Cengage Author Moves to OER: The Implications

Derek Newton called out in his Forbes column that a Cengage organic chemistry author is releasing the 10th edition of his book as OER via OpenStax. Newton is right to call this out as significant. That said, his column contains a lot of speculation about what this could mean or might mean. Fair enough. There’s a lot we don’t know.

In this post, I’m going to tease out some of the implications that Newton doesn’t talk about.

What we do and don’t know

Before I do that, though, it’s worth reiterating some of the basic facts and unknowns covered in Newton’s column. An author for Cengage whose book sold well enough to go through nine editions decided to take his tenth edition to OpenStax and publish it as OER. The author, John McMurry, characterized it as a tribute to his son who passed away. Cengage is outwardly supporting McMurry’s decision and is promoting the added value of the WebAssign and ActivChemistry platforms. Cengage owns WebAssign, which is a homework platform (despite being described as a “courseware platform” in the press release). I haven’t been able to find any information about the relationship between Cengage and Aktiv (which also appears to be a homework platform rather than a courseware platform). I haven’t found any evidence that Cengage acquired them.

We don’t know the degree to which this decision was amicable and mutual. For reasons I’ll get into later in this post, it’s possible that both sides were comfortable with it. It’s also possible that McMurry’s contract came up for renewal and Cengage decided to make the best of his decision to bolt. We don’t know and probably never will. We also don’t know if other successful authors will follow suit. I mean no insult to McMurry when I observe that he profited from the first nine editions of his book before opening up the tenth. I don’t blame authors for wanting to be compensated for their hard work. That said, authors who have signed with a publisher more recently haven’t gotten anything like the kind of deal that McMurry likely had. So incentives are shifting.

The platform theory

Newton, following the cues from the press release, sees this as a movement of publishers selling their platforms as the underlying books commoditize. The problem with this theory is that publishers across the sector have been disinvesting in their platforms. WebAssign was built in 1997 and I don’t have reason to believe that it’s been significantly upgraded in quite some time. Aktiv Chemistry looks newer but it also looks like it might be some sort of a licensing deal rather than an acquisition. Cengage is far from alone in this. Pearson’s platforms are ancient too. I’m hearing and seeing that, by and large, all the publishers are backing off tech investment. Even McGraw-Hill and Wiley, which have been the most tech-forward of their cohort in recent years, appear to have slowed investment.

This is not to say that Newton is wrong or that Cengage is disingenuous about promoting the package. Rather, it should be considered a holding action. Cengage, like several of its peers, is owned by private equity. While these companies can support investment and acquisition, they tend to marshall their resources very carefully. Especially for assets that show a consistent trendline of shrinking businesses, like textbook publishers. By and large, the publishers are milking their aging platforms for as much revenue as possible while investing as little in new tech as possible. It is not a new strategy.

The economics

It’s worth noting that the PDF of McMurry’s ninth edition costs $40.99 to rent for one term.

A PDF. For one term.

Yes, it’s true that prices have come down a great deal on textbooks in recent years. But $41 to rent a PDF?

Of course, that’s not the option Cengage wants students to choose. The first option on that page is a subscription to Cengage Unlimited, which is $69.99 for a four-month all-you-can-eat subscription. They’re trying to move to a model where they don’t care if they lose pricing power on individual items because they can charge for the bundle.

This is a challenging model for a publisher to make worthwhile for students. Either they have to ensure that the students’ professors are adopting several Cengage products every term, which is challenging due to academic freedom, or they have to provide more products that are direct-to-student, in which case they’ll be competing with the likes of Quizlet and, increasingly, Course Hero.

The learning experience

To be clear, nothing about this deal improves the student learning experience. Here’s the illustration that Aktiv provides of how their product “integrates” with the OpenStax book:

Aktiv Chemistry “integration” with the OpenStax book

So…you click a link next to the problem that you’re working on and the software opens up the section of the book that covers the basic concepts.

That’s…better than nothing, I suppose. But it’s pretty crappy. This isn’t integration. It’s a link to an anchor tag on a web page.

The bottom line

Cengage has a courseware platform called MindTap. They could have invested in creating a more seamless experience with more context by building on that platform. But they didn’t. That tells us something about their strategy. For them, this is all about the economics of Cengage Unlimited.

Publishers are struggling. All of their moves right now are defensive. (By the way, I predict that Pearson will sell off its higher ed business—possibly including their OPM—to private equity within six months.) The problem is that, given the natural path that the industry is taking, the student experience is still terrible and the cost, while better than a few years ago, is still hard to justify given the quality of these tech-enabled products.

And as far as I can tell, the sector is not moving toward replacing them with something better.

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