[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
                 ARE COLLEGE TEXTBOOKS PRICED FAIRLY?

=======================================================================

                                HEARING

                               before the

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             July 20, 2004

                               __________

                           Serial No. 108-70

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Cass Ballenger, North Carolina       Major R. Owens, New York
Peter Hoekstra, Michigan             Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon,           Robert E. Andrews, New Jersey
    California                       Lynn C. Woolsey, California
Michael N. Castle, Delaware          Ruben Hinojosa, Texas
Sam Johnson, Texas                   Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania     John F. Tierney, Massachusetts
Charlie Norwood, Georgia             Ron Kind, Wisconsin
Fred Upton, Michigan                 Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan           David Wu, Oregon
Jim DeMint, South Carolina           Rush D. Holt, New Jersey
Johnny Isakson, Georgia              Susan A. Davis, California
Judy Biggert, Illinois               Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania    Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio              Ed Case, Hawaii
Ric Keller, Florida                  Raul M. Grijalva, Arizona
Tom Osborne, Nebraska                Denise L. Majette, Georgia
Joe Wilson, South Carolina           Chris Van Hollen, Maryland
Tom Cole, Oklahoma                   Tim Ryan, Ohio
Jon C. Porter, Nevada                Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director
                                 ------                                

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

            HOWARD P. ``BUCK'' McKEON, California, Chairman

Johnny Isakson, Georgia, Vice        Dale E. Kildee, Michigan
    Chairman                         John F. Tierney, Massachusetts
John A. Boehner, Ohio                Ron Kind, Wisconsin
Thomas E. Petri, Wisconsin           David Wu, Oregon
Michael N. Castle, Delaware          Rush D. Holt, New Jersey
Sam Johnson, Texas                   Betty McCollum, Minnesota
Fred Upton, Michigan                 Carolyn McCarthy, New York
Vernon J. Ehlers, Michigan           Chris Van Hollen, Maryland
Patrick J. Tiberi, Ohio              Tim Ryan, Ohio
Ric Keller, Florida                  Major R. Owens, New York
Tom Osborne, Nebraska                Donald M. Payne, New Jersey
Tom Cole, Oklahoma                   Robert E. Andrews, New Jersey
Jon C. Porter, Nevada                Ruben Hinojosa, Texas
John R. Carter, Texas                George Miller, California, ex 
Phil Gingrey, Georgia                    officio
Max Burns, Georgia



                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on July 20, 2004....................................     1

Statement of Members:
    Kildee, Hon. Dale E., Ranking Member, Subcommittee on 21st 
      Century Competitiveness, Committee on Education and the 
      Workforce..................................................     5
    McKeon, Hon. Howard P. ``Buck'', Chairman, Subcommittee on 
      21st Century Competitiveness, Committee on Education and 
      the Workforce..............................................     2
        Prepared statement of....................................     4

Statement of Witnesses:
    Fairchild, Merriah, Higher Education Director, California 
      Student Public Interest Group, Sacremento, CA..............     7
        Prepared statement of....................................     9
    Fleischaker, Marc L., Legal Counsel, National Association of 
      College Stores, Arent Fox PLLC, Washington, DC.............    13
        Prepared statement of....................................    15
    Isley, John, Executive Vice President, Publishing, Planning 
      and Business, Pearson Higher Ed and Professional 
      Publishing, Pearson Education, Boston, MA..................    18
        Prepared statement of....................................    20
    Monroe, Virgil, Manager, Textbook Services, University of 
      Wisconsin-River Falls, River Falls, WI.....................    26
        Prepared statement of....................................    27

Additional Material Supplied:
    Thomas Higher Education, statement submitted for the record..    41

 
                  ARE COLLEGE TEXTBOOKS PRICED FAIRLY?

                              ----------                              


                         Tuesday, July 20, 2004

                     U.S. House of Representatives

              Subcommittee on 21st Century Competitiveness

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 1:58 p.m., in 
Room 2175, Rayburn House Office Building, Hon. Howard 
P.``Buck'' McKeon [Chairman of the Subcommittee] presiding.
    Present: Representatives McKeon, Ehlers, Osborne, Carter, 
Gingrey, Burns, Kildee, Kind, Wu, Holt, McCollum, Van Hollen, 
Ryan, Payne, and Andrews.
    Staff present: Kevin Frank, Professional Staff Member; 
Alexa Marrero, Press Secretary; Catharine Meyer, Legislative 
Assistant; Deborah L. Samantar, Committee Clerk/Intern 
Coordinator; Kathleen Smith, Professional Staff Member; Linda 
Stevens, Chief Clerk/Assistant to the General Counsel; Ellynne 
Bannon, Minority Legislative Associate; Ricardo Martinez, 
Minority Legislative Associate; Alex Nock, Minority Legislative 
Associate/Education; and Joe Novotny, Minority Legislative 
Assistant/Education.
    Chairman McKeon. Good morning. The Subcommittee on 21st 
Century Competitiveness of the Committee on Education and the 
Workforce will come to order.
    We're holding this hearing today to hear testimony 
addressing the question, are college textbooks priced fairly?
    I am happy to announce that we have a couple of former 
Members in the audience, and I would like to recognize them. 
Pat Schroeder from Colorado, and Bill Latchford from 
Connecticut. Thank you both for being here.
    Under Committee rule 12(b), opening statements are limited 
to the Chairman and the Ranking Minority Member of the 
Committee. Therefore, if other Members have statements they 
will be included in the record. With that, I ask unanimous 
consent for the hearing record to remain open 14 days to allow 
Members statements and other extraneous materials, referenced 
during the hearing, to be submitted to the official hearing 
record.
    Without objection, so ordered.

    STATEMENT OF HON. HOWARD P. ``BUCK'' McKEON, CHAIRMAN, 
  SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS, COMMITTEE ON 
                  EDUCATION AND THE WORKFORCE

    Good afternoon, and happy to welcome you here. I mentioned 
to the witnesses that we are expecting votes to be called 
momentarily, but we're going to try to get in our opening 
statements, and then go over and vote.
    This is a continuation in the series of hearings that we 
have held over the last year or so to examine rapidly rising 
college costs and seek solutions to help increase college 
affordability for students.
    I want to start today by welcoming our witnesses and 
thinking them for joining us here today.
    In 1965, Congress enacted the Higher Education Act to 
ensure that every American student, striving for college 
education, regardless of financial status, had the opportunity 
to pursue his or her educational goals. Because of this 
commitment, millions of eligible students have attended, and 
are continuing to attend, the college or university of their 
choice. However, thousands of highly qualified students are 
being priced out of a higher education because colleges, 
universities and states are increasing their tuition and fees 
beyond the reach of students. We are attempting to address this 
issue by empowering parents and students, and shining a 
spotlight on excessive tuition hikes. However, it is important 
that we don't ignore the staggering costs of textbooks in the 
college cost equation, and the effect they have on a student's 
overall costs of higher education.
    In January of this year, the California Student Public 
Interest Research Group, or CALPIRG, released the report, 
``RIPOFF 101--How the Current Practices of the Textbook 
Industry Drive Up the Cost of College Textbooks.'' The report 
presented an analysis of a survey of the most widely assigned 
textbooks, in the fall of 2003, at 10 public colleges and 
universities in California and Oregon. In brief, the report 
indicates that textbooks are expensive and are getting more so 
each year; textbook publishers add ``bells and whistles'' that 
drive up the cost of textbooks; new additions are flooding the 
market (but contain minimal, if any, substantive changes); and 
online textbooks hold promise in reducing the cost of 
textbooks.
    [The report may be found at http://www.pirg.org/highered/
ripoff101.pdf.]
    Also, in a recent article, according to the National 
Association of College Stores, the wholesale price of college 
textbooks has increased 32.8 percent since 1998. The 
Association found that, of the 75.9 cents of every dollar that 
students pay for new textbooks that go to the publishers, 11.5 
cents is sent to the authors of the textbooks. This leaves 64.4 
cents--
    [Interruption to proceedings.]
    [Laughter.]
    Chairman McKeon.--we live with that--out of every dollar 
that is retained by the publishers. Now, I come from a business 
background and retail background, and I don't have any problem 
with profit. I think that if you don't have profit, businesses 
don't continue. But that is something we want to look into 
today.
    During today's hearing, we hope to find out what expenses 
make up the publisher's costs and whether college bookstores 
and universities are justified in keeping almost 25 percent of 
the cost of a particular textbook. Again, I come from a retail 
background, and 25 percent is less than most retailers charge. 
But when you get down to the final bottom number it is a lot 
less. I would like to go into those costs a little bit, too.
    There is also a growing concern about the discrepancy in 
textbook costs overseas. Identical textbooks are reported to 
have dramatically lower prices when sold outside the United 
States, as compared to the price charged to American students. 
Is important to learn what effect these practices have on the 
overall cost of College.
    Since coming to Congress more than 10 years ago, I have 
been concerned about the rising cost of higher education. I 
believe that the cost of textbooks are too high, and are one of 
many factors jeopardizing our efforts to keep college 
affordable. I am determined to learn about what steps can be 
taken to ease the burden on students and families. Last year, I 
introduced H.R. 3311, the Affordability in Higher Education 
Act, which is intended to hold institutions more accountable 
for the ever-rising cost of a higher education, and makes 
substantive efforts to stem those costs. Within that Bill, and 
within the recently introduced H.R. 4283, the College Access 
and Opportunity Act, we create a College Affordability 
Demonstration Program. The demonstration program would allow 
schools to seek regulatory and statutory waivers from the 
Secretary of Education, in order to demonstrate how they will 
reduce cost to students, including the costs associated with 
textbooks.
    In addition, our colleague, Representative David Wu, 
introduced H.R. 3567 to require the Government Accountability 
Office to conduct an investigation into the high price of 
college textbooks. While we're waiting on GAO to complete its 
report, and on Congress to reauthorize the Higher Education 
Act, a number of schools are holding their own conversation 
about the issues surrounding textbook pricing and many are 
looking at what can be done to address concerns over textbooks 
adding to the ever-increasing cost of a postsecondary 
education.
    One innovative approach to dealing with the cost of 
textbooks, and other educational materials, is that taken by 
the University of Phoenix. Over the past three years, the 
university has been converting this curriculum and content to 
digital format. The goal of this project, called ``RESOURCE,'' 
has been to provide a broader and richer variety of curriculum 
materials, at a lower cost to students. Instead of paying for 
individual textbooks, students pay a flat subscription fee that 
provides electronic access to all course materials for current 
and past courses. Materials available go far beyond simply 
digitizing traditional textbooks. They include sophisticated 
simulations, case studies, packaged e-learning content, current 
full-text periodical articles, virtual organizations, and an 
innovative new ``e-Book Collection'' providing searchable 
access to text utilized across the University's curriculum.
    We are also aware of efforts by some universities to enable 
students to ``check out'' or ``rent'' college textbooks, rather 
than purchase the books. I am looking forward to hearing more 
about this, today, from one of our witnesses.
    Both of these initiatives are examples of how innovation 
can help reduce the burden of high textbook costs on students 
and families. It is my hope that more universities throughout 
the country will adopt these approaches, so that millions of 
low and middle-income students are not priced out of a college 
education because of the soaring cost of textbooks.
    As Congress continues the process of renewing and 
reauthorizes the Higher Education Act, and build upon efforts 
to bridge the educational divide for America's low and middle-
income students, it is important that we continue our dialogue, 
and continue to work towards issues that increase college 
affordability.
    Thank you, again, for joining us here to discuss this 
important topic. I look forward to hearing your testimony, so 
that my colleagues and I can learn more about this very serious 
issue.
    And I now yield to Congressman Kildee, Ranking Member, for 
his opening statement.
    [The prepared statement of Chairman McKeon follows:]

Statement of Hon. Howard P. ``Buck'' McKeon, Chairman, Subcommittee on 
 21st Century Competitiveness, Committee on Education and the Workforce

    Good morning and thank you for joining us today for this very 
important hearing on the costs of college textbooks. This is a 
continuation of the series of hearings that we have held over the last 
year or so to examine rapidly rising college costs and seek solutions 
to help increase college affordability for students.
    I want to start by welcoming our witnesses and thanking them for 
joining us here today.
    In 1965, Congress enacted the Higher Education Act to ensure that 
every American student striving for a college education, regardless of 
financial status, had the opportunity to pursue his or her educational 
goals. Because of this commitment, millions of eligible students have 
attended, and are continuing to attend, the college or university of 
their choice. However, thousands of highly qualified students are being 
priced out of a higher education because colleges, universities and 
states are increasing their tuition and fees beyond the reach of 
students.
    We are attempting to address this issue by empowering parents and 
students and shining a spotlight on excessive tuition hikes; however, 
it is important that we don't ignore the staggering costs of textbooks 
in the college cost equation and the effect that they have on a 
student's overall cost of higher education.
    In January of this year, the California Student Public Interest 
Research Group or CALPIRG released the report, ``RIPOFF 101- How the 
Current Practices of the Textbook Industry Drive Up The Cost Of College 
Textbooks.'' The report presented an analysis of a survey of the most 
widely assigned textbooks in the fall of 2003 at 10 public colleges and 
universities in California and Oregon. In brief, the report indicates 
that textbooks are expensive and are getting more so each year; 
textbook publishers add ``bells and whistles'' that drive up the costs 
of textbooks; new editions are flooding the market (but contain minimal 
if any substantive changes); and online textbooks hold promise in 
reducing the costs of textbooks.
    Also, in a recent article, according to the National Association of 
College Stores, the wholesale price of college textbooks has increased 
32.8 percent since 1998. The Association found that, of the 75.9 cents 
of every dollar that students pay for new textbooks that go to the 
publishers, 11.5 cents is sent to the authors of the textbooks. This 
leaves 64.4 cents out of every dollar to be retained by the publishers.
    During today's hearing, we hope to find out what expenses make up a 
publisher's costs and whether college bookstores and universities are 
justified in keeping almost 25 percent of the costs of a particular 
textbook.
    There is also a growing concern about the discrepancy in textbook 
costs overseas. Identical textbooks are reported to have dramatically 
lower prices when sold outside the United States as compared to the 
price charged to American students. It is important to learn what 
effect these practices have on the overall cost of college.
    Since coming to Congress more than 10 years ago, I have been 
concerned about the rising cost of higher education. I believe that the 
costs of textbooks are too high, and are one of many factors 
jeopardizing our efforts to keep college affordable. I am determined to 
learn about what steps can be taken to ease the burden on students and 
families.
    Last year, I introduced H.R. 3311, the Affordability in Higher 
Education Act, which is intended to hold institutions more accountable 
for the ever-rising cost of a higher education and make substantive 
efforts to stem those costs. Within that bill and within the recently 
introduced H.R. 4283, the College Access and Opportunity Act, we create 
a college affordability demonstration program. The demonstration 
program would allow schools to seek regulatory and statutory waivers 
from the Secretary of Education in order to demonstrate how they will 
reduce costs to students, including the costs associated with 
textbooks.
    In addition, our colleague, Representative David Wu introduced H.R. 
3567 to require the Government Accountability Office to conduct an 
investigation into the high price of college textbooks.
    While we are waiting on GAO to complete its report and on Congress 
to reauthorize the Higher Education Act, a number of schools are 
holding their own conversation about the issues surrounding textbook 
pricing and many are looking at what can be done to address concerns 
over textbooks adding to the ever-increasing cost of a postsecondary 
education.
    One innovative approach to dealing with the cost of textbooks and 
other educational materials is that taken by the University of Phoenix. 
Over the past three years, the University has been converting its 
curriculum and content to digital format. The goal of this project, 
called ``RESOURCE'' has been to provide a broader and richer variety of 
curriculum materials at lower cost to students. Instead of paying for 
individual textbooks, students pay a flat subscription fee that 
provides electronic access to all course materials for current and past 
courses. Materials available go far beyond simply digitizing 
traditional textbooks. They include sophisticated simulations, case 
studies, packaged e-learning content, current full-text periodical 
articles, virtual organizations and an innovative new ``e-Book 
Collection'' providing searchable access to texts utilized across the 
University's curriculum.
    We are also aware of efforts by some universities to enable 
students to ``check out'' or ``rent'' college textbooks rather than 
purchase the books. I am looking forward to hearing more about this 
today from one of our witnesses.
    Both of these initiatives are examples of how innovation can help 
reduce the burden of high textbook costs on students and families. It 
is my hope that more universities throughout the country will adopt 
these approaches so that millions of low and middle-income students are 
not priced out of a college education because of the soaring cost of 
textbooks.
    As Congress continues the process of renewing and reauthorizing the 
Higher Education Act and builds on efforts to bridge the educational 
divide for America's low and middle-income students, it is important 
that we continue our dialogue and continue to work towards issues that 
increase college affordability.
    Thank you again for joining us here to discuss this important 
topic. I look forward to hearing your testimony so that my colleagues 
and I can learn more about this very serious issue.
                                 ______
                                 

