The Economics of iPublishing

Now that  Apple's latest media disruption announcement has been marinating for a day, education experts and publishing pundits are starting to ask some curious or (dare we say) suspicious questions.

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Now that Apple's latest media disruption announcement has been marinating for a day, education experts and publishing pundits are starting to ask some curious or (dare we say) suspicious questions. With the new and improved iBooks platform, Apple makes its way into the textbook business, not only offering an innovative way to design content for the classroom but also an interesting business model to make it affordable for schools and students. And it's exciting new technology! Not only will the new iBooks realize the possibilities of interactive textbooks, but Apple also announced a free self-publishing app called iBooks Author that lets anybody create and sell an e-book as well as iTunes U, a new portal for education-related content. Let's cut to the chase, though: How much money is Apple trying to squeeze out of writers, readers, students, and teachers with this new publishing venture?

Based on our initial assessment, the simple answer seems to be: not as much as they could be squeezing. The more nuanced version of that narrative is, err, more nuanced. Apple is a for-profit company with a well-documented history of bending its money-making pursuits in the name of education. (Steve Jobs willed it so, and Jobs's will be done.) However, there's also the rest of the publishing industry, a slow-moving ship that's been sinking thanks to technology torpedos like Amazon's Kindle. Apple and Amazon are competitors -- no doubt about that -- which makes the economics of iPublishing a particularly interesting study. We've broken it up into three parts: textbooks, e-books and iPads.


Textbooks are big, heavy and expensive. iPads are compact, light and very expensive. However, if you set aside the question that the vast majority of students won't be able to afford the $500-plus price of an iPad, Apple's business model for selling textbook is pretty appealing from an economic standpoint. Apple senior vice president of global marketing Phil Schiller explained that Apple would keep a lid on the price of textbooks. "Apple is committed to a $14.99 or less price point, and apparently have their publisher partners on board with that," MG Siegler writes, summing up the details at TechCrunch. "Peter Kafka has a good explanation as to why publishers would agree to such a price cut (long story short, they’ll do just fine financially thanks to boosted volume)."

First of all, the layers of name dropping in this last paragraph is a good sign that everybody has something to say about Apple's more assertive move into education and publishing. But secondly, Apple is also making efforts to make the content itself affordable. As soon as Apple set the webpages explaining the new iBooks Textbooks live, it also updated its education portal with new details of a bulk buying program. "The Volume Purchase Program allows educational institutions and businesses to purchase iOS apps and books in volume," the FAQ explains. Click through to read all of the fine print, or take the emphasis on content as evidence that Apple will continue to sell iPads as its always sold iPads: expensively. The content, so far, looks fairly affordable.


We ought to just come out and call this section "do-it-yourself e-books." (So many dashes!) But really Apple is presenting a unique deal with iBooks Author. As PaidContent's Laura Hazard Owen pointed out in a Friday morning blog post, the fine print that goes along with Apple helping you produce an e-book is complicated. To borrow her word, the rules are "audacious" but there's sort of a catch. "Apple says that e-books created in iBooks Author must be sold exclusively through the iBookstore, Owen explains. "Authors can only distribute them elsewhere -- through their own websites, for instance -- if they are free." It's unclear how much of a cut Apple will take, but the company did put $14.99 as a price ceiling, in an effort to keep e-books affordable. Publishers don't love that idea, but they're obviously willing to go along with Apple's plan.

Some equated this to Microsoft the distribution of a Word document, but others pointed out that it poses a very interesting possibility for the free spread of knowledge. And as always, if you don't like Apple's rules, you can sell your book through Amazon or another venue. "It’s the book Apple cares about -- the final product the program generates, not the content you put into it," blogger Frederic Lardinois wrote soberly after the announcement. "iBooks Author is, in the end, just a tool for laying out your content so it looks nice on the iPad. Nobody is stopping any author or publisher from using another tool to sell the same content on another platform."


Apple opened its announcement keynote at the Guggenheim Museum with a lot of stats about iPads. Most relevant to this announcement, there are 1.5 million iPads being used in schools and other educational institutions, and more than 20,000 education-related apps. Compared to global iPad sales and App Store figures, these numbers seem low. Apple is also capping the price on textbooks at $15 and giving away an publishing app for free, inviting authors to give their e-books away for free.

Are they finally becoming an everyman's technology company? Who knows. What we do know is that Apple is taking publishing more seriously, and mixing up the economics of the content itself, we'd guess, with the longterm goal of making the iPad a single device that can do everything in schools and elsewhere. The Atlantic's Megan Garber highlights a fascinating passage from James Bowen's A History of Western Education that sounds almost proto-Jobsian in its minimalism:

Both Donatus' grammar, composed in the fourth century A.D., and Alexander's of 1199 were designed for the minimum classroom, that is, one consisting of the barest elements: a master reading or expounding to pupils seated on forms, with no further necessary equipment such as a blackboard or writing equipment -- desks, pens, ink, and paper.

Garber latched on to the phrase "minimum classroom," and in the larger framework of the economics of iPublishing, so have we. Before he got married, Steve Jobs lived a minimal lifestyle in an apartment bare except for a bed, a table, a chair and a lamp. (He might've had a couple other things, but the fable of Steve Jobs is best told like a fable.) Schiller alluded to the original Guttenberg moment that brought about the era of the printed book. He also talked about the problem of kids having to carry around so many tools, just to learn. So if students can trade in their desks, pens, ink and paper for a single device that connects them to the rest of the world and allows them to write their own books, we can see the benefit of a minimal classroom. That is, if Apple figures out a way to make the iPad affordable for everyone. That possibility remains to be realized.

This article is from the archive of our partner The Wire.