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Dean Baker's commentary on economic reporting

The NYT Discovers High-Priced Textbooks, but Misses Cause

The NYT editorialized against textbook companies charging outrageous prices for their texts, but it failed to get to the roots of the problem.

Textbooks are expensive because of the way in which the government finances their production, it grants copyright monopolies. Copyrights were undoubtedly great policy for the 16th century when they when they first came into existence, but they are not very well suited for the Internet Age.

Suppose that the government instead contracted with textbook publishers to produce textbooks, with the condition that everything they produce is in the public domain and can be freely copied or transmitted over the Internet. In this case, the cost of a textbook would be reduced to the printing cost. Professors could freely select chapters from different texts, where they felt it was appropriate, without requiring students to buy multiple texts. And, there would be no incentive to make pointless changes just to create a new edition.

Of course publishers would still be free to operate under the current copyright system and charge $200 for their their textbooks, they just might find it a bit harder to compete with books that are as good or better that can be downloaded for free off the web.

This would take some additional tax money, but we can just pull out of the subsidies that we give to college students to allow them to pay for textbooks. It's time for a little bit of serious economic thinking at the NYT.

(Thanks to a BTP regular for calling this one to my attention.)

--Dean Baker



COMMENTS

This is one topic where I disagree with you. As a rule, the only money book authors make is from royalties and advances against royalty. Without copyright protection, they would have no income at all. Remember that few writers are bestsellers and few are able to turn out successful books on a regular basis. Most scrape by and try to balance a day job (to pay the rent) with time for writing. The money they make from royalties helps them survive and maybe even have some extra time to write.

I don't think copyrights should extend forever. Fifty years or the author's life might be fair.

And while I really dislike publishers, I am not sure how much money they make. Like writers, they may actually need roryalties to survive.

"Suppose that the government instead contracted with textbook publishers to produce textbooks, with the condition that everything they produce is in the public domain and can be freely copied or transmitted over the Internet."

Tee hee, very good joke Dean.

You can see public choice economics (basics: politicians and bureaucrats take decisions to suit their own interests, not those of the taxpayers) textbooks perhaps, umm, being rather underproduced in a system directly financed by politicians and bureaucrats?

No?

While I agree with Dr. Baker that something needs to be done about text books, it's an abusive racket supported by our government.

As to Mr. Worstall's response, if I read it correctly, the results cannot be worse than what we have now.

As to length of copyright, I would go for the original term 14 years + a 14 year renewal. That is plenty of time, particularly when one realizes that the overwhelming majority of producers of content get nothing 10 years down the road, and so are only motivated by those first 10 years to produce.

As to paying authors, that is what Dr. Baker is proposing.

I'm near the end of the semester of teaching a textbook-free course--and it's worked out just fine. Traditionally, the textbooks for courses like mine are collections of classic and contemporary journal articles. These articles are available (password protected) to students and faculty online through the journals our library makes available as "electronic resources." So I just linked the articles to the class website: students can print them off (as most do) or read them online as they choose.

Setting up my course this way not only means that students don't have to buy textbooks--it means that I can make the best possible selection of readings to suit my purposes. It means that I don't have to look for the least-worst anthology, use some readings that I'm not keen on the justify the price of the textbook and then put together a package of additional readings to boot. I also put up all the additional materials I use for the course, including a complete set of powerpoints, all free to anyone who wants to hit my site and available to anyone who wants to use my stuff.

I don't expect to make any money from my stuff, including a book that's coming out sometime in the next two weeks. If the book makes me rich and famous, fine--that's a windfall. But I don't see why I should be paid for it anymore than I should be paid for the articles I publish in journals. Research and teaching are my job. I'm a salaried employee and that's what my university pays me to do. The academic system provides faculty with the money and leisure to pursue research, and the resources to produce teaching materials, so that we don't have to operate as independent contractors or hustlers, selling our stuff in the market to support ourselves. This is a good thing: all the hustling, selling, and grant-grubbing that we'd otherwise have to do wastes time that we should be devoting to research and teaching.

Government policy is a problem but even under the current scheme academics can do their part to undermine the system without doing anything illegal by using online resources and minimizing the use of textbooks, by publishing in journals that don't require authors to sign over copyright and putting their papers up online where anyone can get them for free.

Two questions Dean: (1) I see the article sort of saying Congress is considering part of your proposed idea - do you see any hope in this proposal?; and (2) drawing from Eleanor's comment (only money book authors make is from royalties) - who does get the current monopoly rents and how would authors be compensated under your alternative market mechanism?

I think it was Marketplace (radio) that had a story about book prices recently. It pointed out that book publishers, in an effort to thwart more efficient used book exchanges, are increasing the rate at which they introduce new versions. If true, I would argue that academia is a substantial contributor to high book prices by requiring the latest versions. Note that the newer versions offer just enough changes to call them "new".

Can you imagine the outcry from the media if professors were mostly rightwingers?

Tim,

perhaps you haven't heard, but many universities in the United States were created and are still largely funded by the government. They have names like Berkeley, UCLA, the University of Michigan, and the University of Wisconsin. They have produced much cutting edge research in all areas of academia.

btw, the good capitalists are perfectly free to produce as many textbooks as they want under my system (with government granted copyrights).they just have to compete with free books. If there really is under-supply, then this should not be a problem.

Can you imagine the outcry from the media if professors were mostly rightwingers?

Only if they produced widely inaccurate propanganda like the textbook American Government Institutions and Policies, which is full of rightwing nutcase BS. And in that case -- textbooks misinforming our children -- I'd hope there would be a media outcry. Which, you'll notice, there hasn't been about that book. So much for that liberal media (zombie) canard.