STATEMENT OF HON. DALE E. KILDEE, RANKING MEMBER, SUBCOMMITTEE 
ON 21st CENTURY COMPETITIVENESS, COMMITTEE ON EDUCATION AND THE 
                           WORKFORCE

    Mr. Kildee. Before I leave to vote, I'll edify you with my 
comments here, Mr. Chairman.
    I am pleased, again, to join Chairman McKeon and another 
one of our hearings on the reauthorization of the Higher 
Education Act. I know that all of the Members are looking 
forward to hearing the testimony of our witnesses.
    Textbook costs are a major expense for students attending 
college. The College Board and other organizations have 
estimated that college students spend between $800-$1000 per 
year on textbooks. Textbooks come with software, and other 
additional items, that often increase the overall price. These 
expenses are very significant, an impediment of the overall 
costs of attending college. Since tuition is rising, due to 
smaller state budgets, this is a serious issue for students, 
publishers, and the schools which serve them.
    Like Chairman McKeon, I am also interested in learning more 
about what makes up the price of textbooks, and the factors 
that influence their cost. In addition, as mentioned, 
Congressman Wu is already refocused--or focused on this issue, 
asking the General Accounting Office to examine the issues of 
the textbook costs. The question here is what we can do to help 
publishers, students, schools, and their bookstores make 
textbooks cheaper to students.
    We're going to hear testimony, today, about solutions 
provided by schools, bookstores, and publishers to the 
escalating costs of the textbooks. Ideas such as textbooks 
rentals, online versions, show promise for holding down costs. 
However, these ideas should only be the beginning of efforts to 
hold down costs. Viable proposals need to ensure that 
publishers make a fair profit from their textbooks sales, 
without unfairly increasing costs on students.
    I look forward to learning from the experts here this 
morning, and yield back the balance of my time, Mr. Chairman.
    Chairman McKeon. Thank you.
    Let me introduce the witnesses, and then we'll take a break 
to go over and vote.
    First, we have Ms. Merriah Fairchild. Ms. Fairchild 
currently serves as a Higher Education Advocate for the 
California Student Public Interest Research Group, and is the 
author of ``RIPOFF 101, How the Current Practices of Publishing 
Industry Drive Up the Cost of College Textbooks.'' Did you get 
all of that on one page? Ms. Fairchild began her research 
career while a student at the University of Oregon, where she 
served as Chair of Student Chapters for the Oregon State Public 
Interest Research Group.
    Then we will hear from Mr. Mark L. Fleischaker. Mr. 
Fleischaker currently serves as legal counsel for the National 
Association of College Stores, a leading organization 
representing and supporting higher education retailers by 
providing programs and services, and by facilitating strategic 
partnerships, that concur college stores are essential to their 
campus constituencies, and the higher education retail channel.
    Then we'll hear from Mr. John Isley. Mr. Isley currently 
serves as the Executive Vice President of Publishing, Planning, 
and Business Development for the Pearson Higher Education and 
Professional Publishing Group. Mr. Isley has had a diverse 
publishing career, working principally in editorial or senior 
management positions in the United States and abroad.
    And as I understand, Mr. Kind would like to introduce our 
final panelist at this time.
    Mr. Kind. Thank you, Mr. Chairman. And I do thank you for 
the honor of being able to introduce one of my constituents, 
from a wonderful University in my Congressional District in 
Western Wisconsin, Mr. Virgil Monroe, from the University of 
Wisconsin-River Falls.
    Again, Mr. Monroe, I am and I'm sure the rest of the 
Committee joins me in offering our condolences at the loss of 
Chancellor Highrideker earlier this year. She was a wonderful 
leader in higher education. Terrific leader of the university. 
Very much involved in community activities. And her loss will 
be felt for a long time to come. And I will personally be 
missing her at the university.
    Mr. Monroe joins us from the University at River Falls. He 
joined the university back in 1983, and currently serves as 
Manager of Textbook Services. In this capacity, he establishes, 
documents, implements, and administers policies and procedures 
for the innovative textbook rental services program.
    As you will hear from Mr. Monroe, Textbook Services is very 
much like a library. In fact, at the University of Wisconsin at 
River Falls, it is a department of the university library, 
supervised by the Director of Library Services. Textbooks are 
checked out of the beginning of the semester and then returned 
at the end of the semester. But they also give students the 
option to purchase any textbooks that they think will be of use 
to them in the future.
    And Mr. Chairman, as we move forward with the 
reauthorization of the higher education bill, a lot of our 
focus and attention has been on access, quality, and 
affordability. And I commend you, and Ranking Member Kildee, 
for taking time to focus on this aspect of rising costs that 
our students are incurring, and being able to afford higher 
education--the costs of textbooks, and what innovative, and 
creative thinking that we are seeing across the nation. And 
even right there at the University of Wisconsin, River Falls, 
in my Congressional District, trying to make it a little more 
affordable, a little bit easier for students to be able to 
access the quality education programs that do exist in this 
country.
    So we look forward to the testimony of all of the 
witnesses. But I especially welcome Mr. Monroe today.
    Thank you, Mr. Chairman.
    Chairman McKeon. Thank you.
    The Committee stands in recess while we vote. And we will 
return right after the final vote.
    [Recess.]
    Chairman McKeon. Well, the vote is almost over. Let's go 
ahead and get started.
    Let's hear first from Ms. Fairchild. You understand those 
lights come on, green means start talking, yellow means talk 
faster, and red means really fast.
    Ms. Fairchild.

  STATEMENT OF MERRIAH FAIRCHILD, HIGHER EDUCATION DIRECTOR, 
CALIFORNIA STUDENT PUBLIC INTEREST RESEARCH GROUP, SACRAMENTO, 
                               CA

    Ms. Fairchild. Mr. Chairman, and Members of the Committee, 
thank you for the opportunity to present the views of the 
California Student Public Interests Research Group on the 
important matter of the high cost of college textbooks. I'm 
Merriah Fairchild, Higher Education Advocate with CALPIRG, and 
author of the Textbook Report, and I'm based in Sacramento. 
CALPIRG is a statewide, student- directed organization. And my 
testimony will cover four main points: first, a summary of our 
research. Second, our policy recommendations for publishers and 
schools. Third, an update on the activities of faculty and 
student leaders in the last couple of months. And finally, some 
recommendations for Congress.
    So first, a summary of our research. When we first looked 
at this issue a year ago, we found there were many theories on 
why textbooks were expensive. But no real documentation of the 
problem, or potential solutions. As you said, we surveyed 
students and faculty, at 10 colleges and universities in 
California and Oregon, and we released our findings in a report 
in January of 2004. I want to just highlight three key 
findings. I know that you have the reports.
    The first is that textbooks are expensive. And we found 
students will spend an average of $898 on textbooks this year.
    Second is that textbook publishers add ``bells and 
whistles'' that inflate the price of textbooks, and most 
faculty do not use these materials. For example, half of the 
textbooks that we surveyed came bundled, or shrink-wrapped, 
with CD-ROMs and workbooks. Students rarely have the option of 
buying the textbook a la carte, or without these bundled 
materials. In the one example that we found where students did 
have the option of buying just the textbook or the bundled 
version, the textbook was $60, and the bundled version was 
$130. So these materials drastically can increase the price of 
the book.
    To add insult to injury, while publishers say they are 
putting these materials in because faculty request them, over 
65 percent of the faculty surveyed said they rarely or never 
ask students to use these materials in their courses.
    Our third finding is that textbook publishers put new 
additions on the market frequently, often with very few content 
changes, making the less expensive used books obsolete and 
unavailable. Again, publishers report that they are simply 
responding to faculty demand, but 76 percent of faculty 
surveyed said the new editions are necessary half the time or 
less.
    So based in our research, we developed some policy 
recommendations, which you have in the report; I'm just going 
to highlight four that are in the report, and one that is newer 
than the report.
    First, we believe publishers should sell textbooks 
unbundled from CD-ROMs and workbooks.
    Second, publishers should proactively disclosed to faculty, 
the price and predicted shelf life of each addition, so that 
they can take that into consideration when making their 
choices.
    Third, publishers should keep each edition of a textbook on 
the market as long as possible without sacrificing the 
educational content.
    And fourth, publishers should pass on the cost savings of 
online books to students.
    Our newest recommendation came about because we spend some 
time in California working to start up textbook rental 
services, and we look forward to hearing more for Mr. Monroe. 
So our fifth and newest recommendation is that Congress should 
make grants available to schools to offset the start-up costs 
for these rental programs, and other alternatives, because the 
start-up costs can be prohibitive, and the states, especially 
California, do not have the funds to help.
    I am pleased to hear in your opening remarks that you 
support alternatives. We believe that funding rental services, 
and other alternative are a better investment, because it 
lowers the overall costs for the entire student body, than tax 
credits, or other means that are simply subsidizing the high-
cost of textbooks.
    So following the report, 500 mathematics professors and 
student government leaders from around the country began 
mobilizing to build support for these recommendations. And they 
sent a letter to Thomson Learning, which is a publisher, 
requesting that Thomson Learning adopt some of these 
recommendations to one of their textbooks, which is Calculus: 
Early Transcendentals. The faculty identified this book as a 
textbook example, if you will, for what is wrong. It is sold 
overseas for half the price. And the new edition is hardly 
different from the previous edition. I believe that you have a 
copy of this letter.
    And to date, Thomson Learning has not adopted any of our 
recommendations, but they have agreed to sell this calculus 
book to UCLA for $20 less. And now other schools are 
negotiating similar contracts, which we're excited about it. It 
shows what we have suspected, that there is ample room to 
reduce the cost of textbooks to students.
    Now, if Congress were to act on the issue, we recommend 
that there be regular oversight of publishers' practices to 
ensure that they are not engaging in anti-competitive 
processes, and make sure they don't limit student choice. We 
also believe that Congress should encourage publishers, schools 
and bookstores to take action to lower textbook costs by 
unbundling books, disclosing price to faculty, and only 
printing new additions when it is warranted, because of new 
content.
    Given the significant increase in tuition, it is critical 
that Congress address this issue as part of a larger effort to 
increase higher education. I appreciate the recognition of that 
in your opening statements.
    That summarizes our view on this issue. Thank you for the 
opportunity to testify, and I look forward to answering any 
questions.
    [The prepared statement of Ms. Fairchild follows:]

 Statement of Merriah Fairchild, Higher Education Director, California 
         Student Public Interest Research Group, Sacremento, CA

