Changing Educational Uses

288

March 3, 2000

The stock photo industry needs to totally revise its pricing model for uses in
educational publishing as it takes into account new methods of distributing
educational content.

For more than twenty five years prices for photo usages have been based on the
assumption that a publisher would gather material for a title and order the
material in a certain logical format with a fixed number of chapters. This
package, or book, was then sent for printing. Given the costs of press time,
marketing and distribution certain minimum press runs were necessary, or the
project would never have been started in the first place.

Once a first edition was nearly sold out, the plates might be put back on press
to print another edition, or certain revisions might be made to the original
text. In some cases books would be translated into another language and a
separate edition would be printed in that language. Again the assumption was
that given the basic costs of printing it would be uneconomic to print in
another languarge unless a certain minimum number of copies were produced.

Today's Reality

• With print on demand technology it is possible to print one custom
  book at a time. Publishers are now offering students several options for
  receiving a particular text that has been selected by their professor. The
  student can get it in book form and often it will be printed-on-demand. The
  student can access the full text on-line. Or, they can get it e-mailed to them
  chapter by chapter on a regular basis. In some cases they can get it by fax.
  

  
  

• Professors no longer have to choose between books publishers have
  designed. Now they can design their own book to fit the specific needs of
  their class. They can take one chapter from book A, 4 chapters from book B, 12
  from book C, include a report from an association, write a couple chapters
  themselves, and have it all bound, by the publisher, in a custom volume which
  students can purchase.
  

  
  

• Glencoe has a three book series called Biology: The Dynamics of Life for
  6th, 7th and 8th grades. To date they have sold over 100 versions of these
  books. In most cases this occurred because they moved chapters around to
  comply with the way the course is being taught in certain school systems.
  

  
  

• In another situation a publisher expects to sell 265,000 copies of a book
  currently being edited. Of course, this is an estimate, not a guarantee. The
  publisher is seeking to license use of content at the "Under 40,000" rate.
  Presumably the publisher will pay more if they sell over 40,000 copies. In the
  past year sellers have started receiving more frequent requests to bill for
  print runs over 40,000
  

  
  

• Electronic translators are getting better and better. In the near future
  it will be less expensive to translate an English text into some second
  language and publish short runs of a book in that language.
  

  
  

• The college division of Houghton Mifflin is developing 50 to 60 new web
  sites a year to support their various products. Traffic on these sites has
  followed the "hockey stick" model over the past 18 months (slow steady growth
  at the start and then a very rapid rise in a relatively short period of time).

  
  

• The internet has provided a variety of sales channels through which
  publishers may sell the information in their books. The number of channels is
  likely to be expanded in the future.

Internet

For educational publishers, the internet is dramatically altering their
approaches to marketing their products. It provides an opportunity for them
deal directly with the buyer. It also helps them understand the motivations of
these buyers.

In the past, book publishers focused most of their marketing toward professors
in hopes that they would adopt the publishers books for their course.
Secondarily, they marketed to book stores, but if the professor failed to
choose their book the publisher was basically out of luck. The student -- the
person with the money to actually buy the book -- had little understanding of
who the publishers were, or the distinctives of any particular publisher.

Now, through the web, publishers can find out who the buyers are and deal with
them directly. In addition to selling a book, they can determine what other
support materials the student needs.
If the publisher's book isn't chosen by the professor, the publisher may still
be able to sell a couple chapters to the student.

Through this interaction publishers are learning that students are more willing
to pay for tutorial information than additional ancillary information. Users
are also willing to pay for better functionality and systems that reduce the
amount of effort they have to go through to get information.

Publishers have learned, over the years, that once their product is selected by
a professor there is an average "sell through" of only 60%. That means for
some reason 40% of the students choose not to buy the book even though it is a
class requirement.

Mark Roller, Associate Director of Technology at Houghton Mifflin's College
Division says that early on-line sales statistics indicate that if part, or
all, of a book is available on the web there is a greater sell through of
printed copies of the book. To date there is not enough data to conclude that
there is a direct causal relationship, but it is possible that availability of
information on a web site could lead to more, rather than less, printed books
being sold in the future.

Because their brands are not well known among buyers, publishers are partnering
with other site operators who for one reason of another have the attention of
students/buyers. Most of these sites are attractive to students because they
offer something for free.

Many sites make money through advertising and by selling names and information
about the student rather than by selling content. In most cases, the publisher
gets access to student information in addition to a fee for making the
information available. The dilemma for the publisher is in determining how
much free material to give away, and what to sell at what price points.

Copyright holders need to think about two separate and distinct compensation
models for such material. If the copyright holder's material is sold it is
easy to see how compensation should be based on usage or some type of royalty
model. But, it is much harder to determine fair compensation for material that
is given away, in effect to advertise the brand, or other products which will
be sold.

In some cases students pay a subscription fee for access to a group of assets.
It is unclear whether the copyright holder share of these fees is being divided
proportionally among all whose work is included in the group, or if actual
usage is tracked and payment is given only to those whose work is actually
used. The model for this type of payment might be Index Stock Imagery's
relationship with the people who produce "Homework Helper". However, we have
no guarantee that all book publishers will use the same model.

While all these options are available, Mark Roller says that, "Currently, over
90% (of on-line buyers) still pick a printed text." He says this is probably
due to their price structures, and they are studying other pricing models that
might make web use more attractive. He also acknowledged that students like to
print the material they get on-line and most of them print a lot initially.
Once they get into the digital version they print less and less.

Roller also indicates that the web model is turning out to be lucrative and a
profitable line of business for the publisher.

Visual Information On-line

Looking ahead, I think we need to ask ourselves how important the pictures will
be, and the kind of pictures that will be needed, if
the percentage of students getting information on-line, and printing it out on
a desktop B&W printer rises significantly? Will they need as many still
pictures? Will they want as many still pictures in the on-line environment as
they get in the paper books with glossy color printing? Will this change the
editing strategies for books or, at the very least, for those portions of books
that are offered on-line?

In the book environment one of the principle functions of images has been to
break up the black type and give the product a more user friendly appearance.
Often the actual useful additional information that the photo provides about
the topic is secondary to its role of catching the readers interest. Will
still photos serve the same functions on the web, as they do in print? Will
photos be an aid to the person who is getting information off a computer
screen, or will they be a distraction? Will the kind of visual content that
helps to draw the student to a particular text be video rather than still
images?

As producers and sellers of still images we can put our heads in the sand and
say these issues are not our concern -- until suddenly one day we are faced
with new realities. It might be better to gather information now, try to
educate ourselves and our customers, and be prepared for the changes.

New Systems Needed

There needs to be a dialogue between publishers, leading sellers of content to
textbooks, and representatives of individual suppliers. The sellers need to
get a better understanding of how rights to content may be licensed in the
future and develop new strategies for pricing uses that will insure a
continuing flow of new material and equitable compensation for both content
providers and publishers.

Some of the points that need to be on the agenda are: