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Tuesday, September 2, 2008

Open Source Textbooks challenge the establishment

A small, digital book startup thinks it has a solution to the age-old student lament: overpriced textbooks that have little value when the course is over. The answer? Make them open source -- and give them away.

Flat World Knowledge is the brainchild of two former textbook industry executives who learned from the inside about the wacky economy of textbooks.

In a nutshell, there is a huge, inelastic demand for college texts, even though textbook prices are high. Because of this there is a lot of piracy and a robust secondary market for textbooks -- but not for long, because they are updated every couple of years, rendering old editions virtually worthless.

Flat World's business plan aims to exploit the inefficiencies: Its books are online and free. Instead of charging for content it aims to make money by wrapping content up in "convenient" downloadable and print wrappers and selling those, along with study aides and related items.

Enhancing the value of the online versions is the open source component. Students can annotate and comment in the digital margins of Flat World's texts to share their insights, analysis and conclusions with other students.

Digital versions of popular print textbooks have been widely available for a while now through distribution sites like CourseSmart, which offers around 4,500 titles and more than one-third of the most popular-selling text book titles.

But a study released last week by the Student Public Interest Research Groups (PIRGs) noted that subscription-based digital books are just as unaffordable, considering that a used print book can at least be resold for a while.

“Rather than designing the digital book to fit the [print business] model, publishers should consider redesigning the model to fit digital books,” the PIRG report says. “In theory, this model should work, since students tend to want print books.”

“The nice thing about open content is it gives faculty full control, creative control over the content of the book, full control over timing, and it give students a lot more control over how they want to consume it and how much they want to pay,” says Eric Frank, who along with co-founder Jeff Shelstad, came from a long career in the mainstream textbook industry.

Shelstad spent 13 years at McGraw-Hill and served as editor-in-chief before moving to Prentice Hall, where he was editorial director of Business Publishing. Frank stepped into the industry at Thompson and also eventually left for Prentice Hall where he worked for seven years as acquisitions editor and director of marketing. Flat World raised about $750,000 in angel funding last fall from investors who included authors and university trustees and is on the verge of closing another angel round at a similar amount.

Additional street cred comes by way of the company's "Chief Openness Officer -- David Wiley, the founder of, former Director of the Center for Open and Sustainable Learning, and the man often credited for bringing the phrase “open content” to its modern usage in the late '90s.

The idea behind open textbooks began with people frustrated with the industry, Frank says. The movement then led to non-profit aggregation platforms like Connexions at Rice University and the Global Text Project at the University of Georgia. But he believes they are one of the first to turn this into a commercial venture.

"On the surface they're (traditional publishers) doing OK, but underneath the surface there are lots of problems," says Frank. "The internet has caused so much disruption in the distribution that there are so many used books and international books and pirated copies out there that after about two years, publishers have to bring out new editions in order to capture revenue again."

Frank says the firm is also in the process of releasing a version for Amazon's Kindle, but is working out several technical hurdles before finalizing anything. Amazon is thought to be toying with the idea of a Kindle marketed to the college crowd, and readers have been somewhat vocal about the need for textbook support in the device.

Official launch is not until next January, when the company plans to offer eight textbooks, each written for Flat World by scholars who have also produced texts for some of the major publishing companies. It will test its business model over the next semester in a private beta with more than 20 U.S. universities.

In keeping with the decorum of pedagogy, there will be no advertising on the site -- Frank says that the revenue wouldn’t be significant enough to “justify the distraction from an educational perspective.”

But he's not concerned about viability or walking into a "freeconomics" black hole.

“Our premise is that there will of course be some students who spend nothing, they just consume the free book online, but we believe students are consumers and they will pay for convenience if the price is right,” he says.