    Mr. Chairman, Members of the Committee: Thank you for the 
opportunity to present the views of the California Student Public 
Interest Research Group (CALPIRG) \1\ on the important matter of the 
high cost of college textbooks.
Summary
    As you know, the high cost of textbooks has perplexed and 
frustrated students, parents and faculty for many years. CALPIRG began 
investigating the issue in July 2003 because the cost of textbooks, 
combined with recent fee/tuition increases in California, threatened to 
become a ``tipping point'' for many middle and low income students that 
could prevent them from attending college.
    It quickly became apparent that, while there were a lot of theories 
to explain the high cost of textbooks, there was no formal 
documentation of the problem or potential solutions.
    In January 2004, CALPIRG released the report entitled: Rip-off 101: 
How the Current Practices of the Publishing Industry Drive up the Cost 
of College Textbooks. This testimony summarizes the findings of that 
report. Students pay an average of $900 a year for textbooks, textbook 
publishers use gimmicks to artificially inflate the cost of the 
textbooks. The report found that publishers often produced new editions 
with few significant content changes, rendering older, used version of 
the book obsolete and unavailable. The report also found that 
publishers add bells and whistles--such as CD ROMs and workbooks--that 
over 64% of faculty surveyed said they use ``rarely'' or ``never''.\2\
    Based on this research, CALPIRG recommends that Congress develop 
policy that will ensure that publishers and universities adopt the 
following practices:
Textbooks Should Be Priced and Sold at a Reasonable Price
      Publishers should keep the cost of producing their books 
as low as possible without sacrificing educational content.
      Publishers should sell ancillary items separately from 
textbooks.
      Publishers should fully and proactively disclose to 
faculty all of their products and prices and the length of time the 
publisher intends to keep its products on the market.
      Publishers should pass cost-savings from online textbooks 
onto students.
      Faculty should give preference to least-cost textbook 
options when the educational content is similar.
There Should be a Vibrant Used Book Market
      Publishers should keep each textbook edition on the 
market as long as possible without sacrificing the educational content. 
Publishers should give preference to supplements to current editions 
over producing entirely new editions.
      There should be as many forums for students to purchase 
many used books as possible. Universities should consider rental 
programs such as those at several universities in Wisconsin and 
Illinois and encourage students to consider using online bookswaps.
      Congress should provide grant funding to cover the start 
up costs for schools that wish to rent textbooks to students. Funding 
alternatives that lower textbooks prices for an entire student body is 
a better investment than tax credits that subsidize the high cost of 
textbooks.
    Student government leaders and faculty are currently organizing a 
grassroots campaign to convince publishers to voluntarily change their 
practices. Publishers report that they produce what faculty request of 
them. In October 2004, more than 500 mathematics professors sent 
publisher Thomson Learning a letter requesting that the company adopt 
CALPIRG's recommendations. Faculty are now waiting for Thomson Learning 
to deliver on their promise and agree to their request.
    In the meantime, several states, including California, are 
considering legislation that would adopt the recommendations of the 
report, and students are organizing online bookswaps as a less 
expensive alternative to buying textbooks in a bookstore or overseas.
Discussion
Results of the CALPIRG Report Ripoff 101: How the current Practices of 
        the Textbook Industry Drive Up the Cost of College Textbooks
    Throughout fall 2003, a team of students and staff at ten 
University of California and Oregon campuses conducted interviews with 
bookstore managers and faculty and compared different editions of the 
five most purchased textbooks. The report was peer reviewed by a number 
of academics and a former publishing industry executive to confirm the 
statistical validity of the report's findings and conclusions.
    Among the report's findings:
Textbooks are Expensive and Getting Even More Expensive
      Students will spend an average of $898 per year on 
textbooks in 2003-04, or almost 20 percent of the cost of in-state 
fees. In contrast, a 1997 UC survey found that students spent an 
average of $642 on textbooks in 1996-97.
Textbook Publishers Add Bells and Whistles that Inflate the Price of 
        Textbooks; Most Faculty Do Not Use These Materials
      Half of all textbooks now come ``bundled'' or shrink-
wrapped with additional instructional materials, such as CD-ROMs and 
workbooks.
      Of all the books surveyed, there was only one instance in 
which students could buy a textbook ``a la carte'' or without 
additional materials. In that example, the bundled version was $120, 
while the unbundled version was only $60. Over sixty-five percent of 
the faculty surveyed for the report say they ``rarely'' or ``never'' 
use the bundled materials in their courses.
Textbook Publishers Put New Editions on the Market Frequently--Often 
        With Very Few Content Changes--Making the Less Expensive, Used 
        Textbooks Obsolete and Unavailable
      Publishers keep textbook editions on the shelf for an 
average of only 3.5 years before updating them.
      Meanwhile, seventy-six percent of faculty surveyed said 
that the new editions they use are justified half the time or less; 
over half of those faculty said that the new editions they use are 
``rarely to never'' justified.
      Once a new textbook edition is produced, the used copy is 
quickly made obsolete, forcing students to purchase the more expensive 
new edition. Over fifty-nine percent of students who searched for a 
used book for the fall 2003 quarter/semester were unable to find even 
one used book for their classes and were forced to pay an average of 
$102.44 for a new book, verses an average of $64.80 for a used book.
      Faculty are often inconvenienced by this practice because 
new textbook editions require many professors to revise course syllabi 
to reflect changes in chapters and page numbers.
Faculty Support Alternatives That Lower Students' Costs, Maintain 
        Quality
      Eighty-seven percent of faculty surveyed support 
including new information in a supplement instead of producing a new 
textbook edition.
Online Textbooks Hold Promise for Lowering the Cost of Textbooks
      According to Association of American Publishers and the 
National Association of College Stores, paper, printing and editorial 
costs account for an average of 32.3 cents of every dollar a textbook 
costs--the largest share of the textbook costs. Online textbooks could 
eliminate this cost and significantly lower the retail cost of 
textbooks.
      New York Times columnist Paul Krugman, who is also an 
economics professor at Princeton University, has teamed up with fellow 
Princeton economist Robin Wells and Paul Romer, an economics professor 
at Stanford University and owner of Aplia Inc., a three-year-old 
company that develops educational software and materials. Together, 
these three academics are developing online versions of their upcoming 
economics textbooks at half the price of the paper version.
A Textbook Example
    A particularly egregious example of these practices was publisher 
Thomson Learning's widely used calculus book--Calculus: Early 
Transcendentals, Edition 5. There were only cosmetic changes between 
the current edition, produced in 2003, and the previous edition, 
produced in 1999. However, the price difference was significant--a new 
copy of the book sells for about $130, while a used copy of the 
previous edition sells for between $20 and $90, depending on where one 
looks. Second, we found that Thomson Learning charges American students 
significantly more than its foreign counterparts. According to the 
publisher's website, Calculus: Early Transcendentals sells for $125 to 
American students, but only $97 ($125 C) to Canadian students and only 
$65 (35 pounds) to British students. This practice is widespread in the 
industry and has come under a great deal of scrutiny recently.
Publishers Criticize Report, Statisticians Respond
    The publishing industry has responded by actively questioning the 
methodology of the report. We want to take this opportunity to refute 
these allegations. The primary criticism is that the sample was too 
small. In a letter to faculty who support CALPIRG's recommendation, 
Ronald G. Dunn, CEO of Thomson Learning, wrote: ``'the study surveyed 
only 521 of the 2.3 million college students in California only 151 of 
the 44,545 faculty members teaching in California were surveyed, and 
100 of them were math and science instructors.'' \3\
    In response to this allegation, math professors from around the 
country wrote:
    ``In statistics, it is the size of the sample that matters, not the 
absolute size of the population. If your criticism were valid, then 
practically all polls in this country, including Gallup, would be 
meaningless. CALPIRG's methods were sound. The aim of the research was 
to capture the opinions of faculty who interact with the largest number 
of students. To that end, CALPIRG surveyed only the faculty who taught 
the five most purchased textbooks at ten colleges and universities in 
California and Oregon. In our view, this is an appropriately selected 
sample size.'' \4\
    Signed by:
        -  Christopher Sogge, Chair, Department of Mathematics, Johns 
        Hopkins University
        -  Bernard Russo, Chair, Department of Mathematics, University 
        of California, Irvine
        -  Mark Ashbaugh, Chair, Department of Mathematics, University 
        of Missouri-Columbia
        -  Paul Goodey, Chair, Department of Mathematics, University of 
        Oklahoma
        -  Russell Thompson, Chair, Department of Mathematics, Utah 
        State University
        -  Eugenio Cattani, Graduate Director, Department of 
        Mathematics, University of Massachusetts, Amherst
    Furthermore, eminent statistician Peter Bickel of UC Berkeley was 
quoted in the San Francisco Chronicle in response to Thomson's 
allegations in January as saying, ``'Nonsense. The size of the 
population doesn't matter. It's the size of the sample that matters.'' 
With 156 faculty, he estimated, the error rate could be about 10 
percent.'' \5\
Highlights of Student and Faculty Organizing Following the Release of 
        the Report
    The report was released at 24 news conferences across the country 
including ten in California, receiving media attention across the state 
and country, totaling more than 400 media mentions from various outlets 
including U.S. News and World Report, USA Today, Boston Globe, the 
Christian Science Monitor, Los Angeles Times, San Francisco Chronicle, 
Associated Press, and National Public Radio.
    Immediately following the report's release, student government 
leaders from around the country sent publisher Thomson Learning a 
letter outlining the concerns CALPIRG's research identified and 
requesting that the company adopt the recommendations, especially to 
the book, Calculus: Early Transcendentals. A few months later, more 
than 500 mathematics professors from more than 50 colleges issued a 
joint call to publisher Thomson Learning that reiterated the students' 
initial requests; CALPIRG student volunteers spent nearly a month 
recruiting faculty members from around the country to join this call.
    Shortly after these efforts began, Thomson Learning launched a new, 
``low-frills'' series of textbooks designed to be 25% cheaper than the 
original textbook. In addition, the UCLA Mathematics Department 
successfully negotiated with Thomson Learning a $20 price reduction in 
the above mentioned calculus book for the 2004-2005 school year. 
Currently, several other universities are pressing for similar deals. 
Finally, independent from all the above efforts, publisher Pearson 
Education has announced plans to launch a new series of online 
textbooks in August 2004 that the company claims will be 50% cheaper 
than print titles.
    These are merely small steps, and we think that, if anything, these 
developments simply provide more evidence that there is ample room to 
reduce textbook prices even beyond the steps that have been taken.
    In the meantime, CALPIRG and the other State PIRGs are sponsoring 
an online bookswap, www.CampusBookSwap.com, available at 24 campuses in 
ten states. The bookswap allows students to buy and sell used books 
directly from each other. The website is run by students, for students, 
and is free of charge. There are currently more than 5,900 textbooks 
posted on the site.
State Solutions under Consideration
    The California Legislature is currently considering two bills 
sponsored by CALPIRG: AB 2477 (State Assemblymember Carol Liu) and AB 
2678 (State Assemblymember Paul Koretz). Both bills have passed the 
Assembly and are now in the Senate.
    AB 2477 urges textbook publishers to adopt the report 
recommendations discussed above, such as ``unbundling'' textbooks from 
expensive CD-ROMs and other add-ons. Another recommendation is for 
publishers to fully disclose the price of textbooks to faculty members 
so that faculty can take price into consideration when choosing a 
textbook.
    AB 2678 sets up the framework so that public colleges and 
universities in California can implement textbook rental services, if 
they so choose.
    The Connecticut Legislature also introduced legislation calling on 
publishers to adopt the recommendations of the report, and the Governor 
of Illinois has launched an investigation into the practices of 
publishers.
Congressional Recommendations
    CALPIRG supports H.R. 3567 (Wu), legislation that has been referred 
to this committee and requires the General Accounting Office to conduct 
an investigation of the high price of college textbooks. Many of the 
questions are the similar to the questions CALPIRG asked in California 
and Oregon and this investigation will expand to all states. 
Specifically:
    (b) (1) the average amount of money a student spends on textbooks;
    (b) (7) the extent to which new editions of textbooks are different 
from their previous editions, including the percentage of work that is 
actually substantively changed from one edition to the next; and
    (b) (8) the average time period between old and newer editions of 
textbooks.
    The investigation also asks new questions that are critical to 
understanding how college textbooks are produced, priced and packaged. 
Specifically:
    (a) (2) the average cost to produce a new textbook;
    (a) (3) the average cost to produce a new edition of a previously 
published textbook;
    (a) (4) the reasons for the price discrepancy in textbooks in the 
United States and outside the United States;
    (a) (5) the extent of the problem with such price discrepancy; and
    (a) (6) whether the price discrepancy problem occurs more in 
certain subject areas than others.
    In CALPIRG's view, the results of such an investigation will 
demonstrate, at a minimum, that Congress should develop policy that 
will ensure publishers and universities adopt the following practices:
Textbooks Should Be Priced and Sold at a Reasonable Price
      Publishers should keep the cost of producing their books 
as low as possible without sacrificing educational content.
      Publishers should sell ancillary items separately from 
textbooks.
      Publishers should fully and proactively disclose to 
faculty all of their products and prices and the length of time the 
publisher intends to keep its products on the market.
      Publishers should pass cost-savings from online textbooks 
onto students.
      Faculty should give preference to least-cost textbook 
options when the educational content is similar.
There Should be a Vibrant Used Book Market
      Publishers should keep each textbook edition on the 
market as long as possible without sacrificing the educational content. 
Publishers should give preference to supplements to current editions 
over producing entirely new editions.
      Congress should provide grant funding to cover the start 
up costs for schools that wish to rent textbooks to students. Funding 
alternatives that lower the price of textbooks for an entire student 
body is a better investment than tax credits that subsidize the high 
cost of textbooks.
Conclusion
    The high cost of college textbooks are significantly adding to the 
overall cost of a college education. Faculty report that student 
textbook costs are inflated by publisher's practices, including 
unwanted and unneeded ``bundles'' and production of new editions that 
have few content changes and replace the less expensive used editions. 
In our view, publishers should make simple changes such as selling 
textbooks ``unbundled'' from expensive CD-ROMs and other add-ons and 
disclosing the price and estimated shelf-life of textbooks to faculty. 
At the same time, Congress should further investigate the pricing and 
production of college textbooks by passing HR3567 (Wu). Students 
deserve to pay fair prices for educational materials that faculty, not 
publishers, determine add to the quality of their students' education.
Endnotes
    \1\ The California Student Public Interest Research Group 9CALPIRG) 
is a statewide, non-profit, non-partisan public interest advocacy group 
that works on consumer, higher education and good-government issues. 
Since 1972, CALPIRG has been one fo the state's leading public interest 
groups, with 70,000 student and citizen members across the state. U.S. 
PIRG serves as the national lobbying office for CALPIRG and the other 
state PIRGs. www.calpirg.org
    \2\ ``Ripoff 101: How the Current Practices of the Textbook 
Industry Drive Up the Cost of College Textbooks'', CALPIRG 2004. See< 
http://www.calpirgstudents.org/ripoff101.pdf>
    \3\ See < http://www.calpirgstudents.org/RGDunn.pdf> for the letter 
Ronald G. Dunn, CEO of Thomson Learning sent to 500 mathematics 
professors.
    \4\ See < http://www.calpirgstudents.org/cacampus.asp?id2=13125> 
for the letter six mathematics department chairs sent to Ronald G. 
Dunn, CEO of Thomson Learning.
    \5\ Charles Burress, ``Report Slams Cost of College Texts, ``Ripoff 
101'' surveys students, faculty. San Francisco Chronicle. 1/30/04 For a 
full copy of the article see http://sfgate.com/cgibin/
article.cgi?file=/chronicle/archive/2004/01/30/MNGOR4KU7551.DTL
                                 ______
                                 
    [Attachments to Ms. Fairchild's statement have been 
retained in the Committee's official files.]
    Chairman McKeon. Thank you.
    Mr. Fleischaker.

