E-readers aim to crack the high costs of college textbooks

By Bloomberg News
Book fees can be outrageousAs Sony Corp.’s e-book devices vie with the Kindle to win over readers, the real showdown may come later: when a shift to electronic textbooks at schools threatens to eclipse the current market for the products.

Sony and Amazon.com Inc.’s Kindle are both expanding into the academic world. Students at Blyth Academy in Toronto do all their reading on Sony devices, and five U.S. universities are testing the Kindle. The days of students lugging around heavy textbooks may be numbered, said Sony executive Steve Haber.

“The only ones upset about this are going to be chiropractors,” Haber, who oversees the digital reading unit, said this week in an interview. “It makes perfect sense to move to education.”

Within five years, textbooks will be the biggest market for e-book devices, dwarfing sales to casual readers, predicts Sarah Epps, an analyst at Forrester Research Inc. in Cambridge, Mass. Corning Inc., which is developing glass screens for e-readers, expects textbooks to fuel about 80 percent of demand for those components by 2019.

“Print will expire faster in the textbook world than in the trade book world,” Epps said. “The technical barriers will disappear and five years is enough for the content to catch up with demand. The potential is there.”

The Kindle accounts for about 60 percent of the U.S. digital reader market, while Sony has 35 percent, according to Forrester.

Sales of digital reading devices will double next year to 6 million units, Forrester estimates. While the Kindle and Sony lead the field, Barnes & Noble Inc. has developed its own e- reader. And a wave of startups, including IRex Technologies BV and Plastic Logic Ltd., aim to win customer loyalty while the market is still young.

“When we talk to the folks in the industry, whether it’s at the university or publishing level, everybody thinks, ‘Yes, things could be a lot less expensive if delivered electronically,” said Ian Freed, a vice president at Amazon.com. “With textbook publishing there is an opportunity to make everything a lot more convenient at a lower cost.”

Textbook companies are open to the idea of electronic versions, in part because they could reduce sales of used textbooks. An electronic book can’t be transferred to another Kindle, so there’s no “used” version to worry about.

“That’s a revenue stream publishers and authors are not participating in,” said Frank Lyman, executive vice president at CourseSmart LLC, an online marketplace started by five publishing companies to sell their textbooks.

E-textbooks accounted for about 3 percent of total U.S. college textbook spending during the current school semester, according to Student Monitor LLC.

Digital textbooks may reach 20 percent of total textbook sales in five years, CourseSmart’s Lyman said.

McGraw-Hill Cos. started a digital learning service this year called Connect. The format lets it bundle more interactive learning tools with books, the company says.

The transition to digital “can’t happen quickly enough,” said Rik Kranenburg, group president for higher education professional and international publishing at New York-based McGraw-Hill. “The books and digital products will merge and become much larger than the market for traditional content providers.”

E-readers face other challenges in the textbook market. The University of Wisconsin-Madison and Syracuse University said
that they won’t recommend the Kindle for their schools unless Amazon.com makes it easier for blind students to use the product. Intel Corp. introduced a handheld device this month for $1,499 that reads printed text aloud.

The market for digital textbooks goes beyond colleges. There are 68 million potential customers in the U.S. if you include primary and secondary schools, according to the National Center of Education Statistics.