Regulating the Bookstore

Among the hundreds of new regulations in the Higher Education Opportunity Act (HEOA) passed by Congress in August 2008 are new mandates that require colleges -- and, more specifically, college owned or operated bookstores -- to publish the ISBN numbers and retail prices for textbooks, other trade titles, and related course materials that faculty recommend and students buy for classes. The new HEOA mandates reflect, in part, Congressional concern, echoed in many state legislatures in recent years, about the rising cost of textbooks. The ISBN mandate becomes operational in July 2010.

No question that the ISBN mandate will fuel changes already under way that affect how and where college students buy textbooks. Student Monitor’s fall 2008 survey of full-time undergraduates reveals that 16 percent of undergraduates “bought most of their textbooks online,” up from 12 percent in fall 2007. Additionally, Student Monitor reports that “the share of students who purchase most of their textbooks from their on-campus bookstore continues to trend down: fewer than six in ten students (57 percent) purchased most of their textbooks at their on campus book store,” compared to 64 percent in fall 2006 and down from 72 percent in fall 2005.

College bookstores are (for-profit) service organizations: Prior to the emergence of Internet book sellers just over a decade ago, college students were largely a captive market for the (often one) campus store, usually owned and operated by the college or university (or operated under contract on behalf of the college by an agent such as Barnes & Noble or the Follett Higher Education Group). The money saving options were not where to buy (which store) but what to buy (new or used). Until recently, for most students at most institutions, the primary source for new or used books and related course materials was the “college” store.

Enter the Internet. As with other products and services, Internet merchants provide price and service competition for local providers, in this case college bookstores. The emergence of Internet book merchants -- initially Amazon, followed by Web-based resellers specifically targeting college students such as BigWords, CampusBooks, TextBooks, and others -- offered students new options: the Internet brought a new transparency to the prices of both new and used textbooks. Case in point: in fall 2008 my daughter, a UCLA student, purchased a new accounting book from Amazon for $135 that the ASUCLA store was selling for $176.

There’s little argument that the HEOA mandate to publish ISBNs and retail prices brings a new transparency to the textbook market. It facilitates the efforts of students to shop for books based on price. Concurrently, the ISBN mandate poses new challenges for colleges, college stores, and the firms that operate college stores (and the store Web sites) under contract.

Ahead of the regulations due later this year from the Education Department, campus administrators, college store directors, and, yes, even campus lawyers are parsing the HEOA legislation (Section 133) and also reviewing bookstore operations, Web sites, and current contracts to assess compliance issues. For example, as reported by Theresa Rowe, the CIO at Michigan's Oakland University in a recent Educause listserv post, the campus counsel at Oakland recently rejected an ISBN–link-system solution incorporated into the campus portal provided by Barnes and Noble, the contract operator of the campus store for Oakland.

Campus counsel at Oakland ruled that the B&N link-solution is "not legally acceptable [under HEOA] given that [the university’s] contract with Barnes and Noble does not obligate [B&N to provide the ISBN linking service]; hence, if [B&N] fail[s] to comply with the statute Oakland would have no one to point the proverbial finger at.… if we did, [simply] saying that B&N screwed up is not a good defense to a claim that [the university] failed to comply with federal law."

No doubt lawyers at other institutions may have different perspectives on the linking solutions provided by store operators. Still, it is a safe bet that these contracts will be carefully reviewed -- and many will be revised -- following the release of the regulations governing the ISBN mandate later this year.

While the new transparency that accompanies the publication of ISBNs may be good for Internet book sellers, it will also be a catalyst for new services that target college students and also colleges and universities.

For example, Apple’s student-oriented iPhone ad broadcast during the NCAA men's basketball championship game on April 6 highlighted SnapTell, an iPhone app that supports “photo commerce:” take a picture of a book (including college textbooks) and the SnapTell app will link you to multiple Web sites that sell the book. On the institutional side, Verba Software, a Cambridge, Mass., firm launched by some recent Harvard grads, offers an application that links course lists to IBSNs and then searches the Web for the best prices for new and used textbooks and course tomes.

Internet book resellers that target college students and the textbook market proclaim that they save students money. (Hey, Amazon saved me and my daughter $40 last fall!) So we can expect the ISBN mandate to foster more competition between bricks and clicks -- the campus store on (or near the quad) vs. the on-screen Internet reseller. The ISBN mandate will accelerate the demise of a once captive market: college students buying books and course materials at the local college bookstore.

Many will applaud the increased competition because students will save bucks on books. Still others who lament the decline of “community bookstores” to chain stores, big box stores, and Internet booksellers will also lament what may be the demise of campus stores, as they continue to lose the annuity-like revenue stream from textbooks and course materials that has been essential to their operations.

But let’s also acknowledge that the HEOA mandate to publish ISBNs will not resolve the recurring complaints about (and some might add structural problems affecting) the suggested retail price of textbooks and course materials -- and by extension the wholesale price of course materials.

Here other factors are at play that include accelerated updates to stem the used book market, the costs of developing ancillary materials for faculty and maintaining web sites for students and professors, routine and appropriate development and production costs, modest author royalties and, yes even a little profit. Regardless of what I paid for my daughter’s accounting textbook last fall, these factors and others all affected the wholesale price that both Amazon and the UCLA store paid for the book assigned for my daughter’s accounting class. (Note: This article has been updated from an earlier version to correct an error.)