   STATEMENT OF MARK L. FLEISCHAKER, LEGAL COUNSEL, NATIONAL 
 ASSOCIATION OF COLLEGE STORES, ARENT FOX PLLC, WASHINGTON, DC

    Mr. Fleischaker. Thank you. Mr. Chairman and Members of the 
Subcommittee, on behalf of the National Association of College 
Stores, NACS, I thank you very much for inviting us to appear 
today. My name is Mark L. Fleischaker, and I'm a partner in the 
Washington law firm of Arent Fox.
    NACS is a national trade association headquartered in 
Oberlin, Ohio. They represent all retailers whose primary 
businesses to sell to higher education students, including 
institutional stores owned by the college or university, stores 
leased to private operators, and private stores located on or 
near college campuses. NACS has approximately 3200 store 
members, which constitutes some 90 percent of the stores 
servicing the higher education community.
    The role of all college stores, regardless of their 
ownership or management structure, is to contribute to the 
education function of the university, the faculty, and the 
university students that they serve. In that context, NACS has 
been concerned for several years about the escalating costs of 
higher education, including the cost of course materials, 
primary textbooks. In that conjunction, early this year the 
NACS board of trustees, specifically, reiterated that one of 
its primary objectives is to continue to work to reduce the 
cost of course materials for students. NACS believes that this 
hearing will assist in that objectives by shedding additional 
public light on the issues.
    The price of college textbooks is affected by many factors, 
including the quality of new books which are sold, the sale of 
views books, authors' royalties, increases in the cost of 
producing books, ``sell-through'' of books to students. That is 
how many students who are buying books for their classes. The 
frequency of new editions, the bundling of other products with 
the textbooks, and the margins obtained by the collegiate 
retailers.
    Regarding those margins, college books are sold on either a 
``pre-price'' basis, in which the intended retail prices on the 
book itself, or on a net-price bases, when the book cover does 
not contain a price. When books are pre-priced and sold to 
retailers on the basis of a discount from the preprinted retail 
price, most publishers provide college stores with only a 20 to 
25 percent discount from the preprinted retail price. That 
discount is approximately half the discount provided to trade 
stores for the sale of books not intended for classroom 
adoption.
    Mr. Chairman, I think you alluded to that low margin in 
your opening remarks. In those situations, of course, the bulk 
of college stores would sell the book to students at the pre-
printed price, achieving a margin of 20 to 25 percent. When 
books are sold to stores on the net price bases, with no 
preprinted retail price, stores are, of course, free to charge 
whatever price if it was appropriate.
    Based on industry surveys, the average margin for all 
textbooks has remained approximately 22 percent for many years, 
meaning they college stores are charging approximately the same 
margin for net price books than for pre-price books.
    Therefore, it is difficult to conclude that margins earned 
by college stores on the primary causative factor in the 
escalating prices test books. And that margin, of course, is 
used to fund all store operations including salaries, rent in 
many cases, all overhead normally assumed by any business.
    Of course, college stores to attempt to give their students 
options by selling used books. And to that extent, bookstores 
would probably plead guilty to attempting to increase lower-
priced options for their student customers. It is indisputable, 
and acknowledged by textbook publishers, that most engage in 
dual-pricing of textbooks. Not like the drug industry, although 
it does not occur in Canada, where textbook prices are 
compatible to those in the United States, textbooks are often 
sold overseas at a fraction of the cost they are sold the 
United States. This practice has been described as traditional 
by representatives of the publishers. But I do not personally 
know how long it has been happening.
    The actual prices of textbooks sold for overseas 
distribution apparently, vary, and precise statistics would 
have to be, sir, provided by the publishers. But in many cases 
they are resold at no more than half the price, then they would 
be--at lower prices than the college store would buy the book, 
they are resold to the college student when they are from 
overseas.
    It is difficult for NACS to estimate the number of students 
purchasing books at lower prices from overseas sources. College 
stores have certain natural advantages such as proximity to 
students, and the ability and willingness to accept returns. We 
estimate, that textbooks purchased from sources originating 
overseas, account for approximately 5 percent. That number is 
likely to grow.
    Our understanding is that the dual-pricing system 
continues. Some publishers have apparently amended their 
distribution agreements to make re-importation back into the 
US, more explicitly volatile of the agreement, and we are aware 
of several, threatened or actual, lawsuits filed by publishers 
against distributors re-importing textbooks back into the US. 
We are not aware of these individual efforts. But the two-price 
system continues to be the prevalent business practice of major 
education publishers.
    We do not seek a legislative solutions to this problem at 
the current time. We want to continue to work cooperatively, 
with our textbook publishers, to lower the prices of textbooks, 
while protecting the legitimate interests of publishers, 
authors, distributors, college stores, and college students.
    I want to again express our appreciation to the 
Subcommittee for shedding light on this issue, and encouraging 
discussion of a topic that begs for broad cooperation as we 
seek a solution. And of course, I will be happy to engage in 
the discussion as we move forward in this hearing. Thank you.
    [The prepared statement of Mr. Fleischaker follows:]

 Statement of Marc L. Fleischaker, Legal Counsel, National Association 
           of College Stores, Arent Fox PLLC, Washington, DC

    Mr. Chairman and Members of the Subcommittee:
    On behalf of the National Association of College Stores (``NACS''), 
I thank you very much for inviting me to appear today. My name is Marc 
L. Fleischaker, and I am a partner in the law firm of Arent Fox, in 
Washington, D.C. I have been the legal counsel for NACS for many years.
    NACS is a national trade association headquartered in Oberlin, 
Ohio. NACS represents all retailers whose primary business is to sell 
to higher education students. This includes institutional stores (owned 
by the college or university), stores leased to private operators, and 
private stores located on or near college campuses. NACS has 
approximately 3,200 store members, which constitute some 90% of the 
stores serving the higher education community.
    The role of all college stores, regardless of their ownership or 
management structure, is to contribute to the education function of the 
university, the faculty, and the university students that they serve. 
In that context, NACS has been concerned for several years about the 
escalating costs of higher education, including the costs of course 
materials, primarily textbooks. In that connection, early this year the 
NACS Board of Trustees specifically reiterated that one of its primary 
objectives is to continue to work to reduce the cost of course 
materials for students. NACS believes that this hearing will assist in 
that objective by shedding additional public light on the issues.
    It is also important to point out that NACS has a long, positive 
relationship with textbook publishers, represented by the Association 
of American Publishers. Of course, that does not mean that publishers 
and retailers agree on every issue. But it does mean that NACS looks 
forward to working with AAP in appropriate ways to address the issue of 
textbook prices.
    The pricing of college textbooks is affected by many factors, 
including the quantity of new books which are sold, the sale of used 
books, authors' royalties, increases in the cost of producing books, 
``sell-through'' of books to students, the frequency of new editions, 
the ``bundling'' of other products (such as compact disks) with the 
textbook, and the margins obtained by the collegiate retailers.
    One note about those margins before I move to the specific topic 
which I have been asked to address. College books are sold on either a 
``pre-priced'' basis in which the intended retail price is on the book 
itself, or on a net-priced basis where the book cover does not contain 
a price. When books are pre-priced and sold to retailers on the basis 
of a discount from the preprinted retail price, most publishers provide 
college stores with only a 20-25% discount from the preprinted retail 
price. That discount is approximately half the discount provided to 
trade stores for the sale of books not intended for classroom adoption. 
In those situations, of course, the bulk of college stores would sell 
the book to students at the preprinted price, achieving a margin of 20-
25 percent. When books are sold to stores on a net price basis with no 
preprinted retail price, stores are, of course, free to charge whatever 
price they feel is appropriate, and different college stores charge 
different amounts. However, based on industry surveys, the ``average'' 
markup for all textbooks has remained approximately 22% for many years, 
meaning that college stores are charging approximately the same margin 
for net priced books than for pre-priced books. For these reasons, it 
would be extremely difficult to conclude that the margins earned by 
college stores are the primary causative factor in the escalating price 
of textbooks. (That margin, of course, is used to fund all store 
operations, including staff salaries.) Of course, college stores do 
attempt to give their students options by selling used books. To the 
extent that this reduces the number of new books that are sold, thereby 
causing publishers to charge even higher prices for new books, college 
bookstores would probably plead guilty to attempting to increase lower 
price options for their student-customers.
    I have been specifically requested to address the question of 
discrepancies between the prices of textbooks sold in the United States 
and overseas, the effects of that discrepancy on the cost of post-
secondary education, and possible solutions.
    It is indisputable and acknowledged by textbook publishers that 
most engage in dual pricing of textbooks. Not unlike the drug industry 
(although it does not occur in Canada, where textbook prices are 
comparable to those in the U.S.), textbooks are often sold overseas at 
a fraction of the cost they are sold in the United States. This 
practice has been described as ``traditional'' by representatives of 
the publishers, but I do not personally know how long it has been 
happening. The actual prices of textbooks sold for overseas 
distribution apparently vary, and precise statistics would have to be 
provided by publishers. However, we understand that many textbooks sold 
for distribution overseas are priced at from 20-40 percent of the price 
for textbooks sold for distribution in North America.
    While this practice has apparently continued for many years, NACS 
only became fully aware of and concerned about the practice several 
years ago. NACS became aware of, and troubled by, the dual pricing 
policy when the internet became fully operational as an alternative 
source of textbooks for college students. Several international sources 
for textbooks sprang up, including such well-known sites as amazon.uk, 
and students began to notify college booksellers about available 
prices. Very quickly thereafter, distributors began selling textbooks 
purchased overseas back to the U.S. at very low prices that enabled 
U.S. students to buy at prices well below the prices at which college 
bookstores themselves were able to purchase directly from the 
publishers. College stores generally watched this development with 
great anguish not only did it adversely affect their own sales, but it 
generated complaints from students who assumed that the college store 
must be ``price gouging,'' when, in fact, the college store could not 
even purchase the book at as low a price as a student could purchase 
the book from overseas sources.
    It is difficult for NACS to estimate the number of students 
purchasing books at lower prices from overseas sources. College stores 
continue to have the natural advantages of proximity to the students 
and the willingness to accept returns when the student drops the class 
or decides not to use the book. (Some students actually buy books from 
overseas or other sources and then try to return them to the college 
store.) We would estimate that textbooks purchased from sources 
originating overseas account for approximately 5 percent of textbooks 
which are sold, and that number is likely to grow.
    In an attempt to address the problem I wrote letters to a number of 
major textbook publishers in December 2002, noting that the sale of 
textbooks from non-U.S. sources was becoming increasingly more 
prevalent, and that there was no apparent good reason to ``justify 
treating foreign and U.S. textbook markets differently beyond the fact 
that it has been feasible to do so.'' We recommended that the practice 
of offering more favorable pricing to overseas distributors be 
discontinued. As a second option, we suggested that, at the very least, 
publishers take steps to assure that textbooks sold into overseas 
markets at more favorable prices be prevented from being resold back 
into the U.S. for use by college students. Frankly, I did not receive a 
congenial response. No individual publishers responded to my letter. 
Instead, I received a response from AAP stating that AAP could not 
discuss pricing issues collectively because of the antitrust laws. The 
letter went on to suggest that the problem could be caused, at least in 
part, by the so-called ``first sale'' doctrine, which limits the 
copyright holder's ability to enforce its copyright rights to 
purchasers not buying directly from the copyright holder. The letter 
concluded by noting that the publishers' and retailers' interests were 
similar and that the difficulty in finding solutions ``will only be 
exacerbated if our efforts to find mutual relief are complicated by 
fruitless disputes over legitimate and well-established price 
differential practices.''
    Subsequent to this exchange, the NACS Board of Trustees, in March 
2003, adopted a resolution deploring ``the sale of identical or 
virtually identical college textbooks to foreign wholesalers and 
retailers at prices significantly lower than those available to 
domestic wholesalers and retailers.'' Since then, NACS has continued to 
seek ways to work with the publishers to explore possible solutions to 
the re-importation problem. On October 21, 2003, the New York Times 
published a major, front-page story about this issue that placed the 
major responsibility for higher textbook prices on the publishers. The 
AAP responded by assigning much of the blame to college bookstores, 
because of margins and the proliferation of used books. Unfortunately, 
this ``war of words'' appears to have impeded cooperative efforts by 
publishers and retailers to address the problem.
    Our understanding is that the dual pricing system continues. Some 
publishers have apparently amended their distribution agreements to 
make re-importation back into the U.S. more explicitly violative of the 
agreement, and we are aware of several threatened or actual lawsuits 
filed by publishers against distributors re-importing textbooks back 
into the U.S. NACS is not aware of the results of these individual 
efforts. The ``traditional'' two-price system under which the same book 
is sold overseas at a significantly lower price than it is sold in the 
U.S. continues to be the prevalent business practice of the major 
higher education publishers. Based on anecdotal evidence, it does not 
appear that the re-importation problem has been reduced from 2-3 years 
ago. By the same token, of course, continuation of the dual pricing 
system keeps textbook prices for most U.S. college students 
significantly higher than they are for students overseas, whether in 
Mexico, Southeast Asia, or Western Europe.
    NACS is not seeking a legislative solution to this problem at the 
current time. We continue to want to work cooperatively with our 
textbook publishers to lower the prices of textbooks, while protecting 
the legitimate interests of publishers, authors, distributors, college 
stores, and college students. We believe that progress is achievable.
    However, NACS does believe that the dual-pricing system, even if 
well-intentioned, is unfair. Like publishers, NACS wishes to encourage 
reading and education in underdeveloped countries, and can understand 
the desire to encourage education and discourage counterfeiting by 
discounting prices to some extent in those areas. This desire, however, 
does not justify steeply lower prices to distributors and students in 
Western Europe, for example. Low prices in order to discourage 
counterfeiting or other improper reproductions of books in countries 
such as Mexico, China, and India are no substitute for more aggressive 
and satisfactory intellectual property protection in those countries. 
If textbooks, like movies, can be copied with impunity, then the 
industries themselves and the great American intellectual achievements 
they represent will ultimately be in jeopardy.
    U.S. and Canadian college students should not, by themselves, be 
made to suffer the consequences of underdeveloped countries' inability 
or unwillingness to enforce their laws. In fact, higher prices in the 
U.S. are also leading to improper copying of books and many U.S. 
students deciding to forego acquiring textbooks altogether. All 
segments of the textbook industry should be working together to see how 
we can best maintain the extraordinary high quality of U.S. higher 
education which is the envy of the world without making the price of 
that education prohibitive to many Americans. Textbook prices should 
not be ignored in this discussion.
    For these reasons, I want to again express NACS'' appreciation to 
this Subcommittee for shedding light on this issue and encouraging 
discussion of a topic that begs for broad cooperation as we seek a 
solution.
                                 ______
                                 
    Chairman McKeon. Thank you.
    Mr. Isley.

