Flat World Knowledge’s “Freemium” Textbooks Gain 140,000 Users, Average $34 Per Sale

In Feature Articles by Guest Contributor

• Flat World Knowledge, a three-year-old textbook publisher, has released 24 titles which are now in use by 140,000 students at over 800 universities in the United States and another 50 abroad.

• The company allows students to read the textbook for free online, while selling them POD, e-book and other editions. Over half of users opt for these additional formats, with the average transaction being $34.

• Published under a Creative Commons license, the textbooks can be adapted by professors to suit their needs. While the idea is “counterintuitive” to many authors, it offers the potential for longer-term profits than a traditional publishing model, argues Flat World Knowledge co-founder Eric Frank (seen at right).

By Edward Nawotka

IRVINGTON, NY: The “freemium” publishing model, advocated by proponents such as author Chris Anderson and that has been popular with computer software, is now making in-roads into academic textbook publishing. Case in point: Flat World Knowledge –- the three-year-old textbook publishing company that offers students the ability to read their books online for free, while selling them a variety of alternative formats and add-ons, including POD editions, e-books (in epub, .mobi and PDF formats), audiobooks, and study aids, such as interactive quizzes and flashcards.

Launched in 2007, the company has since published a total of 24 textbooks; with the first, Launch! Advertising and Promotion in Real Time by Mike Solomon, going live online in March 2009. At present, some 1,300 professors at 800 different colleges in the United States (a majority are community colleges), and some 50 throughout Asia, the Middle East, and Europe, have adopted the books.

In all, some 140,000 students are expected to be using Flat World textbooks in the coming semester, with more than half of those expected to buy add-ons.

“The average transaction value for students buying alternative formats is $34,” says Flat World co-founder Eric Frank, “So, that’s a significant spend.”

Why Free?

Frank and business partner Jeff Shelstad launched the company after a stint working together in the Business Economics and Computing Group of Prentice Hall, where the pair had run marketing and editorial, respectively. “We realized at the time that students and faculty were both frustrated with the cost of textbooks and turning to the internet for lower-priced alternatives,” says Frank, via phone from the company’s offices in Irvington, NY.

“The textbook market had been shrinking and to offset the decline in sales, publishers had been hiking prices,” says Frank. “They justified this by making superficial changes to textbooks or bundling them with CD-ROMs and other things, thus creating a unique ISBN. It all made perfect sense for publicly traded companies trying to preserve revenue, but it was also throwing more fuel on the fire. We thought the market was being underserved.”

He adds, “Our believe is that the average student is out there looking for the lowest cost textbook. So, instead of driving them to a pirated version, we went to the end conclusion and gave it away for free.”

Customizable, Creative Commons Textbooks

Perhaps even more disruptive of all the changes Flat World Knowledge has made was the decision to publish all the company’s titles under a Creative Commons license (see this page for an explanation of how it is being used in education) thus allowing professors to customize the books as they see fit. Professors using the books have the ability to delete chapters, drag-and-drop sections, and add notes. At present, “just over 30% of the books in use will have been customized by faculty,” says Frank. The company plans to release new editing tools in December that will allow professors to upload their own documents to be included in the book, as well as allow for line-level editing of the text.

The company pays no upfront advances, but offers a 20% royalty rate on all sales associated with the book in perpetuity. “But that is sustainable,” says Frank, “because you don’t have cannibalization and loss of sales because of used books. Alternative format sales where the author makes money continues through semester one, two, three and on into the life of the book.”

“Yes, publishing under a Creative Commons license is counterintuitive to most people,” adds Frank, “but they come around once you explain it to them and I believe authors will be able to earn equal and greater income, over time, than with a traditional publishing model.”

He argues that customization means that authors will end up with more loyal and happier customers, who in turn become a “sticky” customer base. Another benefit to the authors is that since the books are customizable, and all changes are recorded by Flat World, the author can see first-hand how the book is being altered, allowing them to aggregate this information and eventually edit the book accordingly.

Profitability? Credibility?

Frank admits that it is too soon to say exactly when the company will be able to match the same sales revenue from the add-ons that the company might have achieved had it gone to a traditional publishing model. “We estimate that it will happen around the fifth semester that a book is available,” he says, “so sometime next year.”

Nevertheless, the company is forging ahead with an ambitious publishing schedule. It currently has some 70 authors under contract to produce another 100 textbooks and they are rapidly expanding beyond business and marketing titles. Flat World’s first non business-related title, Introduction to Psychology by Charles Strangor, is being released in October, with others forthcoming in the fields of science, applied science and mathematics. To date, the focus has been on introductory “101”-type textbooks, but more advanced course materials are in the works.

As with any new textbook company, the issue of developing credibility is the key. Aside from recruiting A-list as well as up-and-coming authors into their fold, the true test will come from professors and whether or not they recommend the books to their colleagues.

“Our belief is that credibility comes from authors not publishers, profs join the authors tribe and not the publishers tribe,” says Frank. “We want to throw the bucket of cold water on that perception that the publisher is important — it’s the author. As proof, we are starting to see see momentum and it’s viral,” says Frank. “The 1,300 professors using our books is triple from a year ago. The first group who adopted the books saw a quality book that can solve the price problem for students. Then they have a high level of control. Some 49% came to us through hearing about us through PR or through a peer. Another 67% ended up adopting without speaking to a rep from the company.

“That,” he adds, “speaks for itself.”

DISCUSS: What is the future of “Freemium” in book publishing?

About the Author

Guest Contributor

Guest contributors to Publishing Perspectives have diverse backgrounds in publishing, media and technology. They live across the globe and bring unique, first-hand experience to their writing.