For some majors, particularly
mathematics, physics, and chemistry, the books traditionally used in fresh/soph courses have become ridiculously expensive and dumbed-down with fancy colors and software that
is completely worthless. In my
university, we have been discussing how to get rid of those worthless phone-book-sized textbooks and replace them with our own materials developed over the years. And from what I hear thisis being considered in many places across the country.

Hey, I'm all for Copyright reform. 14 + 14 year terms sounds great. But good luck with that one enacted.

The good news is that the Copyright system isn't, in fact, the root of the problem of "outrageously-priced" textbooks.

The real problem is that the person making the purchasing decision -- the professor assigning the book -- either has no incentive to pick an affordable book or has an incentive to pick an expensive textbook (the professor authored it!).

I would argue the best solution is to simply provide textbooks free to students. The cost of the books can be passed along through tuition increases. Universities would be incentivized to bargain down textbook prices. Incidentally, if professors want to assign different chapters from different texts, there is no reason why they can't do that under the curent Copyright scheme. Presumably there is little to no market for a la carte academic textbook chapters simply because most professors believe that is not an effective pedagogical technique.

I would also advocate that government and taxpayer funded institutions be required to use freely distributable and royalty free open source software if it met the functional purpose for its use within that institution. Many taxpayer funded institutions purchase proprietary operating systems and application software for uses that may easily be replaced by open source products. The savings from a such a policy to the taxpayer would be enormous.

Matthew G. Saroff wrote, As to length of copyright, I would go for the original term 14 years + a 14 year renewal. That is plenty of time, particularly when one realizes that the overwhelming majority of producers of content get nothing 10 years down the road, and so are only motivated by those first 10 years to produce.

I don't see any reason why there should be copyrights lasting longer than 10 years, period.

The notion that longer periods are needed to create proper incentives among authors doesn't pass the laugh test.

Dean Baker wrote, ...many universities in the United States were created and are still largely funded by the government. They have names like Berkeley, UCLA, the University of Michigan, and the University of Wisconsin. They have produced much cutting edge research in all areas of academia.

Not only that, but the bulk of academic research, regardless of whether it is carried out at private or public universities, is publicly funded through grants.

PGL,

prohibiting mandatory bundling would be a good step, but it will not get at the root of the problem.

under my proposal, the contractors would have to pay textbook authors to write books, just like now. The only difference is that they get the money in advance, rather than as a monopoly rent.

Space, there is certainly a market for a la carte textbooks. It's publishers who are reluctant to provide that option. I used to ask publisher reps why not and the answer was always the same: we wouldn't be able to make money that way.

Now they're providing more options for a la carte selections--I use an a la carte logic textbook that's 1/4 the price of the full version. But publishers still don't all provide that option. More and more are promoting a la carte selections, course-packs and the like though because they know that we're starting to put together our own stuff. The market is working--slowly: we're approaching the tipping point at which the expense, poor quality and sheer bulk of available textbooks will outweigh the costs of do-it-yourself--the hassle of putting together your own book and the residual discomfort of some academics with technology.

Another thing I think many are nervous about is student response. Will a shiny, full-color textbook make them like the course, and us, better--and give us better course evals? Will they get mad at us if the technology isn't absolutely smooth? I can take these risks because I'm tenured, but many can't.

Most students use second hand textbooks, which are sold by university bookstores as well as used book stores. they don't care if there are newer editions, as long as they have a book that allows them to pass the course and get their nearly worthless degree.

You're confusing the (legitimate) copyright issue with the (legitimate) cost of textbooks issue.

Cut the copyright limit to 10 years. Fine. What does that do to the prices of textbooks, which generally are rewritten every 3-7 years, 10 at the outside? Bupkis.

No problem whatsoever with the idea that textbooks are too expensive: that I can go online and (1) buy the Indian edition from (2) a seller in Dallas, TX who (3) probably initially paid shipping costs for 1/3 (or MUCH less) the price of that same book as a new hardcover indicates that the market is not efficient.

But nothing in the supply chain has anything to do with the length of copyright, even under the most limiting case suggested above.

Ken Houghton wrote, What does that do to the prices of textbooks, which generally are rewritten every 3-7 years, 10 at the outside? Bupkis.

Wrong. For example, when a calculus textbook goes off-copyright, that means all of the questions are public domain and don't need to be reconstructed. Ditto figures in many other books.

The particular charade of rapidly changing versions to eliminate a secondary market in used textbooks wouldn't be directly affected, but it would make it far easier to construct open source, free textbooks than it is now.

I'm interested in what "going off copyright" means here. Suppose the nth edition of blah-blah's baby logic textbook is out of copyright but in the n+1th edition of blah-blah recycles the same exercises (as he does). Can I use these problems? If I just change the letters in the natural deduction derivations, can I use them? If I change the order of lines, can I use them?

Truly, this is the big issue for me and I think quite a number of us. Making up these exercises is a big deal and I basically buy the customized versions of the text book I use--3 chapters at about 1/4 of the cost of the full version textbook--for the exercises. Maybe in a year or two I'm going to cut the cord but I am just wondering what constitutes, e.g. the same natural deduction problem. I work pretty hard to contrive new problems for tests, and contriving lots of new problems would take lots of work.

I actively encourage students to get cheap old copies of the text I use that are readily available as trash or at thrift stores for a few cents--they just need to have the exercises which haven't changed. The brutal fact of the matter is that the exercises are what matter--I've just been to a "focus group" at my professional society conference in which we pretty much agreed on this. To be honest, I'm also sick of blah-blah's exercises which have appeared in every new edition and would like a little more intellectual stimulation.

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