STATEMENT OF JOHN ISLEY, EXECUTIVE VICE PRESIDENT, PUBLISHING, 
  PLANNING, AND BUSINESS, PEARSON HIGHER ED AND PROFESSIONAL 
           PUBLISHING, PEARSON EDUCATION, BOSTON, MA

    Mr. Isley. Chairman McKeon, Ranking Member Kildee, and 
Members of the Subcommittee, thank you for inviting me here 
today. I'm John Isley, I am here as Chair of the Higher 
Education Executive Committee of the Association of American 
Publishers. My day job is working for Pearson Education as 
Executive Vice President of Global Strategy and Publishing.
    First, I would like to say that the American system of 
higher education and outstanding course materials that 
publishers provide that support that system are without 
question the world's best. And like many good things, they are 
changing. Cutting-edge course materials are nearly as much 
about electronic services as they are print textbooks. They 
provide Web access, interactivity and access for distance 
learning that we couldn't have imagined even 10 years ago.
    Let me emphasize that these high-end products are not for 
everyone. Publishers are a lot like auto manufacturers--we 
offer our versions, both the Lincoln Navigators and the Ford 
Focuses of the world.
    Let me show you how this works, using some examples from my 
company, Pearson Education. I have to do a show and tell. The 
first title is a two-semester, top-of-the-line U.S. history 
book. Full color throughout, full of illustrations, 1200 pages 
long. We would sell it to retailers for $80.25. They would 
probably sell it to students at about $107. It also includes 
access to a premium web site that has a lot of resources for 
the students.
    The second is a briefer version of the same book, designed 
for a one semester course, that doesn't contain the access to 
the web site, that we would sell to booksellers for $48.
    The third is yet another American history book designed for 
a one-semester course, in the Penguin Academic series, that we 
would sell to resellers for $25, and they would probably sell 
to students for $33.
    And the last is a fully featured book, but you can't really 
see it, because half of it is on the Web. It's a text-Web 
hybrid. So again, it is a one-semester book in American 
history. We would sell it to bookstores for $28.80. They would 
probably sell it for like $38. And it includes an access code 
to the web site.
    And finally, at Pearson, we are introducing an electronic 
text subscription service, where any text in the service would 
be available at 50 percent off its likely suggested retail 
price. So you are, basically, half off. You get an electronic 
subscription, it's viewable from any computer from the 
Internet.
    And this is only a small subset of what is available. And 
all of these options, except the new e-book initiative, were 
available well before the CALPIRG report.
    So with all of these choices, who does the choosing? Well, 
course materials are selected by instructors. And that's a 
tough job, given all the options they have. Frankly, we think 
they do this job conscientiously and well. When a class uses 
the course materials thoroughly, whether they are a book, 
electronic, we generally have high faculty and student 
satisfaction. What goes wrong is when students are asked to buy 
something they don't use or value.
    We think the best source for measuring what students are 
paying for textbooks come from the student monitor. They've 
been doing this for years. Their studies say student spending 
on textbooks at four-year institutions was $620 this past year. 
And it has risen an average of less than 2.5 percent per year 
for the last five years--similar to inflation. But at $623 
they're buying roughly 12 books, or paying about $52 a book.
    There are other data points in this issue. One issue that 
confuses the data is the difference between prices and 
spending. For example, measuring the price of the Lincoln 
Navigator over time doesn't say very much about what the 
average person is paying for a car.
    Now, we are worried about used books. These make up about a 
third of the market in dollar terms. So about a third of the 
$623 spent on textbooks, you spend on used books, not new. 
Publishers neither set the price, nor do we, nor do our authors 
receive any of the proceeds.
    And one last point on cost, per the College Board, student 
spending on course materials and supplies, at public four-year 
colleges, represents about 6 percent of the total cost of that 
education. I think it's worth it.
    The invitation memo asked what we thought about the recent 
CALPIRG report. There is much in the report that we object to, 
in its tone, data, and conclusions. One clear inaccuracy in the 
report is a description of packaging or bundling. This is a 
process described previously where things are put together and 
sold at one price. Well, I can't comprehensively speak to 
pricing policies in our industry, but most bundles, 
specifically including those in the CALPIRG report, represent a 
considerable savings to the purchaser.
    The misunderstanding around new editions is also pervasive. 
In the college market, new editions are usually published every 
three years. Professors generally want the most up-to-date 
information and resources available and are unwilling to adopt 
older textbooks. I know from personal experience, when a title 
is not revised, it won't continue to be adopted.
    Finally, though, CALPIRG suggests that electronic delivery 
of course materials might save students money. We hope they are 
right. Many in our industry, including Pearson, are seriously 
taking the plunge in electronic text offerings, and we hope to 
find a market for them.
    Let me say, in closing, that I believe the concern and 
debate about course materials will resolve itself in the 
competitive market, as it has done in the past, and will 
involve all members of the academic community working together 
to improve on the high standards that we've already set.
    Mr. Chairman, this concludes my statement, and I look 
forward to answering any questions.
    [The prepared statement of Mr. Isley follows:]

Statement of John Isley, Executive Vice President, Publishing, Planning 
 and Business, Pearson Higher Ed and Professional Publishing, Pearson 
                         Education, Boston, MA

    Chairman McKeon, Ranking Member Kildee and members of the 
subcommittee, thank you for inviting me here today to discuss the role 
of the publisher in textbook development and distribution.
    I am John Isley, Executive Vice President of the Pearson Higher 
Education, International and Professional Group. I appear today 
representing the Association of American Publishers in my role as 
Chairman of the AAP Higher Education Executive Committee.
    The Association of American Publishers is the national trade 
association of the U.S. book publishing industry. AAP's members include 
most of the major commercial book publishers in the United States, as 
well as smaller and medium-sized houses, not-for-profit publishers, 
university presses, and scholarly societies.
    There have been significant changes in higher education over the 
last decade and we appreciate the invitation to share these 
developments with you, as well as address the questions you raise. 
Today's students, and the faculty that teach them, have new 
expectations from their higher education. These expectations are driven 
by many factors, including demographics, employment requirements for 
knowledge workers, the significant lifetime wage benefits of a college 
degree, and a student population that is multi-tasking the demands of 
school, work, and home.
    These market conditions have created the need for publishers to 
personalize higher education, employing technology, instructional 
tools, and a new, vast array of materials that address individual 
learning and teaching styles. Higher education publishers offer a 
continuum of price points for the textbooks and digital products we 
offer, from low-cost editions to fully-loaded textbooks and 
instructional packages, with a variety of options to integrate the 
components which may include customized editions, and electronic, 
abridged and brief editions.
    Publishers offer faculty and students ancillary materials 
customized to the way individual faculty members prefer to teach and 
enriched and prescriptive learning resources that ensure all our 
students have an equal opportunity to be successful.
    Allow me to address some of the key issues relating to 
postsecondary textbooks that have been raised by you and others:
1) How are course materials decisions made in colleges, community 
        colleges, and universities?
    The decision-maker in selecting instructional materials for course 
use is the individual professor or, in some cases, a committee of the 
instructors responsible for teaching a specific course. The selected 
textbooks are then typically ordered from the publisher and/or 
wholesalers by the campus bookstore or other resellers and purchased 
directly by the student from that retailer.
    Professors and instructors independently choose instructional 
materials in the context of their course needs, their perceptions of 
their students' needs and abilities, and any guidelines given by their 
department or institution. A wide array of materials from a variety of 
publishers is generally available for each course at the college level. 
Since the market is freely competitive, there are typically materials 
available from both AAP member and non-member publishers, including 
multiple versions or customized offerings from individual publishers in 
various formats and at significantly different price points.
    Faculty members have the difficult job--which we believe they do 
conscientiously and well--of making selections among the offerings 
based on their judgments about which are the best materials that meet 
their standards to recommend or require students to buy. Their 
judgments are based on a variety of factors but it is clear that price 
and value offered by the materials are increasingly important in their 
considerations.
2) Why are textbooks so expensive? When adjusted for inflation, are 
        books and textbooks more expensive today than they were in the 
        past?
    As noted above, textbooks are available from publishers at a 
variety of price points, and there is price pressure on college 
textbooks as a result of several factors that will be discussed below. 
In general, however, we don't believe students are paying significantly 
more for course materials today, either on an inflation-adjusted basis 
or as a percentage of overall education expenses. To be more specific:
      Student Monitor, LLC, an independent market research firm 
which studies a broad range of student lifestyle and purchasing 
patterns, consistently measures what students spend each semester on 
new and used textbooks. Their data says students of four-year colleges 
spent $623 in the 2003-2004 academic year and that increases in student 
spending have averaged 2.5%. By our figuring this increase is 0.2% 
faster than inflation. (See Appendix for Student Monitor's view of 
textbook spending.) We realize there are other measures that tell a 
different story, though there are also those--including one cited by 
CalPIRG for the U. of California system that says student spending 
increased 3.4% over the last seven years--which present similar data. 
Perhaps the GAO study can help sort out a more precise number here but 
it is certainly our view that in recent years student spending on 
course materials has not increased much faster than inflation.
      Textbooks have always been expensive relative to general 
interest publications since the potential market for any individual 
title is limited to the students who would enroll in a college class on 
the topic.
      Publishers often support the basic text with an 
increasingly large and complex array of print, web, and other media 
supplements and services to both instructors and students. Instructors 
value these complementary products and additional instructional support 
but the costs of creating, maintaining and servicing these assets are 
not insignificant.
      Production values in the texts themselves have increased 
significantly from the days of one-color, lightly illustrated books. 
Today, many of the books are in oversized formats and in full color. 
This shift is in response to customer demand.
      The majority of costs involved in creating textbooks are 
in the intellectual capital and labor of the authors and knowledge 
workers who create them, costs that aren't easily reduced. These sorts 
of cost pressures present, of course, a challenge in all facets of 
higher education.
      A significant amount--we estimate 50%--of the revenues 
from student purchases of authors' and publishers materials goes to the 
distribution and re-distribution chain. (See Appendix for a graphic 
representation of where student purchasing dollars go.) To be sure, 
some of this money goes back to students who choose to sell their books 
at the completion of a term for resale on the used book market.
3) How are authors recruited to write textbooks and course materials?
    In the most typical cases, textbook authors are college 
instructors. There are, however, many, many different sources of 
authors of successful textbooks and, since the market is freely 
competitive, people with non-traditional backgrounds or unaffiliated 
with academic institutions can succeed.
    In the most typical case, however, authors are college instructors 
who are great teachers, write well, are entirely up-to-date on certain 
areas in the field or in pedagogical techniques, and smart enough to 
know to ask for and accept help in areas where they are less talented 
or up-to-date. Some potential authors contact publishers directly, 
others are discovered by a member of a publisher's staff who hears them 
talk about their classes and students, believes they are talented, and 
encourages them to give textbook writing a try.
    Successful, proven authors, or even new authors with a terrific 
proposal or samples, can be highly sought after and competed for by 
various publishers. We each have our stars. However, the norm for 
results, as is probably true in most of the creative businesses and is 
certainly true in other parts of the publishing business, is that most 
new titles do not sell as well as their author's or publishers' initial 
expectations. In these instances, the royalties earned, in an economic 
sense, in no way justify the time and energy spent on the project, 
though few regret having written their books.
    There is an even larger group of members of the academic community, 
generally instructors, who serve as authors of supplementary materials 
or developers of electronic materials or reviewers of draft 
manuscripts, who greatly aid in the creation of a publisher's learning 
materials.
    Finally, and increasingly, many publishers engage, generally 
through instructors, students who ``class test'' portions of draft 
manuscripts or beta versions of electronic materials for their 
efficacy.
4) What portion of total expenses of attending college do course 
        materials represent?
    According to the College Board, the cost of course materials and 
supplies is about 6% of the total cost of attending a four-year public 
college or university
5) Why are supplementary materials, such as workbooks and CDs, packaged 
        with textbooks instead of sold separately?
    When print or media supplements are packaged with textbooks that 
offer is generally the result of the instructor's specific selection of 
that combination of materials. In may cases, the combination of 
materials enable the publisher to offer the learning package at a 
discount relative to the aggregated cost of the items if purchased 
separately. That noted, the items in the package typically can be 
purchased separately, or a student could combine buying a used book 
with new supplementary print or electronic materials.
6) How often are new editions published? Why do they have to be 
        published so often? Why can't faculty order older editions of 
        books to supplement the college's supply of used copies of a 
        certain edition?
    In the college market new editions are usually published, on 
average, every three years. In some disciplines or markets the cycle 
could range from two to four or fives years but three years is a 
typical normal cycle across most disciplines.
    Students and professors generally want the most up-to-date 
information available and instructors have historically been unwilling 
to adopt textbooks that are three and four years old. New editions are 
done to update content, improve the instruction, issue new sets of 
problems and practice tests that aren't in general circulation, offer 
electronic resources that are compatible with current software systems 
and infrastructure, and enable publishers to attempt to make sales and 
gain new adoptions by instructors who have not previously used the 
title. Once a new edition is published, publishers generally do not 
continue to stock the old edition for any extended period of time. 
There is nothing, however, to prevent campus bookstores or other 
resellers from maintaining a stock of an old edition.
7) How is the Internet changing your business? Do you sell online 
        texts? If so, does it cost as much to prepare them as it does 
        to publish paper texts? Eventually, will the publishing of 
        books on the Internet lower their prices for both students and 
        publishers?
    It is still early to fully understand how the Internet will change 
the delivery of instruction in higher education and, as a consequence, 
change the higher education publishing business.
    Most higher education publishers do, indeed, have many of their 
textbooks available online, either in downloadable form or readable-
online. There are several initiatives to this effect currently ongoing, 
with some offering substantial discounts to students. That noted, e-
textbooks have been available for a few years but sales have been 
minimal so far. The costs of e-textbooks are additional to the costs of 
producing and maintaining the print content. On an industry-wide basis 
our customers are still heavily favoring print content in their 
purchasing despite oft stated demand for digital delivery. To meet 
marketplace demands, I suspect publishers will choose to maintain a 
dual inventory for some time to come.
    We welcome the challenges of digital delivery and we look forward 
to opportunities to improve instruction through digital delivery of 
content. All publishers are currently providing a variety of digital 
content for use by instructors and students in assessment, homework, or 
for other instructional purposes, very often in a variety of electronic 
formats as specified by an instructor or individual campus. That noted, 
I expect the migration to digital delivery to be very gradual, and I 
expect that the need to maintain and increase investment in both print 
and digital delivery will be with the sector for some time to come.
    However, as previously noted, on an industry wide basis the largest 
costs in producing quality instructional content and tools lie in the 
creative inputs--the work of authors, editors, artists, and reviewers--
not in the sheer manufacturing and delivery of that content.
8) Are textbooks priced differently around the world?
    By any measure, American higher education is the world's best and 
we believe American course materials are part of that excellence. The 
rest of the world agrees. American books, written primarily by American 
authors, particularly in business, science, engineering, and computer 
science, enjoy strong demand outside the U.S.
    Each publisher has its own individual policies and practices about 
pricing around the world but it is fair to say that most titles 
intended for purchase in areas such as Asia, India and Latin America 
are sold at prices that reflect local market conditions. To set 
pricing, each publisher, usually through their local management, 
examines the factors that influence that market, such as local income, 
costs, competition, standard of living variances, and local regulatory 
and trade issues.
    Selling into foreign markets helps publishers spread their costs of 
development over more copies and keep prices lower for U.S. students.
    One reason that most publishers have chosen to make desirable U.S. 
textbooks available at prices that reflect local market conditions is 
that price is often used as an excuse for copyright infringement. 
According to a conservative estimate by the International Intellectual 
Property Alliance, piracy cost U.S. publishers $500 million in 2003. 
While piracy of American textbooks is a worldwide phenomenon, AAP 
believes book piracy and commercial photocopying of American texts are 
most rampant in Asia due to the high demand for English language 
materials in that region. United States government officials encourage 
publishers to price their materials to the local markets. The U.S. 
Government has also requests publishers to commit their own resources 
to monitoring piracy and they are, both through the AAP and 
individually.
9) What are publishers' views of textbook rental programs?
    Rental programs have existed at certain institutions for a number 
of years so there is likely good data on their efficacy. As publishers, 
we have the view that many of our learning resources have
    lasting value for students in their educational and professional 
careers, and we would hope they would keep them. A system of ``rental'' 
presupposes that books are primarily for borrowing, not keeping, and we 
struggle to agree with that view.
    In addition, although this is not really an issue for publishers, 
there are economic considerations for colleges and universities. We 
believe on campus bookstores are generally profit centers for these 
schools.
    There are also practical concerns. As more of publishers' resources 
for students become electronic, measure individual student performance 
and, thus, are consumable, it is not clear to us how the rental model 
can effectively respond to that usage.
10) What did publishers' think of the recent CALPIRG report?
    It isn't hard to imagine that publishers weren't too keen on a 
report entitled ``RipOff 101'' that attacked our industry. There is 
much we object to in its methodology, tone, data and conclusions. 
Perhaps the GAO report will help clarify the survey methodology and 
data. One small point: AAP was aware of the report while it was in 
preparation and offered to participate, but we were not invited. On the 
other hand, there are points in the report that accurately reflect 
student frustration with course materials purchasing and some suggested 
directions that some industry members already are pursuing.
    The report is inaccurate in its description of packaging. Most 
packages of learning materials, including those cited in the CALPIRG 
report (as reported by the California Association of College Stores), 
represent a considerable savings to the purchaser over purchasing the 
items separately. Where packages go wrong is when a student is asked to 
buy something that isn't helpful or doesn't get used.
    The misunderstanding around why publishers introduce new editions, 
discussed previously, is also pervasive.
    Finally, though the report suggests electronic delivery of course 
materials might save students money, so far this has not been the case 
as most e-book offerings have met with customer indifference. Still, 
some AAP member publishers are currently pursuing this avenue and 
offering significant savings to student customers.
    Mr. Chairman, that concludes my testimony and I am happy to answer 
any questions you and the Members of the Subcommittee may have.
                                 ______
                                 
    [Attachments to Mr. Isley's statement follow:]
    [GRAPHIC] [TIFF OMITTED] 94936.001
    
    [GRAPHIC] [TIFF OMITTED] 94936.002
    
    Chairman McKeon. Thank you.
    Mr. Monroe.

