The Battle for Cheap College Textbooks Escalates

PARENTS DROPPING THEIR kids off at college this month will take in the peaceful campus scene and assume all is well. Oh, you beautiful innocents, don't you know there's a war on? At schools across the land, a vicious battle has enmeshed students, professors and executives in a series of boycotts, price hikes, underground trading rings, gray-market smuggling deals and cutthroat tactics surrounding an increasingly valuable commodity. Ground zero? The campus bookstore.

Anyone who's been to college has cursed the high price of textbooks. Since the professors selecting the books don't have to pay for them, the $5.5 billion textbook industry is somewhat shielded from free-market forces. Prices are also inflated by the sector's high-risk, low-reward economics. A publisher may spend millions to create a major textbook, but an academic blockbuster typically sells fewer than 50,000 copies, compared with 14 million for the latest Harry Potter.

That's old news. What's got the industry rumbling now is the growing sophistication and liquidity of the used-book market. A decade ago students faced with the unhappy prospect of buying General Chemistry were stuck with their college bookstore's high markups. Now students can find a huge selection of low-priced used books online. As a result the past five years have seen the share of textbook dollars going to buy used books rise, from 35 to 44 percent.

It's a scary scene for publishers. Sales of a title plummet as more used copies enter circulation. Their response: Higher prices for new books. Textbook prices have climbed 33 percent since 2003 — double the rate of inflation. Publishers have also stepped up their efforts to thwart the used-book market. Not only are they issuing new editions faster (is there really anything new to say about introductory calculus?), but they're also pushing products that can't be resold, such as e-books, workbooks and online tutorials. Bruce Hildebrand, executive director for higher education at the American Association of Publishers, says the industry is responding to the market's demand for better teaching materials (adjunct professors teaching hundreds of students need all the help they can get), but even he admits that textbooks sometimes are revised for financial reasons. "You make an effort to recoup your investment," he says.

Students haven't taken this lying down. Alex Trambitas, president of a student-run used-book exchange at the University of Michigan, says participation in his school's book swap has doubled over the past 12 months, and more of his peers are going online to buy gray-market editions smuggled in from overseas. "Textbook prices are insane," he says. The latest twist? Textbook-rental services like BookRenter.com that work like a Netflix for books. Even professors have joined the fray: This spring more than 1,200 instructors signed a statement vowing to forgo commercial texts, citing high prices and "unnecessary" new editions.

Everyone's frustrated. Student organizations accuse the publishers of bilking penniless scholars, and publishers grouse that students spend more on booze and iPods than books. Congress threatens to regulate the industry. But here's the funny thing: Despite all the accusations and hand-wringing, the system seems to be working beautifully. Research outfit Student Monitor says that with the growing availability of low-cost alternatives, average student spending on textbooks is rising at a slower rate than inflation. Publishers, meanwhile, have seen sales and profits grow, thanks to increased college enrollment. "It seems to be percolating along just fine," says Kathy Mickey, publishing analyst for Simba Information. Looks like all those students anxiously awaiting the ninth edition of General Chemistry can stop panicking. Its arrival is virtually guaranteed.

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