UC Davis to Launch Effort to Control Costs of University Course Materials

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A University of California campus seeks to alter how students receive and pay for text course materials – but will it work?

The University of California, Davis, is preparing to launch a text course materials program which it hopes will stabilize the cost of text course materials for students.  This new program, called “Equitable Access” is effectively a buyer-created subscription offering where the university arbitrarily sets aside an amount for each course for materials (currently set at $20/student), with that amount to be distributed to the publishers of works used in that course.  Participating publishers make their works available in a common pool of materials from which professors can select.  These works are then provided digitally via Ingram’s VitalSource delivery platform.  (How the money is allocated among participating publishers has not been disclosed.)

Overall, the creation of a subscription model for text materials follows in the footsteps of programs like Cengage Unlimited.  What’s new is that, rather than a subscription to a single publisher’s titles, Equitable Access is intended as a subscription to the works of multiple publishers (with the price set entirely by the buyer rather than by the seller or by negotiation).  Some smaller colleges, such as Williams College, have already implemented fiscal mechanisms through which they build the price of course materials into tuition; in the United Kingdom, course materials have been rolled into tuition for decades.  In the UC Davis program, the University hopes to leverage its broad buying power to reduce the cost of materials to the student.  The University drew, perhaps, on the market’s experience of health insurance for an idea of how to structure the program with the intent of building a fair and equitable system for the purchase of text books.

The difficulty with such a program, however, begins with a problem familiar to those who have studied healthcare: the person in the system deciding what to buy is not the same person as the payer.  It has always been the case in higher education that book demand is not generated by the student; rather, demand is generated by the professors who require certain works for their course.  And, as in healthcare, that decider has been insulated from the cost implications of his or her decisions while, also as in healthcare, any savings is going to have to come from reducing the ability of the decider (the professor) to require more expensive materials.  The books available in Equitable Access amount to the rough equivalent of an insurance company’s “formulary” for pharmaceutical purchases.  If the formulary is broad enough and satisfactory to the professors, they will stay within it in deciding what they “prescribe”; if not, the pressure in the system to bypass the formulary will be significant.  If the example of healthcare is any guide, the tension between the payer (University), provider (professor) and user (student) may undermine the success of the program and its ability to control costs.

Similarly, for the University to become the buyer under the terms of Equitable Access may undermine the University’s own negotiating power.  Presently, most universities outsource the acquisition and delivery of text materials to third parties: primarily the independent college bookstore.  Barnes & Nobles and Follett are powerful players in this market and bring not just the buying power of a single university, but the buying power of all their universities to the negotiating table.  While they have little ability to manage the requirements of the professor, nonetheless they have the ability to buy in quantities that even a university the size of UC Davis cannot match.

It is unclear if publishers will be interested in participating in a subscription service over which they have no pricing power.  Certainly, some niche or smaller publishers may find such a program a good way to gain entry into the UC Davis classroom. Of course, if those works are not already a part of the professors’ syllabi, it is an open question whether the professors at UC Davis will accept those books as adequate for the purposes of the classes they teach.

UC Davis argues that participating in the Equitable Access program will provide an overall benefit to publishers because students will no longer have an incentive to pirate works or purchase works in the used book market.  That argument seems thin, from my perspective.  First, digital provision of the works implies that – over time – there will be no way to supply the used book market, such that the decline of that market will occur anyway through natural attrition.  Second, while it is true that, since the student is no longer the buyer – the University is now the buyer – piracy will no longer be necessary, it is unclear whether on balance the publisher comes out ahead at the price levels being proposed. That calculus will be unique to each publisher.

For some courses which require few materials, the capitation of $20 becomes a tax on those courses to provision works for other courses. Money is allocated for the students taking the course to acquire content, but if no content is acquired, the remaining money is available for content in other courses.  However, there is a risk that professors will see the $20 as a budget line that needs to be filled and may order more materials than required simply because the money is allocated for that purpose and the use of additional materials has no financial impact on the student or the university, it only leads to a smaller allocation per publication to the publisher. For other courses, the types of works required will also make maintaining a stable text material cost difficult.  For courses in English that require reading contemporary literature, for example, underlying agreements with authors may prohibit the publishers’ participation in subscription-type licensing.  Given a consumer market for these titles, such publishers may come to see the threat of losing the UC Davis market as more of a minor nuisance than an existential threat.  For other non-fiction works in the Arts & Social Sciences, such as scholarly monographs traditionally published by university presses, the reduction in price-paid implied by the Equitable Access system might indeed only further reduce the economic viability of the scholarly monograph market.  Professors who rely on income from the sale of their monographs may see their royalties decline.  As a consequence, university presses may find themselves conflicted as to sustaining their participation.

Text course materials are also not limited to traditional “books”, but include readings from journals, magazines and other materials collected in coursepacks.  These readings are composed of works from multiple publishers each of whom would have to agree to participate.  Fortunately, Copyright Clearance Center offers a collective license – the Annual Academic Copyright License – which allows this type of arrangement for the works CCC represents.

In a recent interview in The Scholarly Kitchen, Jason Lorgan UC Davis’s Executive Director of Campus Stores recognizes several of the potential issues with Equitable Access, but argues that Equitable Access is superior to the current system of Inclusive Access which “has variable pricing for each course… EA offers a fixed price per term regardless of what course you are taking.”  As Lorgan explains, “Currently, financial aid offices use the campus average to calculate book costs. This means that the students whose materials amount to more than the average do not receive sufficient institutional support to cover those costs. By setting a fixed amount, we can ensure the financial aid award will cover the costs for all affected students, not just those who would otherwise pay the average or less than the average.”  Under the current system, UC is providing too much financial aid to some students and not enough to others.  Equitable Access cures this problem not by adjusting the UC system to balance financial aid grants (students who receive excess money could return the excess to fund the students who overpay), but by asking publishers to facilitate the cross-subsidy.  Ultimately, one can wonders if the problem is not with the variable cost of books, but with the allocation and administration of financial aid and if so, is Equitable Access less about equity and more about extracting savings from publishers by reducing the money available to pay for the books in their pool of titles?

While the Equitable Access program underway at UC Davis is an innovative attempt to make the provision of text course materials to students more predictably priced and perhaps less expensive, it faces significant structural and business challenges.  It could form part of a system that balances the needs of the students with those of the professor and the publisher and their authors.  It could provide significant efficiency.  But the unintended consequences of such a program could also be unexpected costs and changes in underlying behavior that create new stresses without substantially altering the cost to the student. While this new program could make a positive difference, there is also a perceptible risk of its furthering a stressful battle with publishers (and professors), which could in turn lead to a situation where nothing really changes.

I’d be interested to hear other views on this initiative.

Andrew Campana

Author: Andrew Campana

Andrew Campana is a business development director at CCC where he works to bring products and solutions to broader markets.  Andrew previously worked at PBS, licensing television to international markets, and was a member of the founding staff at the United States Holocaust Memorial Museum.  Andrew holds a masters’ degree from Tufts University and an MBA from IESE in Barcelona, Spain.

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