    STATEMENT OF VIRGIL MONROE, MANAGER, TEXTBOOK SERVICES, 
      UNIVERSITY OF WISCONSIN-RIVER FALLS, RIVER FALLS, WI

    Mr. Monroe. Thank you, Mr. Chairman. Thank you, Members of 
the Committee. I'm very pleased to testify before the House 
Subcommittee on 21st Century Competitiveness.
    As Representative Kind mentioned, Textbook Services is in 
his district. It is very much like a library.
    Chairman McKeon. Mr. Monroe, could you pull the microphone 
closer, please.
    Mr. Monroe. Yes.
    Chairman McKeon. Thank you.
    Mr. Monroe. it is very much like a library; in fact, on our 
campus it is a department of the university library, supervised 
by the Director of Library Services. Textbooks are checked out 
at the beginning of the semester, and then returned at the end 
of the semester. But we also give students the option to 
purchase any textbooks that they think will be of use of them 
in the future.
    Our rental system is very popular with students. In fact, 
on our campus, it is popular because of the rental system. A 
full-time student pays $59 per semester rental fee, and that 
entitles a student to check out textbooks for the semester. 
Students check out an average of seven textbooks each, that 
means 14 textbooks over the course of the year. If the text are 
returned undamaged and by the due date, no further charges are 
levied. If students wish to purchase texts, then they may 
purchase them. Any text in our inventory during our semester 
textbook sale, at a discount of 20 to 40 percent off the retail 
price.
    As textbook prices continue to rise, prospective students 
and their parents are attracted to the University of Wisconsin-
River Falls by the potential for saving money on textbooks. The 
textbook rental system also has the effect of bringing total 
college costs down to a more manageable level, and this makes 
college more accessible, especially for poorer students.
    As I said, the service is very popular with students. And a 
student survey, which we conducted in 1998, the 417 students 
who responded to the survey question, do you think the textbook 
service is a valuable service for students. Four hundred and 
ten indicated they thought it was. In the section of the survey 
reserve for written comments, 82 students wrote, excellent, 
good, or great service for students or a similar comment. 
Forty-nine students wrote, saves money, better than buying 
books or a similar comment. Only one student wrote, I would 
prefer to buy my books in the bookstore.
    At the University of Wisconsin system audit of the seven 
Wisconsin-based textbook rental systems, which was conducted 
from December 1998 to September 1999, concluded that, 
``Textbook rental programs provide a needed service, while at 
the same time rendering measurable cost savings to students and 
the campus community. Overall, textbook rental operations are 
well-managed, and we have recommended that institutions without 
textbook rental, explore the feasibility of providing some 
rental services.''
    Students also like a rental service because they do not 
have to decide whether or not the academic benefit they gain 
from buying copies of the text, for a particular class, is 
worth the considerable financial cost. As I monitor class 
enrollments each semester, and then compare enrollment to our 
textbook inventories, I see almost invariably, everyone in the 
class has checked out the textbooks for the class. This is in 
contrast with textbook purchase systems, where a percentage of 
students in the class may elect not to purchase the text at 
all. This percentage can reach 25 percent or more in some 
classes.
    In addition, students have the opportunity to check out, 
without additional charges, a second copy of a text or texts 
from other classes. The ability to check out a second copy of a 
text can be very useful for students with disabilities, and for 
students who may forget their text at home on the day of the 
big test, or when an important assignment is due. Each semester 
we distribute 41,000 texts, and the other 48,000 texts in our 
inventory are available for these purposes.
    Faculty members like our rental system for the same reasons 
the students do. Though faculty members do not support the 
rental system as uncritically as students, they are, basically, 
satisfied. A most recent faculty survey, conducted in spring 
semester 2000, indicated a medium to high level of faculty 
satisfaction with our rental service. We sent 337 surveys to 
teaching faculty. Seventy-seven completed surveys were 
returned. In response to the survey question, are you satisfied 
with our textbook ordering policies, 62 percent indicated that 
they were very satisfied. 31 percent indicated that they were 
satisfied. No one indicated that they were dissatisfied.
    Textbook services is considered an asset by many other 
universities, faculty and students. I think the recommendations 
of the UW system audit reflects this. As textbook services 
manager, I respond to frequent requests for information about 
textbook services from universities, faculty, and students all 
across the nation. Other universities are actively looking for 
a way to solve their significant problems with textbook 
purchase systems. I wish I could say that we were very 
innovative in establishing a textbook rental system at the 
University of Wisconsin-River Falls, when in fact, we've always 
had a textbook rental system here. That decision was made a 
long ago before our current faculty and staff and 
administration had begun this service to the university.
    However, it is to the great credit of the current 
university faculty and administration that they have continued 
to support textbook services, when it is now and has always 
been clear that a textbook service purchase system would bring 
in more revenue for the university.
    This support, I believe, begins with a very sincere respect 
for student opinion and a sincere concern for their academic 
and financial welfare. Thank you.
    [The prepared statement of Mr. Monroe follows:]

 Statement of Virgil Monroe, Manager, Textbook Services, University of 
                 Wisconsin-River Falls, River Falls, WI

    My name is Virgil Monroe. I manage Textbook Services at the 
University of Wisconsin-River Falls. I am very pleased to testify 
before the House Subcommittee on 21st Century Competitiveness. In my 
testimony today, I will describe our textbook rental service for 
students, the impact it has on the cost of their college education, how 
it was implemented on our campus, and how it is perceived by our 
students, faculty and administration. I will close with comments about 
textbook pricing and a short discussion of the feasibility of 
establishing textbook rental systems on other college campuses.
    Textbook Services is a college textbook rental service which was 
established by the University of Wisconsin-River Falls to supply our 
students with college textbooks and other instructional materials in 
direct support of the curriculum. In exchange for a rental fee, paid as 
part of the student's tuition, we provide textbooks and other 
instructional materials to students under the direction of the faculty 
and the University administration.
    Textbook Services is very much like a library. In fact, on this 
campus, it is a department of the University Library, supervised by the 
Director of Library Services. Textbooks are checked out at the 
beginning of the semester and then returned at the end of the semester, 
but we also give students the option to purchase any textbooks that 
they think will be of use to them in the future.
    Our rental system is very popular with students. It is popular 
primarily because it saves students a significant amount of money each 
semester. For example, it is not unusual for a student in a book 
purchase system to spend $300 to $600 for texts each semester, and then 
to sell the texts back to the Bookstore or online, at the end of the 
semester, for $150 to $300. In our rental system, (full time) students 
pay a $59.00 per semester rental fee to checkout texts for the 
semester. Students check out an average of 7 textbooks each. If the 
texts are returned, undamaged, and by the due date, no further charges 
are levied. If students wish to purchase texts then they may purchase 
any text in our inventory during our semester book sale at a discount 
of 20-40% off the retail price. The amount of the discount depends on 
the age of the text.
    By buying current texts at discounts of 20-40% and by buying 
discontinued texts (i.e. textbooks which are no longer used, have been 
replaced by a later edition, or a different text) at prices that range 
from $.25 to several dollars per copy, students may develop a personal 
and professional library at minimal cost. I think it is incorrect to 
assert that a rental system discourages the development of a personal 
and professional library. In fact, it does just the opposite. We sell 
approximately 10,000 copies of current and discontinued texts to 
students each year. Each semester teaching faculty members receive a 
list of discontinued textbooks, in their subject areas, that are 
available for students to purchase. For many weeks after these lists 
are distributed, we have large numbers of students who come in to 
purchase discontinued texts. We also advertise our current and 
discontinued semester textbook sales in the student newspaper, on 
campus t.v., and in emails that we send to students each semester. So 
it is very easy and inexpensive for a student to establish a 
professional library.
    As textbook prices continue to rise, prospective students, and 
their parents, are attracted to the University of Wisconsin-River Falls 
by the potential for saving money on textbooks. The textbook rental 
system also has the effect of bringing total college costs down to a 
more manageable level and this makes college more accessible, 
especially for poorer students.
    In a student survey, which Textbook Services conducted in 1998, of 
the 417 students who responded to the survey question: ``Do you think 
that Textbook Services is a valuable service for students?,'' 410 
indicated that they thought it was. In the section of the survey 
reserved for written comments, 82 students wrote ``Excellent, good, or 
great service for students,'' or a similar comment. 49 students wrote 
``Saves money, better than buying books,'' or a similar comment. Only 
one student wrote, `` I would prefer to buy my books in the 
Bookstore.''
    A University of Wisconsin-System Audit of the seven Wisconsin based 
Textbook Rental Services, which was conducted from December 1998-
September 1999, concluded that ``. . . textbook rental programs provide 
a needed service while at the same time rendering measurable cost 
savings to students and the campus community. Overall, textbook rental 
operations are well managed. . .We have recommended (that) institutions 
without textbook rental explore the feasibility of providing some 
rental services. . .Textbook rental operations provide the convenience 
and flexibility needed by students, while at the same time helping 
control textbook costs and consequently shielding the students to some 
degree from ever-rising textbook prices.''
    Students like the control a rental system gives them. They may buy 
the texts they think will be of value to them in the future, in later 
classes or in their professions, but they are not forced to buy texts 
that they may never use again. Our students also have a voice, through 
the Textbook Services Advisory Committee, the Student Senate and the 
Fees and Facilities Board, in reviewing Textbook Services policies and 
procedures and in setting the textbook rental fee each year. So, I 
think our textbook rental system is perceived by most students as being 
a fairer system. In my experience, students who must buy their 
textbooks each semester have little or no voice in determining textbook 
prices.
    Students also like our rental service because they do not have to 
decide whether or not the academic benefit they gain from buying copies 
of the texts for a particular class is worth the considerable financial 
cost. As I monitor class enrollment each semester and then compare 
enrollment to our textbook inventories, I see, almost invariably, 
everyone in the class has checked out the textbooks for the class. This 
is in contrast with textbook purchase systems where a percentage of 
students in the class may elect not to purchase the texts at all, 
others students in the class may wait until late into the semester--
until they realize they cannot get along without the texts--to purchase 
the texts for the class. This percentage can reach 25% or more in some 
classes. Some students may elect to purchase a similar text at a lower 
price, and this can also cause problems.
    In addition, students have the opportunity to check out, without 
additional charge, a second copy of a text, or texts from other 
classes. The ability to check out a second copy of the text can be very 
useful for students with disabilities and for students who may forget 
their texts at home on the day of a big test or when an important 
assignment is due. Each semester, we distribute 41,000 texts. The other 
48,000 texts in our inventory are available for students to check out 
for review, for help in preparing papers and assignments, for looking 
forward to future classes, and for reference.
    Faculty members like our rental system for most of the same reasons 
that students do. They appreciate the savings it offers to students. 
They know everyone in their classes will have the textbooks for the 
class. They can make assignments from and recommend texts that are used 
in other classes. Though faculty members do not support the rental 
system as uncritically as students, they are basically satisfied.
    Our most recent faculty survey, conducted in Spring Semester 2000, 
indicated a medium to high level of faculty satisfaction with our 
rental service. We sent 337 surveys to teaching faculty; 77 completed 
surveys were returned. In response to the survey question, ``Are you 
satisfied with our textbook ordering policies,?'' 48 (62%) indicated 
that they were very satisfied, 24 (31%) indicated that they were 
satisfied, 0 (0%) indicated that they were dissatisfied, 0 (0%) 
indicated that they were very dissatisfied and 5 (7%) did not respond 
to the question. In response to the question, ``Is our textbook 
collection adequate for the classes you teach,?'' 42 (55%) indicated 
that the collection is very adequate, 35 (45%) indicated that the 
collection is adequate, 0 (0%) indicated that collection is inadequate 
and 0 (0%) did not respond to this question.
    In the section of the faculty survey reserved for written comments, 
14 faculty members wrote, ``The rental system is great, keep up the 
good work.,'' or words to that effect. 6 faculty members wrote that 
they would like us to purchase new texts instead of used texts. 2 
faculty members wrote indicated that they would like students to 
purchase texts instead of renting them. In our 1997 faculty survey, one 
faculty member wrote, ``(I) should be able to change books as (often 
as) necessary and (have) as many (titles) as necessary for each 
course.'' Another wrote, ``Too many used books are purchased, we lose 
out on extra perks from publishers.'' Another faculty member wrote, 
``Too many books are in poor condition.,'' and another wrote, ``Discard 
books that are in worn condition or written in.''
    In a letter to the Faculty Senate, dated 10/29/99, a faculty member 
wrote, ``Faculty need greater flexibility in adapting to an ever 
changing world of information in their respective fields. Students who 
leave this institution need to have established a library to which they 
can refer as a foundation in their field It's time we join the rest of 
the academic institutions in the state and nation which have university 
bookstores' ''
    The letter and the survey comments effectively summarize the main 
problems and concerns that a relatively small number of the teaching 
faculty have with our textbook rental system. We have sought to address 
these concerns, but we have not always been successful. To be 
financially viable, we have established a minimum two year use period 
for textbooks, we occasionally have to limit the number of titles that 
we can supply for a class, and our textbooks become worn, marked and 
highlighted when they have been used repeatedly. I do think, though, 
that we offer a very good opportunity for students to develop a 
personal and professional library.
    In 1995, a subcommittee of the Faculty Senate evaluated all campus 
student support services in terms of their importance to the mission of 
the University, their contribution to student academic success, and 
their effectiveness in providing service to students and faculty. 
Textbook Services was ranked number one among all student support 
service departments. In their report to the Chancellor the committee 
wrote: ``This program is a model of efficiency and effectiveness 
because of: 1. Its high level of service. 2. It uses survey data to 
improve and refine services. 3. It is oriented to serve students as 
cost-effectively as possible. 4. It is highly efficient in getting 
texts, distributing texts, and retrieving texts. 5. It operates at a 
very reasonable cost. 6. It maintains a clear focus and single 
function.''
    Is the rental system feasible for other Universities who currently 
have book purchase systems? Possibly, but there are several hurdles to 
overcome.
    A textbook rental system is very expensive to establish and there 
is very little financial return on investment. With most Universities 
struggling to make do with static or reduced revenues from taxes, they 
do not have the revenue necessary, without taking money from other 
University programs, to make the initial, large textbook purchases that 
are necessary in order to establish a textbook rental system .
    Once the program is in place, it is self supporting and may even be 
able to generate some revenue for other University programs. At the 
University of Wisconsin-River Falls, our textbook rental program 
currently provides $10,000 per year in revenue to the University 
Library and $19,000 per year in revenue to other University programs. 
Admittedly, this is a small amount when compared with typical revenues 
that the University collects from a textbook purchase system.
    In order to reduce the financial impact to their other programs, 
Universities seeking to establish a rental system may want to phase it 
in gradually, beginning with Freshman and Sophomore level classes, as 
texts for these classes are generally less expensive.
    The University administration must be willing to give up a 
significant source of revenue. Whether the University owns the 
Bookstore or leases it to an independent company, a portion of textbook 
sales on most University campuses makes its way into the University's 
general revenues and is used to help cover the cost of University 
programs.
    The program must have strong support from the teaching faculty. In 
order for the textbook rental system to be financially viable, 
professors must agree to use a text for at least two years from the 
date of its adoption. Though exceptions may be made in areas where 
information changes rapidly and where a new or different professor 
begins teaching the class, the textbook rental system is less flexible, 
less forgiving, than book purchase systems, where, in many cases, the 
text may be changed each semester if desired.
    In order to avoid getting stuck with a bad text, professors must be 
willing to devote time and research into the selection of a text and 
new professors may need to seek help from their older colleagues and 
from their department chairs. The result of more time spent in the 
selection process and better coordination among department members can 
pay real dividends, however, in the selection of a better text that is 
better integrated into the broad selection of courses that the 
department offers.
    Student support is also critical, though much more easily achieved. 
Students are very concerned about the rising cost of textbooks and, 
judging from the many comments and requests for information about our 
rental service that I receive from students, from all over the country 
each year, they are looking for a means to help reduce the percentage 
of their college expenses that they spend on textbooks.
    Students are justified in their concern about textbook prices. 
Textbook prices have been rising rapidly. Some of our commonly used 
texts have a retail price of over $120 per copy. The recent years of 
very low inflation rates, nationally, do not seem to have affected the 
rate at which textbook prices are rising.
    Many times the same textbooks we are using are for sale in college 
bookstores in England, Europe and Asia for much lower prices. The 
introductory calculus text that we use on our campus retails for $130 
in the United States; its' retail price in England is $75.
    Students think that the rapid production of new editions, 
especially of texts that are used in entry level and lower level 
classes, is designed to inhibit the sale of used textbooks and keep 
textbook prices high. There does seem to be some justification for this 
belief. Rapid edition changes in lower level classes, where enrollment 
is high, but where information generally does not change as rapidly, 
far outpace edition changes in higher level classes, where enrollment 
is low, but information generally changes more rapidly. When publishers 
representatives come to visit they never ask me what text is being used 
in Advanced Organic Chemistry, but they are very interested to know 
what text is being used in General Chemistry I.
    Textbook Services is considered an asset by many other 
universities, faculty and students. I think the recommendations of the 
UW System audit reflect this. As Textbook Services Manager, I respond 
to frequent requests for information about Textbook Services from 
universities, faculty and students, all across the nation. Other 
universities are actively looking for a way to solve their significant 
problems with textbook purchase systems, and they are looking for 
innovative ways to deal with the rapidly increasing cost of a college 
education.
    I wish I could say that we were very innovative in establishing a 
textbook rental system at The University of Wisconsin-River Falls, but 
in fact we have always had a textbook rental system here. That decision 
was made long ago before any of our current faculty, staff and 
administration had begun their service to the University. However, it 
is to the great credit of the current University faculty and 
administration that they have continued to support Textbook Services 
when it is now and has always been clear that a textbook purchase 
system would bring in more revenue for the University. This support, I 
believe, begins with a very sincere respect for student opinion, and a 
sincere concern for their academic and financial welfare.
                                 ______
                                 
