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The textbook industrial complex: How private publishers operate within the public university

Despite radical changes in curriculum design and management, outsourced course materials are a 'persistent concern' for students

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The textbook industrial complex: How private publishers operate within the public university

Despite radical changes in curriculum design and management, outsourced course materials are a 'persistent concern' for students

College students are intimately familiar with exorbitant price tags on textbooks. Often dipping into scholarships and student loans or working extra hours just to manage the costs, many routinely cite course materials as a serious financial burden.

Over 60% of students intentionally avoid buying course materials when possible, according to the Education Data Initiative. Others look to the internet for cheaper materials as online textbook alternatives grow more popular. Some even pirate materials.

Universities are acquainted with students’ textbook price tag outrage. ASU factors $1,000 in course materials into the estimated yearly cost of attendance for undergraduates. The library compiles student resources for navigating rising costs.

In February 2021, Undergraduate Student Government Tempe passed Senate Bill 25, creating a $50,000 emergency student textbook fund with excess appropriations amid COVID-19.

Bhavani Subbaraman, a senior who was on the USGT appropriations committee when the bill passed, described textbook prices as an economic equity issue and “a persistent concern” for students.

READ MORE: USGT passes bill to give students funds for educational expenses 

But textbook and course material prices have actually slightly decreased in recent years. The average selling price of required course materials has declined in the past five years at Sun Devil Campus Stores, according to data from Follett. Nationally, annual spending on course materials has dropped 28% in the same time frame, according to the National Association of College Stores.

As sticker prices and student spending decrease, adoption of online course materials are increasing.

“Digital first” initiatives are now the priority in education publishing as the pandemic ushered in another notable surge in reliance on online learning platforms. In the 2021-22 academic year to date, course materials purchased from Sun Devil Campus Stores were 45% digital and 55% print.

College course materials are still expensive and proprietary, but their price tags are less visible than ever before. Against the backdrop of a digital revolution in education, the largest publishers have found a way to quietly maintain their dominance of the curriculum market.

Instead of opportunistically jacking up consumer textbook prices like they may have in the past, companies like Pearson and Cengage are tapping directly into the tuition revenue streams of colleges themselves.

By contracting out a broad new range of services — including software management, curriculum design, student recruitment and marketing — publishers underwent a radical business model transformation by having a direct stake in student enrollment and how much they pay in tuition.

Industry games

The term industrial complex refers to the comprehensive infiltration and cooptation of public services by an associated profit-driven industry. In political economy, industrial complexes pose a threat to social wellbeing, economic stability and government accountability.

The college textbook industry has frequently been accused of anti-competitive market behaviors. In the 2010s, nearly 80% of the American education publishing market was composed of five major companies, which were federally blocked from consolidating further.

These companies have typically opted to strategically deny these accusations. Arthur Blakemore, vice provost for student success at ASU and an economics professor, believes the education publishing market is competitive enough to maintain fairness.

“I think there are enough significant publishers and enough significant outlets that no company has a monopoly,” Blakemore said.

Molly Ott, an associate professor in the Mary Lou Fulton Teachers College who researches policy in higher education, has a different outlook. She thinks the industry is moving toward more market consolidation.

“Unless there's more regulation and things change drastically, I believe that some of these larger entities are going to keep merging and take over all the other players,” Ott said.

But monopoly accusations are old news. Education policy experts like Ott are increasingly concerned with the direct administrative integration of publishers’ services with universities’ course management — in other words, the early signs of a budding industrial complex.

According to Ott, publishing companies that thrived in the traditional print textbook market now derive much of their income from online program management (OPM) contracts with universities. Around half of these contracts use tuition-sharing payment structures.

“I don't think a lot of students realize that not all of their tuition dollars are going to ASU per se,” Ott said. “Literally percentages of their tuition are committed to other companies and programs.”

Tuition-sharing OPM contracts typically earn anywhere from 40%-80% of tuition revenue from courses which use their services, according to an investigation by The Century Foundation. 

