Page 111 - Crisis in Higher Education

Understanding the Root Causes • 83

operations to private concerns. These private-sector organizations under-
stood the price sensitivity associated with textbooks—students only bought
them because they thought they had to. They did not want them when the
term was over. So the bookstores began to aggressively buy back books from
students at the end of the semester and sell them at much lower prices than
new books to the next wave of students. Over time, the demand for new
books waned, but the cost of producing fewer copies of a particular book
did not drop proportionately. The costs of acquiring, proofing, editing, and
marketing are fixed. If fewer copies are printed, the publisher saves the ink
and the paper, but it still has most of the fixed costs for printing presses,
typesetting, and the like. Thus, when a textbook publisher sold one fewer
copy, it lost all of the revenue from the sale, but its cost savings were only the
ink, paper, binding, and royalty to the author, but little else.
With sales volume declining substantially and cost dropping only mod-
estly, the book publishers lost economies of scale and felt they must raise the
price for new textbooks. Increasing the price for new textbooks only made
more room for people and organizations to buy back more books, resell them,
and make even more money. This led to further declines in the demand for
new books, which resulted in even higher prices, and this vicious cycle of
price increases continued for many years. For a while textbook publishers
cut into the used book market by coming out with a new edition, but that
only worked for a while. Today, many textbooks are on a three-year refresh
cycle, and the cycle is unlikely to be reduced further. The used textbook mar-
ket is so profitable that people are willing to roam the halls knocking on the
doors of faculty asking to buy the complimentary copies they receive from
publishers when they are considering a textbook for adoption. In addition,
the Internet has expanded competition by providing access to many sellers
and offering opportunities to rent the book or buy an e-book.
The following bullet points examine the impact of root cause 5, “Rapidly
Growing Costs for Books and Supplies,” on the underlying problems listed
in Table 4.3.

• Problem 1. Cost increases: As the costs for books and supplies
increase, the cost of higher education increases as well.
• Problem 2. Quality decreases: As the cost of books and supplies
increased, students are opting not to buy textbooks, sharing text-
books among two or more people, or purchasing old editions of the
book. These actions, especially the first two, can alter the quality of
their education.