    Chairman McKeon. Thank you very much.
    That's intriguing. I don't know if I understand exactly how 
it works. Say you have 2,000 students signed up in the school 
for Economics 101. Do you buy 2,000 texts and then rent them 
out?
    Mr. Monroe. Yes.
    Chairman McKeon. Say the cost of the book is $80, you rent 
out for $59. How can you afford to do that?
    Mr. Monroe. Well, we require that a text be used at least 
two years.
    Chairman McKeon. Okay.
    Mr. Monroe. Some texts are used longer than that.
    Chairman McKeon. Okay.
    Mr. Monroe. It just depends. It's completely up to the 
professor. And after that two-year period has passed, the 
professor can replace a text or not replace it, as he or she 
sees fit.
    Chairman McKeon. So it is a revenue generator then and 
cheaper for the students.
    Mr. Monroe. Well, it's not a revenue generator, no. But in 
our particular case--
    Chairman McKeon. But it's not a loss.
    Mr. Monroe. No. Once it has been established, it does 
generate some revenue for the university, which can be applied 
to other programs. In our case. Last year, we generated about 
$29,000 in revenue for the library and for other university 
programs.
    And I should mention, also, that the $59 that we charge, is 
not per textbook. That's for all textbooks.
    Chairman McKeon. I understand.
    Mr. Monroe. Okay.
    Chairman McKeon. I understand it. But I just couldn't see--
I understand it, and if you use the textbook for five years 
it's even better.
    Mr. Monroe. Yes.
    Chairman McKeon. Because you're only buying it once, and 
you use it for five years.
    Mr. Monroe. Yes.
    Chairman McKeon. And the student has to keep it in certain 
shape before they turn it back in.
    Mr. Monroe. Well, we repair books to the maximum extent 
possible. But I guess we do depend upon our students to do 
that.
    Chairman McKeon. Mr. Isley, in the four examples, if the 
professor picked the first one, the more expensive version, 
that's the one the students have to buy.
    Mr. Isley. It's the one that the bookseller would most 
likely stock. And yes, it is the one that students would buy. 
And that would be at the professor's direction.
    Chairman McKeon. So the choice is not the student's, the 
choice is made by the--
    Mr. Isley. Right. Typically, the student--the professor 
would choose among various offerings. The student choice occurs 
whether they either by a new book, or as Mark said, they buy 
used book, or now, we hope, potentially, an electronic.
    Chairman McKeon. Or you can go to University of Wisconsin 
and rent them.
    Mr. Isley. Or go rent them. Yes, in that setting, sure.
    Chairman McKeon. I understand the wide, wide divergence 
there. How do you answer the question about the calculus book 
that--How much has calculus changed over the last five years, 
10 years?
    Mr. Isley. Calculus probably hasn't changed in 200 years. 
But--
    Chairman McKeon. Or longer, right?
    Mr. Isley. Pedagogical methods, though, around calculus 
have changed.
    Chairman McKeon. So--
    Mr. Isley. The way classrooms are managed has changed.
    Chairman McKeon. How often do they change?
    Mr. Isley. The way homework is done has changed. There are 
new technologies, and infrastructures schemes coming out, 
virtually every year. New versions of--
    Chairman McKeon. So you should have a new textbook every 
year?
    Mr. Isley. I'm not saying that. I'm simply saying that the 
way classroom instruction is done is constantly evolving. And 
that some universities are out there on the cutting edge with 
all the latest stuff, and others are not.
    Chairman McKeon. You know, I'm wondering if some of those 
new methods derived because instructors are bored with the way 
they taught it last year. Or if, in fact, students will learn 
better with the new methods, because some of our tests show 
that were not improving a whole lot. And I don't know if 
that's--I don't know what the reason is there.
    Mr. Isley. Yes. And I would simply say that again, just 
like some books fail, some teaching methods fail, too. But the 
efforts are to increase productivity. I mean, if you look at a 
quantitative discipline like math or physics, or something like 
that, it's all about practice. It's all about--
    Chairman McKeon. How much does U.S. history change?
    Mr. Isley. U.S. history changes, well, quite a bit.
    Chairman McKeon. Yeah, that's the problem.
    [Laughter.]
    Chairman McKeon. The act doesn't change, but the new author 
changes because of his impression, or because another year has 
gone by.
    Mr. Isley. But I--
    Chairman McKeon. This is a very complex problem, and I 
don't mean--we're not up here attacking anybody. But we just 
have real concerns.
    I have a question, Ms. Fairchild, used the amount $898 a 
year for textbooks. And you have the figure of $623 a year. I 
like to hear both of you respond to how you came out with those 
different numbers.
    Mr. Isley. Well, the $623 number comes from a company 
called the Student Monitor LLC, that has been monitoring 
student lifestyles and spending behavior, and what TV shows 
they watch, and what they buy. And they have been doing it for 
years. And they use very consistent methodology. They do long 
interviews with students. That's their number. It's in the 
written testimony. It shows that spending on textbooks hasn't 
really--I mean, has gone up a little bit in the last five 
years, but not dramatically. And it pretty consistently, about 
two-thirds of the books are new, and about one-third of the 
spending is on used books. And students spend more in first 
semester than they do in second semester. And the reason for 
that is the two-semester courses start in first semester. So 
the more expensive books are first semester books, not second.
    Chairman McKeon. Ms. Fairchild.
    Ms. Fairchild. Well, the way that we came to that number 
was simple. We went out and asked students how much they were 
spending on books. But our number is consistent with other 
numbers. And of course, there are different numbers out there.
    So you could also cite The College Board--they just put out 
a new report which you mentioned in your opening statements. 
For this year, they estimate that students, on average, at a 
four-year school, nationally, will spend an average of $817. 
They also broke that down regionally, and for the West Coast, 
showing in California and Oregon, they estimate that the 
average for books and supplies is $1,039. So our number is 
right there in the neighborhood of these numbers.
    Chairman McKeon. And that will vary state by state, school 
by school?
    Ms. Fairchild. Sure, and it's different for community 
colleges. On the West, The College Board estimates that 
students will spend, this year, $807 on books at a community 
college. But if you compare that to what they're spending on 
fees, they're basically spending 44 percent of their total cost 
on textbooks, according to The College Board.
    Mr. Isley. May I?
    Chairman McKeon. My time is up. If you can do it very 
quickly.
    Mr. Isley. Okay, sure.
    The College Board number is not just a books number, it's a 
books and supplies number.
    Ms. Fairchild. Right.
    Mr. Isley. So supplies are printing ink, and software, and 
stuff like that, that's not inexpensive. So it is not hard to 
see how that changes the data.
    Chairman McKeon. Thank you. Mr. Kildee.
    Mr. Kildee. Thank you, Mr. Chairman.
    This has been a very good panel, and I appreciate it very 
much for that, some very good input.
    The question of textbook prices really needs to involve--
all the parties involved. The schools, at University of 
Wisconsin, you have a method there, the students and the 
publishers.
    What, if any, is the role of the Federal Government in the 
question about the price of textbooks? And we will start with 
you, Merriah, and move down. Okay?
    Ms. Fairchild. Great. Well, I suggest three things. One is 
that we need to invest in alternatives that have proven to 
significantly cut students costs. So the model that Mr. Monroe 
is talking about is difficult for some schools that are trying 
to start that up now. You know, River Falls was lucky. They had 
it started when they first started the school. Most schools are 
not that fortunate, and they need help with the start-up costs.
    As the Chairman described, to buy all of those books, 
you're not going to make all of the money back in the first 
semester. So I think it would be very helpful if Congress could 
allocate funds for schools to acquire those start up costs--to 
offset the startup costs. That would help to lower the, you 
know, costs for an entire student body.
    He's talking about $59 a semester, that's a little over 
$100 a year. No matter whose numbers you look at, that is a 
huge savings for students. And that's a great investment.
    Secondly, we are very concerned that faculty don't have 
full disclosure over the price of books. It's great that they 
have these four different options. But if a faculty member 
doesn't know how they compare in price, they're going to pick 
the Lincoln Navigator. Of course, because they are looking at 
the content.
    So we want to make sure that Congress is ensuring the 
publisher is disclosing that price of faculty. And they say 
that they do, but, when we talked of faculty, they don't know, 
or it is very difficult to get. It's not in the materials, the 
publication materials.
    Mr. Kildee. Could we move--
    Ms. Fairchild. Yes.
    Mr. Kildee. We do want to give him a chance.
    Mr. Fleischaker. Yes, let me just respond, very briefly.
    First, your question is an excellent one. We are not 
convinced that there is a role, at the moment, specifically, in 
addressing these issues, whether it is promoting rental 
programs or otherwise. I would say, though, that we do support 
H.R. 4243, which would provide a tax credit for the cost of 
course materials which is not currently in the law. That would 
be an amendment that is pending.
    And also, we don't have a position on the College Access 
and Opportunity Act. It does contain a provision expanding the 
allowance for textbooks from $450 to $600, under three campus-
based aid programs. So those we feel are appropriate roles for 
Congress to play. But we do not feel, at this point, anyway, at 
the very least, it's premature for Congress to try to dictate 
the way books are distributed. That's our view.
    Mr. Kildee. All right. Mr. Isley.
    Mr. Isley. Basically, in line with Mr. Fleischaker on this 
one, the only other thing that I see the Federal Government 
funding are studies on pedagogy, and educational teaching 
methods, that if they work, promise to increase productivity. 
And I think that, sometimes universities are strapped to do it 
on their own, and the occasional, you know, grant to have 
somebody figure out how to better teach something, is not a bad 
spending--is not a bad expenditure.
    Mr. Kildee. Mr. Monroe.
    Mr. Monroe. As far as the role of the Federal Government in 
helping the universities to establish rental systems, I think 
the Federal Government could have a role in making the system, 
publicizing the system, to various universities.
    Perhaps, giving some sort of aid--financial aid, in some 
form or another, to help with pilot programs in the states. And 
to possibly, also help with the cost of establishing programs 
in the universities across the country. I guess, that's the 
role that I would see for the Federal Government.
    Mr. Kildee. Thank you, Mr. Chairman. I yield the balance of 
my time.
    Chairman McKeon. Okay. Mr. Osborne.
    Mr. Osborne. Thank you, Mr. Chairman. Thank you, members of 
the panel, for being here.
    I would like to address Mr. Isley, I think that you had the 
four examples. I can understand the hardback, $100, I think you 
said.
    Mr. Isley. Yes.
    Mr. Osborne. But some of the other--what was the next 
highest?
    Mr. Isley. The next example was a soft cover version, for a 
one-semester course that is still pretty full featured, but it 
did not have access to the premium web site.
    Mr. Osborne. Yes.
    Mr. Isley. And it sells for $40.
    Mr. Osborne. Yes. Well, that kind of caught my attention in 
that--I would have assume that there is a fairly high mark up 
here, when you look at the materials that go into that book. 
And I know--
    Mr. Isley. Certainly--
    Mr. Osborne.--I know the author, maybe, gets a percentage. 
And the publisher has to make some money. But when you look 
at--you know, I don't know what Bill Clinton's book sells for, 
its $36 or something like that, and it's 900 pages, hardback. 
There is something wrong here.
    And as the Chairman mentioned, unless you are into 
revisionist history, you know, the time in which the Pilgrims 
discovered America or came here first doesn't change.
    Now, is there some churning involved, where people revise 
little bits of books here and there, and interpret history 
different to keep the thing going? Where in the world are these 
margins? Because it just looks very exorbitant to me.
    Mr. Isley. Okay. Let me address that in a couple of ways. 
Textbooks are produced for very, very limited markets. 
Successful textbooks can sometimes be defined by selling a 
thousand copies. I don't think Bill Clinton would be very happy 
with that. So volume is certainly one driver in costs.
    Another driver in costs is that the actual physical print 
materials aren't really the major part of the costs of the 
textbook. I would guess, and I am estimating here, that the 
physical materials in this book probably cost somewhere between 
three dollars, three and four dollars, probably. The same is 
true of a car. The physical materials in a car maybe cost 
$3,000.
    The cost of the textbook is in the human capital of 
intellectual labor that goes into making it. There are lots of 
moving parts here.
    [Interruption to proceedings.]
    Mr. Osborne. That is okay.
    Mr. Isley. Should I continue?
    Mr. Osborne. Yes.
    Mr. Isley. Okay.
    Mr. Osborne. We are not gonging you, or anything like that.
    Mr. Isley. Fair enough.
    Mr. Osborne. Okay.
    Mr. Isley. I was going to say, my time was up--earlier.
    Mr. Osborne. Right.
    Mr. Isley. There are lots of moving parts in textbooks, and 
they are the work of a lot of people. And that, in industries 
where--like the educational industry, like the healthcare 
industry, where the major costs are in people, those costs are 
pretty irreducible.
    Mr. Osborne. Okay, so you have an author, you have a 
publisher?
    Mr. Isley. Right. We've got--
    Mr. Osborne. Who else? Who else?
    Mr. Isley. We've got reviewers. We've got people writing 
the supplements. We've got production editors. We've got 
artists. We've got art researchers. We've got permission staff. 
We've got production staff. We've got people on the outside who 
do page makeup. We've got manufacturers. We've got sales, 
marketing, advertising people.
    The publishing industry is not one--and you could check 
this out by looking at the public results of the public 
companies--that is enormously profitable.
    Mr. Osborne. Okay. Thank you, it was very interesting, and 
very enlightening. But having taught courses in universities, 
and I feel that there is a pretty good markup there, and 
students are really paying quite a price. There ought be some 
way we could figure out to bring the costs down, and I 
appreciate the thought that the panel has given to this 
subject.
    I yield back, Mr. Chairman.
    Chairman McKeon. Would the gentleman yield to me?
    Mr. Osborne. Yes, certainly.
    Chairman McKeon. You said, there are some textbooks that 
have a thousand--
    Mr. Isley. Yes.
    Chairman McKeon. But that's got to be a very small 
percentage, I think, of what is--
    Mr. Isley. Unfortunately--
    Chairman McKeon.--produced.
    Mr. Isley. Unfortunately, you would be surprised.
    Chairman McKeon. Well, I think that's a real problem then. 
Because, the vast majority, I think, of the classes are 
probably very large. You know, English, history--
    Mr. Isley. Yes, but in any university catalog, you'll find 
800 to a thousand different courses.
    Chairman McKeon. So we have a few anthropologists, and a 
few medieval history, and things like that--
    Mr. Isley. Yeah.
    Chairman McKeon.--that are good for well-rounded education, 
but only prepare us to maybe teach anthropology or medieval 
history. That's where some of these schools have an advantage 
where they are preparing somebody for the job market, versus 
just a broad, general education. Anyway, that's--Mr. Kind.
    Mr. Kind. Thank you, Mr. Chairman.
    Yes, we do have a vote on, so you may have some of us 
running off to the floor to cast a vote. But don't let the 
bells scare you. We will probably get another one and a couple 
of minutes.
    But I do appreciate the panel's testimony, today, in a lot 
of the thoughts that are going into how we can better manage 
and control the rising costs of higher education for our 
students. It is such an imperative that we come to grips with 
this. This is just one aspect of it. But I like the idea, Mr. 
Isley, that you had, perhaps, some grant money to increase 
efficiencies in delivering higher education to students too.
    And I know that a lot of our Fortune 500 companies are 
investing in Sig Sigma programs, for instance, to find those 
cost-efficiencies, and how to deliver a better product. And 
maybe, the higher education industry needs to go through the 
same type of transformation process itself.
    Ms. Fairchild, getting to some of your testimony on that, 
with regards to the used book market, and the viability of that 
option to students, in light of changing editions or updated 
editions, is that a major impediment to the used book market? 
Or, are students able to work around that in some fashion?
    Ms. Fairchild. Well, we are less concerned with the used 
book market. And what students are spending. Of course, and we 
didn't actually know what we were going to find when we did 
this research. So we didn't ask all of the questions that, in 
retrospect, I wished we had asked.
    Mr. Kind. Yes.
    Ms. Fairchild. But one question that I think it is telling, 
is that we asked students, you know, how many used books were 
they able to find? And we found that 59 percent of the students 
surveyed were unable to find even one used book.
    So that would just make me think that the used books are 
being replaced by the new books. And AAP has said, that books, 
new editions are put on the market, on an average, every three 
years, as I understand it. And that's what we found in our 
research as well.
    But it's like clockwork. From what I can tell, it is 
basically,--it is regardless of really any new change in the 
field, and it is just every few years. From their view, there 
are too many used books in the market, and they want to get out 
a new edition, so that, you know, can increase their profits.
    They are a business, and I understand that. But it is 
unfair to students, because there's nothing wrong with those 
previous editions. They should be able to find them.
    And then one other note, just in terms of the cost 
difference between new and used books. We did find that an 
average new book costs $102.44, and an average used book costs 
$64.80. So that is some pretty significant savings that 
students are missing out on.
    Mr. Kind. Okay.
    Mr. Fleischaker. May I respond to that, sir?
    Mr. Kind. Sure.
    Mr. Fleischaker. With all due respect, I think that is a 
little oversimplified version of the way that used books are 
sold.
    But there have been to--I think, incontrovertible results 
of the increase in the price of new books. One is an increase 
in the used book market, because students look for used books 
in order to avoid buying the new books. And that results in--
the stores, obviously, are seeking sources for those used 
books.
    And the second result--
    Mr. Kind. Not just used books, but also class notes. I 
found students anxious to acquire.
    Mr. Fleischaker. The second result is a decrease in sell-
through. Fewer students buy books, which exacerbates the 
problem of low runs, frankly, of new books. There are classes 
in which less than half of the students are buying books. So 
the problem needs to be addressed, and there ought to be a 
common interests of all segments of this marketplace in 
addressing it, because that issue hurts everyone.
    Mr. Kind. Mr. Monroe. Let me turn to you, real quickly. And 
getting back to what Chairman McKeon was getting to in his 
initial statements, in regards to startup costs of the textbook 
rental program and that.
    Is that significant? Is that coming straight out of the 
university budget, or is there a different way of financing the 
start-up costs of the rental program?
    Mr. Monroe. Well, there are, I think, as I look at that 
question there are several strategies that could reduce the 
cost of starting a textbook rental program.
    One is to phase it in gradually, you know, freshman, 
sophomore classes, first. Another is to have a buy-back at the 
end of the semester, prior to the rental system being 
instituted. Have a buy-back, in which the bookstore would buy, 
just as many of the texts from students as they could.
    Another, would be to have a voluntary agreement among 
faculty, that for the first several years of the rental system, 
they would keep the textbooks that there presently using. And 
of course, there are grants available, too. And pilot programs 
might possibly help with these expenses. But yes, to respond to 
your question--
    Mr. Kind. One last, final question, Mr. Chairman.
    Any negative feedback from faculty? I mean the results of 
your survey were pretty overwhelming. But any concerns 
expressed?
    Mr. Monroe. Yes. There is some negative feedback. There are 
a few, a small number of faculty members on our camp is who 
don't like the rental system. They would prefer to change their 
books more often--their textbooks more often. And some feel 
that it doesn't help the students to develop a professional 
library, for instance.
    Now, I can understand why they might want to change the 
books more often, but, I don't agree with the statement that it 
inhibits students from developing a professional library. I 
think it does just the opposite. Because we sell very many 
books every year out of our facility. And most of them are 
discontinued texts that are no longer being used, that we sell, 
you know, for 25 cents to several dollars, per copy. And so, 
our students have a real opportunity to develop a professional 
library, for the course of their careers there.
    Chairman McKeon. It's hard to have it both ways. To say 
that they are out-of-date, so we need to come up with new ones. 
And at the same time, you ought to put it in your professional 
library.
    We will take about a 15-minute recess to go vote, and then 
come might back. We appreciate your patience. Thank you.
    [Recess.]
    Chairman McKeon. We're going to go back into session. And 
there may not be anybody coming back. I just heard. If I had 
known that before, we would have ended the hearing. But I 
appreciate you waiting. And I'm going to ask a couple more 
questions, as long as I have the gavel. And in case somebody 
does come back--let me ask. In student stores, what kind of--
you said some of them pay rent, some of them don't. They have 
different operating overhead.
    I come from a retail background, and I know that 25 percent 
is not enough to make ends meet. If you buy a book for $50 and 
sell it for--what's 25 percent? The way in retail, we used to 
say a 50 percent--
    Mr. Monroe. It's about $65, yes.
    Mr. Fleischaker. It's about $65.
    Chairman McKeon. Yes. We used to call it a 50 percent mark-
up, because we would go off of the selling price. So if you 
bought it for $50, you would sell it for $100.
    Mr. Fleischaker. Right.
    Chairman McKeon. And then after you paid all of your 
expenses and everything, if you made 1 or 2 percent, that was 
pretty good. So I am intrigued as to how you can do that on 25 
percent.
    Mr. Fleischaker. Well, to the extent that they are a non-
profit part of the university, they don't have tax advantages 
in terms of that issue. They do, they have many student 
employees that are part-time, and that is one way do it to keep 
personnel costs down. And--
    Chairman McKeon. Do they get rent breaks from the 
university?
    Mr. Fleischaker. You know, it's very hard to say it across-
the-board, because some--about a third of college stores are 
leased, and run by for-profit institutions. And then, you have 
private stores--
    Chairman McKeon. Yes.
    Mr. Fleischaker.--that are near the campus creating 
competition for the college institutional stores.
    Chairman McKeon. Yes.
    Mr. Fleischaker. Which, also, is another reason that prices 
have to be kept down. I know that most stores like to return 
some money to a scholarship fund, or something at the campus. 
But generally, it's very small, and are trying to be self-
sufficient, and not make much of a profit to keep the prices as 
low as they can.
    Chairman McKeon. And that's commendable, and I want to 
thank them for doing that.
    What we're really looking at, and it sounds like we are 
just ganging up on textbooks. This is just one hearing, and we 
have held lots, lots of hearings. And we are trying to look at 
every possible way we can to cut the costs of education, 
because we have too many young people that are being cut out of 
the system, right now. And the studies show that by the end of 
this decade, about 2 million are not going to be able to attend 
college. And that's just not right. And that's not acceptable 
in our country.
    So we are trying to find every way that we can. And 
textbooks is one of the things that we're looking at.
    I have some concerns about when you have professors, 
basically, writing the textbooks, and then determining which 
textbooks are used. I am wondering if there is some conflicts 
there, there are some things we need to look at.
    Mr. Isley. Let me address that in one way. There are, 
again, it is part of the university issue. On individual 
campuses there will be policies that say that you can't make 
any money off something that you are assigning to your own 
students. So that's an individual campus, or sometimes 
department, or sometimes, frankly, individual policy.
    Chairman McKeon. Okay, as I mentioned before, I am not 
adverse to profit. So I am not trying to say they should not 
make money, it's just when you have a captive market--
    Mr. Isley. I agree--Yes.
    Chairman McKeon. There should be some--
    Mr. Isley. I also think the captive market explains to some 
extent why Marc's group doesn't need to have the high margin, 
because the students are going into the store because the 
professor is saying, you need this product.
    Chairman McKeon. Yes.
    Mr. Fleischaker. I think that is true to the extent, 
marketing costs are probably less in the college community than 
they are in many retail environments.
    Chairman McKeon. Right.
    I tried to get some information, today, on how other 
books--President Clinton's book was mentioned. Actually, you 
can get that a lot cheaper than $36 if you do a--not that I 
bought it--
    [Laughter.]
    Chairman McKeon. But I had looked at the prices in the 
window.
    But I was wondering how publishing, out in the Barnes and 
Nobles, and you know, the other regular bookstores, how they 
compare with textbooks. How the publishers, how their costs 
breakdowns vary compared to--but I couldn't get that 
information today.
    And I don't know, I'm sure we can get it as we go forward. 
It doesn't really make much difference, it was just kind of 
curiosity.
    I want to thank you all for being here today, and for your 
patience as we run back and forth to vote. That's just kind of 
the life that we live with here. But I appreciate your being 
here. I appreciate your testimony.
    And as we go forward in reauthorizing the Higher Education 
Act, I would hope that you will avail yourselves of more 
questions that we may have as we move forward, and be involved 
in the process, because it's a very, very important issue.
    And sometimes I think only the people involved in it are 
the only ones that see it as important. But we do. And again, 
thank you for your testimony, for your patience, and for the 
things you have given here today.
    If there is no further business, now, this Subcommittee 
stands adjourned. Thank you.
    [Whereupon at 4:22 p.m., the Subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

