Tolstoy, Economics and OER

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David Wiley wrote a recent blog post that had me scratching my head. In the post, David argued that OER is in a feature of the resource, not who is providing it and whether the provider is offering it for free. This whole thing got me thinking about OER, commercial publishers and non-profit providers.

I know there are people who are opposed in principle to publishers who charge for their products in order to make a profit. I don’t have a problem with profit. If a chef opens a restaurant in my community and offers good food at a reasonable price, I am happy if they make a profit with the business, because that means they are likely to stay around. What I do have a problem with is excess profit. My favorite example, which some of you will remember, is Blockbuster Video. Blockbuster offered lousy service and charged too much. But they were the only game in town, so if you wanted to watch a video that night, you pretty much had to go to Blockbuster.

The first rule of economics is that nothing is produced for free; if it’s free to use, someone else is paying. This is not a moral judgment. Rather, it’s a fact of life. Everything (or almost everything) has a cost to produce. Image of Leo Tolstoy dressed in peasant clothing

Leo Tolstoy gave up the copyright to his early novels, and adopted a peasant lifestyle.   I can’t imagine what his family thought of that. Most of us are not like Tolstoy. We all need to provide for ourselves, and our families. When I helped write OpenStax’ Principles of Economics, I was paid a reasonable stipend to compensate me for the time. It didn’t make me rich, but it was enough. If I was one of those heroic authors, like my colleague Caitie Findlayson, who writes an open textbook without the support of any publisher, I would be able to do it only because I had the luxury of time as part of my professional responsibilities as a tenured faculty member. In other words, I would be implicitly compensated by my institution, but the cost would be the other scholarly work I wasn’t able to do in that time. There is always an opportunity cost. If I was working 9 to 5 somewhere, I wouldn’t be able to do the project at all.

OpenStax is a nonprofit organization. Where did they get the money to pay me, and to pay the other expenses of producing the book? The answer is grant funding. Grants are great, but they run out. Then what? How does OpenStax pay for the servers on which the book resides? How do they pay for updates and corrections? How do they pay for new editions? This is a perpetual challenge for non-profits. As far as I can tell, OpenStax has a four-pronged approach:

  1. They ask for donations. I don’t know how successful this us, but I suspect it’s not much.
  2. Ten percent of their adoptions are in print form. They sell these at slightly over cost, which means those copies generate some revenue.
  3. They look for more grants, but granting agencies prefer to fund new books to maintaining existing ones.
  4. They find commercial partners to work with, like Sapling Learning. Sapling offers the OpenStax text with online end-of-chapter problem sets and quizzes. In return, Sapling gives OpenStax a modest kickback, and then OpenStax markets the Sapling option. (I mention Sapling because I used their product after I adopted OpenStax. OpenStax has many more partners than Sapling.)

Do people criticize OpenStax because of their affiliation with Sapling who charges a fee for the book plus ancillaries? I may be wrong, but I don’t think so. Do they criticize OpenStax for openly allowing Sapling to use their open texts? I’ve not heard that criticism. Have people criticized Sapling for exploiting the open license of OpenStax? I haven’t heard that either.

The elephant in the room is commercial publishers who are beginning to offer OER wrapped in a package for a price. Traditional proponents of OER are rightly suspicious of commercial publishers who are new to the OER field. Commercial publishers have a long history of charging very high prices for textbooks, higher than can be justified by costs.

Take “Inclusive Access” for example. If you’re not familiar, Inclusive Access is a marketing venture by commercial publishers to rent digital texts to an entire class for a discounted price. Students are on the hook to their university for the bill, unless they opt out, so the “nudge” is in the wrong place. Inclusive Access strikes me as akin to OpenWashing. While the digital text is cheaper than a new print edition, at my school at least it’s not very cheap, coming in a bit under $100. It’s a pretty good deal for the commercial publishers, since the marginal cost of a digital copy is about zero. And Inclusive Access is certainly not OER since the access goes away at the end of the term.

When is it legitimate to charge for OER? Like any product, charging is appropriate if the product adds value, in this case to the OER. Sapling added value to OpenStax Principles of Economics because it offered a feature that OpenStax didn’t have. The problems & quizzes helped students learn better than just with the text alone. Similarly, Lumen Learning adds value in its Waymaker platform for the same reason.

Of course, one can argue that the value added isn’t worth the price. In the older model of commercial publishers, they charged for the book and then offered the ancillary products, including online quizzes and problems for free. But the package was pricey. Cengage is currently charging over $200 for their market leading Principles of Economics book.  That price has come down from its original $385.  Sapling charged about $40 for its product, which included OpenStax Principles of Economics. Lumen Learning charges $25 for its Waymaker Principles of Economics. Sapling struck me as a bargain for what it offered my students. Waymaker, which I’ve used for the last three years, is even better, especially since my own statistical analysis has shown that the average student does at least as well with Waymaker as with the previous commercial text I used. Perhaps more importantly, Waymaker seems to help weaker students more than stronger ones.

Commercial publishers have traditionally charged too high a price for their books two reasons: First, because they have a higher cost structure (due to their large sales force). Second, they have exploited their market power to charge more than a reasonable price for their products. Netflix mailing envelope w/DVD insideMonopolies often fall when a technological improvement creates better alternatives. Thus, Netflix supplanted Blockbuster.  Only when OER came on the scene did cracks appear in the commercial textbook oligopoly. (For non-economists, an oligopoly is an industry dominated by a small number of firms that exploit their joint monopoly power.) Newcomers like Sapling brought textbook prices down to under $50. And Lumen Learning brought them down to $25. Is $200 too much to ask a student to pay for a textbook? In my opinion it is, especially given the alternatives. Is $25 too much to ask? I’ve asked my students that question every semester that I’ve used Waymaker, and no student has ever said yes.

Lumen Learning deserves some kudos: For every course for which they offer their Waymaker value-added OER, they also offer a free version of the Waymaker content without the added features. This free version is openly licensed to include the 5Rs. It’s hard to ask more than that.

Disclosure: I’m the lead subject matter expert for Waymaker Principles of Economics and I’ve taught with Waymaker for the last three years.

 

Image credits:

OpenStax website

Image By Ilya Repin – ugFXC9F7-NWM9Q at Google Cultural Institute maximum zoom level, Public Domain, https://commons.wikimedia.org/w/index.php?curid=21854099

Image Netflix courtesy of Abhijit Bhaduri via flickr.com

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One Response to Tolstoy, Economics and OER

  1. Sue Erickson says:

    I appreciate the economist’s viewpoint on the situation. Great post!

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