react quickly to findings that could improve pedagogy. However, the traditional print cycle of revisions every three years is supported by infrastructure and scheduling. Pearson has yet to clarify how it will accomplish a more rapid and frequent flow of updates. Would such updates require authors to be responsible for constantly submitting updates that immediately modify their digital texts, or would modifications only be implemented on a scheduled, perhaps yearly, basis?

Students and instructors might have low tolerance for courseware that is updated and patched as frequently as operating systems, but correcting typos and other errors would be useful on an ongoing basis. A change to the concept of revision cycles might have implications for future authoring contracts or for addendums to current contracts applicable to books included in Pearson’s digital-first initiative. The authoring community will have to wait for more details on this issue of ongoing updates.

Authors may also be affected by Pearson’s proposed pricing model. Whether the effect of a $40 price tag will be positive, negative, or neutral may not become apparent for quite some time. Royalties on a student’s $40 expenditure for access to a digital textbook will be considerably lower than royalties on the sale of a print text currently priced at $100. However, the digital model is designed to eliminate used books for which neither the publisher nor the author receives income.

With Pearson’s evolving model, students never purchase a book. Instead, they pay to access a digital version or to rent a print version. The print version must be returned, preventing textbooks from circulating to the used book market. In theory, the revenue lost from low pricing will be recouped in a world where revenue from every student reaches the publisher. Although authors may receive less revenue from each book sold, the prospect of an increase in the volume of sales could equalize the royalty stream.

Another factor in declining royalties is the used book market that develops as editions age. The longer an edition remains in print, the more used books become available. Publisher income and author royalties decline as a result. When students access time-limited digital materials and rented print textbooks, publishers expect the revenue decline from used books to be negligible. This may be particularly true in an era where the digital version is frequently updated, thus rendering the print book out-of-date more quickly, with no alternative but to purchase access to the digital product. As a result, publishers anticipate that revenue and royalties for digital courseware will remain relatively stable throughout the life of an edition.
Pearson’s strategic shift could prove to be a much-needed answer to the demand for lower-priced textbooks, while still preserving reasonable revenue for the publisher and fair royalties for authors. However, many questions remain unanswered about the ramifications of the new workflow implied by a digital first strategy, as well as how royalties will be allocated and existing contracts honored. The authoring community will continue to monitor and report on its effect on pricing, royalties, and Pearson’s revenue stream.

For a legal perspective on these announced changes, see Pearson’s “Digital First” Announcement: A Legal Perspective
Read the third piece in this series, Pearson’s move to ‘digital first’: Perspective from a key Pearson executive (Part I)

June ParsonsJune Jamrich Parsons is an educator, digital book pioneer, co-author of Texty and McGuffey Award-winning textbooks, a TAA Fellow, and chair of the Publishing Practices Committee. She co-developed the first commercially successful multimedia, interactive digital textbook; one that set the bar for platforms now being developed by educational publishers.  Her career includes extensive classroom teaching, product design for eCourseware, textbook authoring for Course Technology and Cengage, Creative Strategist for MediaTechnics Corporation, and Director of Content for Veative Virtual Reality Labs. She holds a doctorate in instructional technology, CCP (Certified Computing Professional) certification, and is a member of the Association for Computing Machinery.

Marlys MayfieldMarlys Mayfield is the author of the TAA McGuffey Longevity Award-winning book, Thinking for Yourself (9e).