EBN: What’s going on in the text book publishing industry?

Frank: The industry is in turmoil. We’re in the midst of a national textbook affordability crisis…author royalties began dwindling, as they get paid a percentage of new books sold. So, in a rational effort to preserve revenue in the face of falling unit sales, publishers began to raise prices faster – books are over $1,000/yr. for students and many have surpassed $200 each. Publishers also bundled books with things like CDs to try and generate a unique ISBN at the bookstore and confuse the student looking online for an alternative. And publishers started bringing out new editions faster to flush the market of low-cost substitutes for at least one semester.

EBN: How does your business model work?

Frank: Our model starts by sticking with what works from the traditional industry – publishing expert-authored, high-quality, peer-reviewed textbooks that faculty want to use in their courses. Then, we flip the old model on its head. We license our books under a Creative Commons open license, in effect transferring control (legally) to adopting faculty to modify the textbook to better suit their own teaching goals.

EBN: What is an open textbook?

Frank: As the Internet became an increasingly important tool for the creation, distribution, and consumption of content, legal scholars believed that it was time to reform copyright law and create a middle ground between “all rights reserved” and “no rights reserved.” One can think of this middle ground as “some rights reserved.” The copyright holder publishes the book under a “some rights reserved” license. The family of Creative Commons licenses is the most commonly selected option for this purpose.  Generally, the rights are transferred to the user using the “4 R’s”: the right to reuse; the right to redistribute; the right to revise; and the right to remix.

EBN: Are students adopting eReaders at school?

Frank: It’s too early to say how popular eReaders will be with students for reading their textbooks. Our belief is that their popularity will continue to grow over time, though less slowly than some pundits seem to predict. In five years, we still think there will be more sales of print books than any other format, with steady migration to digital formats. We think that a smart publisher today needs to be platform agnostic. The way that consumers read will only get more fragmented, not less.

EBN: How will textbooks grow over the next few years?

Frank: We’ll see a broader use of technology innovations like built-in self-assessment tools that provide performance data to help students learn better, help professors become more effective instructors, and help authors develop better texts. One of the more exciting parts of our business is building a social learning platform so that students can collaborate and share information with other students cross-campus and around the world. One of the coolest things about publishing open textbooks that people can modify and improve is that we are unlocking human potential for innovation. We think some of the greatest innovations in textbooks will come from our users (not from publishers) because we’ve given them that opportunity.

Flat World’s textbooks are published under an open Creative Commons license, as opposed to the industry-standard “all rights reserved” copyright.  Faculty can pick and choose content to create a “perfect textbook,” and students have the ability to choose the way they use Flat World textbooks.  According to Flat World, while many students view their texts for free online, “more than 50 percent purchase a physical book or other format that fits their individual learning style.”

From an author’s standpoint, Flat World is offering a new model that allows for faster market entry and a better royalty rate, along with sales and marketing support. “Flat World authors earn 20 percent royalties (the standard is 12 to 15 percent) on all revenue generated around their work, in all channels, sold anywhere in the world. In the open model, authors can benefit from a consistent revenue stream over time since sales don’t drop off dramatically after the first year due to used books sales and rentals,” the company says.

Copyright and licensing conventions in the music industry have been radically altered by challenges which began at colleges and universities; this may be a harbinger of similar change for rights and royalties in the publishing industry.

In China, enormous potential profits in e-book industry are encouraging many traditional publication houses to launch their own e-readers. But “a common obstacle for domestic e-reader makers is a shortage of content caused by a bottleneck in digital copyrights,” China Intellectual Property Magazine quoted Zhang Hongbo, deputy director general of China Written Works Copyright Society (CWWCS), as saying.

Adding to the confusion is China’s difficulty in enforcing copyrights against an avalanche of domestic digital piracy.  And even writers themselves need greater awareness about copyrights.

“I have no idea about digital copyrights and don’t know whether I have authorized them to the publishing houses in formal contracts. After all, I don’t get any profit from it, ” said the famous writer Yi Zhongtian at a forum.

Any e-book rights or digital copyright scheme that successfully emerges from this complex challenge will surely be robust and creative, so it will be interesting to see what solutions Chinese regulators, e-reader manufacturers, and publishers agree on.

Rest of article here: PW on Sourcebooks.