ASU's 2015 OPM contract with Pearson has a fluctuating payment model based on the total number of students enrolled, but the company is guaranteed between 41% and 56% of tuition revenue for their managed courses, up to 35,000 enrolled students. The contract applies to all degree programs that fall under the ASU Online brand, with some exceptions.

The services provided by OPM providers — the most prominent including Blackboard, Wiley, 2U and Pearson — are varied, falling far outside the traditional scope of education publishers. They include learning management systems, like Canvas, homework and textbook software, and student recruitment and retention services. As a result, third-party companies have access to a wide array of confidential information, including data on university students. Pearson’s contract with ASU, for example, grants the company access to the University's confidential personnel databases.

A 2018 internal audit found the University had “not implemented adequate third party oversight monitoring processes of Pearson” and that “Pearson’s access to ASU information system (was) not appropriately restricted.”

Blakemore said the University continues to work on “very favorable deals for students” in the realm of online course materials and program management. ASU is considered a national trailblazer in online education, but as its partnerships with Pearson and others continue to evolve, the next few years will likely shape the future of online learning.

Digital markets

“The important thing to recognize is that we are going through a transition,” James Dwyer, assistant vice president of auxiliary business services, said. “It’s probably in one of the most volatile stages that I’ve ever seen, and I’ve been working in this space for a little over 20 years.”

Dwyer oversees contracted partnerships between ASU auxiliaries, like the University bookstore, and third parties. In his opinion, the digital shift is exciting; moving to online programs could potentially make course materials more affordable for students.

Most recent data does indicate declining average expenditures on course materials, either due to adoption of cheaper digital options or the use of free alternatives, which are increasingly popular with students.

Blakemore believes course materials will continue to get cheaper, at least in the immediate future. He also thinks the customized learning experiences made possible by online courseware will increase net affordability for students.

Blakemore claims some ASU classes that incorporated personalized and adaptive courseware have seen pass rates improve.

“As an economist, I think about efficiency,” Blakemore said. “If I only had to take the course once, that’s a lot cheaper than taking it twice.”

But while virtual programs are typically cheaper and more efficient to maintain than physical publishing outlets, the increasing prevalence of online and hybrid-style education has not yet spurred overall savings in tuition for students.

For this reason, Ott’s outlook is far less optimistic. Many OPMs have already recovered financially from startup costs, but hardly any universities are passing those savings on to students.

“It’s feasible to offer fully online degrees for a lot cheaper, but almost no one does that,” Ott said. “I'm a little bit cynical as to whether any changes in technology … will really translate to lower tuition. That hasn't been the case writ large across the U.S. for online programs.”

Photo illustration taken Thursday, Feb. 4, 2016.

Instead, Pearson and other publishers have successfully adapted alongside the changing market, staking their claims to revenue on tuition payments from public university students and relaxing the ever-inflating prices of conventional textbooks in the process. 

While companies like Blackboard and 2U started as program managers, Pearson, Wiley and other veterans bought their way into the OPM industry. At a pivotal moment of restructuring, the giants of the education industry have only expanded their influence and diversified their income streams.

READ MORE: Welcome to the ASU-niverse

Profit incentive

Students tend to be perceptive of possible conflicts of interest between for-profit publishers and universities. Even when questionable tuition-sharing schemes are hidden from view, fee-burdened students notice injustices. Subbaraman, for example, is concerned by individual professors’ ability to assign unnecessary material without regard for students’ financial wellbeing.

“There have been so many times in class I've been told that a textbook is required and I have not even opened the textbook,” she said. 

In other instances, Subbaraman had to purchase textbooks written by the professors themselves. This is a serious ethical contention: should instructors be allowed to profit off their own material in their own courses?

The University of Arizona requires instructors provide students an explanation for why they choose to assign self-authored materials, as well as disclose how much they earn from each sale. If expected profits are greater than $500 per course, instructors must work with their respective dean to minimize the conflict of interest. 

ASU, on the other hand, has no such requirements. As long as the material is independently published and approved by the dean of the associated college, professors can require students purchase self-authored materials with no limitations or requirements of disclosure.

