Disrupition of Business Model

Last night I was watching a movie about The Temptations and  I was struck once again by how much the business model of the music industry has changed. And how much the business models of the publishing industry are being changed. 

Before the digital disruption that was initiated by Napster, the business model centered around the record company and its agents.  The record companies determined what artists were successful and what music we would hear.  The record companies controlled distribution and music was available for purchase in retail stores.  Now we look at the plethora of business models in the music industry in the redistribution of power and profitability they brought to the industry participants.  Music can be purchased by individual song (e.g. iTunes) or albums, through subscriptions to services which provide all songs as long as your paid subscription is maintained current, through selective paid services which offer choice of music genre or type, but not individual songs (e.g. satellite radio), and through free services which are either customized (e.g. Pandora) or generic (e.g. FM radio) and supported by advertising.

It's interesting to apply these models by analogy to the publishing industry and in particular to the textbook publishing industry.  Looking back only a few years, we can see, the textbook publishing industry using models are analogous to those that we saw years ago in the music industry.  The major publishers control the selection of authors, content, production and distribution of textbooks.  But things have changed rapidly.  We see some of these same business models as we saw in the music industry, already established in the textbook publishing industry and competition building in several of the arenas.  For the purposes of this discussion, I will be considering only digital textbooks, not paper textbooks. In the arena of individual purchase we see bookstores such as Amazon (i.e. Kindle), Barnes & Noble (i.e. Nook) and Apple (iTunes) competing to sell individual books.  They are employing different proprietary technologies to try to lock users into purchasing only from their stores or to read books that have been distributed only by them.  Publishers are also selling directly through websites. 

Subscription business models for textbooks also exist already in the marketplace.  These include CourseSmart, and eChapters, for example.  Both of these services provide students with access to the digital textbooks online and through multiple devices whenever and wherever they want to access them.  These services are currently more narrow than the music subscription services, in that the student subscribes only a single textbook for a set duration of time, typically a semester.  That time period can be extended.  We can expect to see these subscription models expanded to include access to multiple textbooks for a duration of the course study.  It is likely that this expanded model will be done in conjunction with either universities or departments within universities.

Other business models are also emerging, which are similar to the custom music services business models.  However, because of differences in the industries, the selection of content is being driven more by intermediaries, namely professors or instructors, then by the ultimate consumers (the students).  Custom textbooks and remixes (to borrow a term from the music industry) can be created by faculty through Flat World Publishing.  This ability enables the creation of unique textbooks with quality content tailored to the individual professor's class and teaching style.

The controversy over providing advertising to students within the body of the textbooks has delayed the emergence of the advertising supported free textbooks for students.  However, I would not be surprised to see this model available within the next year.  This model may make its first emergence through the bundling of textbooks with textbook eReader devices.

What do you think?  


Mitchell Weisberg