It is by no means obvious that a lower-cost book (yes, like my own) works less well for students than a higher-cost book from a big publisher. Some would put that point more strongly.
Yes, I know that professors do not care much, if at all, about the prices of the textbooks they select for their students, but that is not the only reason that prices are so high.
Another factor is that the industry is similar to venture capital and pharmaceuticals. The organizations that fund projects in these areas incur heavy expenses on failures. A lot of textbook projects fail. The author may not even finish the book. Or it will flop in the market.
For a VC firm to stay in business when most of the companies that it funds wind up failures, it has to earn spectacular returns on its successes. For a pharmaceutical firm to stay in business when a lot of its research fails to yield a marketable compound, it has to charge a lot for those drugs that do make it. And for textbook publishers to stay in business when many of their projects flop, they have to charge a high price for the books that do sell.
Advances in technology have made it easier to produce a textbook at low cost. However, by the same token, it has probably increased the probability that any given textbook will fail to get a toehold in the market. So the overall economics of the business still requires publishers to absorb a lot of failed-project costs.
If the most likely reason textbooks are expensive is the VC explanation (“for a VC firm to stay in business when most of the companies that it funds wind up failures, it has to earn spectacular returns on its successes”), then I would argue that textbook selection (demand push driven by teachers) could be the most important reason. What is compelling informed students to demand that the market invests so much time and effort developing new Mechanics, Thermodynamics, Macroeconomics, Effective Writing,….(ad infinitum) textbooks (or revisions to original editions) at the cost of these cost-risk premia?
Charging high prices only works if there is not sufficient competition from lower-priced alternatives. If *all* textbooks were equally expensive, you would have a case. But if there are equally good low-priced alternatives, one has to wonder about the robustness of the market in textbooks. The consumers (students) are not making the choice, the professors are. If they insist on assigning high-priced books, there is little the student can do. This reminds me of the situation in enterprise software. The IT managers choose the software, but the workers are forced to use it. When the workers choose the software, it becomes cheaper and better (for the users).
There’s a very close analog to textbooks – the various computer language tutorial books produced by O’Reilly and others. Like textbooks they contain detailed technical information and must be constantly updated.
“Learning Perl, 6th Edition: Making Easy Things Easy and Hard Things Possible ” looks a lot like a texbook and costs about $35 or so. And there are hundreds of similar titles and similar costs.
Somehow all the VC type reasons for textbook expense don’t seem to apply in this market.
“So the overall economics of the business still requires publishers to absorb a lot of failed-project costs.”
This analysis makes sense for dynamic fields with shifting mainstream understandings or ongoing controversies, and in which the pedagogical low hanging fruit has not already been picked, so that there is still plausibly some room for new ‘breakthrough’ innovations that somehow increase educational productivity.
But it doesn’t at all explain why any professor would assign the latest, 2014, “10th edition!” of a multivariable Calculus Book, which is practically indistinguishable from one printed 20 years ago. (I saw this recently at my own Alma Matter’s bookstore on a recent visit).
For instance, let’s take a look at the book for George Mason’s Fall 2014 offering of Math 315, “Advanced Calculus I”: The Way of Analysis by Robert Strichartz. Buy New for … $224.65! Whoa. Talk about sticker shock.
Yes, there are the now standard ways to reduce the cost to students. You can ‘rent’ it, or get it used, and also try to resell it. But those coping mechanisms have emerged precisely because the book cost is so outrageous.
No disrespect to Strichartz or his publisher or the professor who picked this book, but in this field the same learning objective could be achieved with a free book that entered the public domain a half century ago.
Textbook publishing is an oligopoly with tacit collusion. Everybody makes more money if prices are kept high. Add to that agency problems – the person assigning the book doesn’t have to pay for it – and you get the current situation.