But as colleges outsource their online or hybrid-style courses to OPM providers like Pearson, the questionable exploits of a few professors may become a more marginal concern.

Ott believes professors are beginning to lose control of their curriculum autonomy in the first place. In some courses, instructors inherit standardized materials and courseware from the University — sometimes only days before classes begin.

“It's something that professors more and more need to be aware of, but nobody tells us anything,” she said. “We're not getting kickbacks.”

In 2019, an ASU economics professor accused the University of secretly profiting off Cengage’s MindTap software. The allegations were refuted by the University in an independent investigation, but the professor maintains that requiring the use of Cengage products is unethical.

As the conflicts of interest between universities and publishing companies are becoming larger and systemic, they are also becoming less visible to students. Unlike the interests of individual professors, the profit incentives of multinational corporations are obscured, hidden from the public eye.

The recent history of public universities is characterized by struggle between the private sector and government regulation. In 1992, the Higher Education Act was amended to eliminate the use of commission-based bonuses in college recruitment. Such legislation is intended to insulate nonprofit universities from the influence of market forces and profit incentives.

Some OPM contracts, however, bundle marketing and recruitment services with course materials and program management. ASU's contract with Pearson places primary responsibility for marketing its managed programs on the company, not the university.

According to Ott, this is one of the most concerning conflicts of interest in higher education right now.

“They're incentivized to bring more students in and have their materials be in the courses,” Ott explained. “Whether or not that's in students’ best interest though is not necessarily their concern.”

More students means more tuition revenue and a bigger payout for Pearson. Some contracts even mandate university admissions increase enrollment rates in their programs over time. 

ASU's 2015 Pearson contract required the minimum number of enrolled online students to nearly double from 2015-19. If the University failed to meet the mandatory minimum, it pledged to either add new courses and programs or transfer existing ones to Pearson’s management, effectively bolstering the company’s revenue.

Profit-driven corporations are also incentivized to raise the price of tuition and cut operating costs, all in the interest of financial success. When colleges hire these companies to recruit students and manage their courses simultaneously, many begin to look at the university like less of a public utility and more of a business venture.

“Students are more and more considered to be consumers in universities, but there's not enough transparency or enough commitment to giving them a quality product,” Ott said.

Bottom line

For-profit companies have historically been on the cutting edge of online education. Universities have struggled to keep up — ill-equipped to adapt to a fast-moving online marketplace, they have usually chosen to outsource digital services to online program managers.

This is part of a larger trend in public education over the past decades; as the range of services a university is expected to offer has proliferated, the number of third-party vendors integrated within universities has as well. Some point to this trend as a factor in college price inflation.

“From my standpoint, everything in higher education is expensive, but textbooks and access to learning materials is one aspect of that,” Ott said.

In the past 20 years, the price of a college tuition, fees and course materials has inflated by nearly 200%. At the same time, austerity measures in state education funding have devastated university finances.

Arizona’s defunding of education is particularly egregious. Since 2008, state spending on higher education has decreased by over 50% in Arizona, the most of any state in the country.

In an impossible bind, universities like ASU are looking to the private sector for support and collaboration. In response, policy experts are interrogating and criticizing the place of third-party services in higher education with renewed scrutiny.

Ott emphasized a need for transparency in third-party contracts and continued regulation of the for-profit education industry. She hopes Biden’s Department of Education will reimplement some of the protections rescinded by the Trump administration.

Subbaraman hypothesized that exorbitant student expenses could also serve to increase the intrinsic value of a college degree at a time when attending college has become more common. High price tags can essentially act as a socioeconomic barrier to access.

“Education can have value and merit that can be realized without having to spend thousands of dollars, semester upon semester, on these textbooks,” Subbaraman said.

In the past, inflated textbook prices posed a situational and external burden on students. Today, the threat is existential, impacting the basic administrative structure and financial incentives of public institutions.

If the warnings of Ott and other policy experts hold true, students could become concerned not just about the cost of their degree but about the integrity of their university.

Reach the reporter at and follow @lexmoul on Twitter. 

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