    Statement of Thomson Higher Education, Submitted for the Record

        In Response to Unfounded Accusations Leveled by CALPIRG
Methodology of CALPIRG report
    In fact the size of the POPULATION relative to the sample is 
irrelevant, as long as the population is large. The two relevant issues 
are the size of the sample, and the method of selection. In CALPIRG's 
case, they say the students were ``randomly surveyed'' but then say 
they were chosen as they finished buying their books at the campus 
bookstore. That is not a ``random'' sample. They also admit that the 
faculty were selected based on what books they used in their classes. 
Thus, they were not randomly selected either.

    Jessica M. Utts, Professor of statistics, University of California, 
Davis.
Facts regarding Stewart's Calculus: Early Transcendentals, alternative 
        texts and media
    CALPIRG decided to single out a popular Thomson calculus textbook, 
Stewart's Calculus: Early Transcendentals, to be the focus of its 
publicity campaign. Stewart's Calculus enjoys a well-earned reputation 
for excellence among professors and students alike. Of the five leading 
texts for the calculus market, Stewart's is the least expensive, and it 
is not revised more frequently than its competitors. And, almost all of 
the allegations CALPIRG makes about the book are simply wrong.
    Here are some key facts about Stewart's Calculus:
      Students normally use Stewart's Calculus over three 
semesters, so the price they pay up front provides them with their 
calculus course materials for that extended time period. This means 
that the retail price paid by the student in a college bookstore is 
less than $50 per semester.
      Thomson has always offered a range of choices and options 
in calculus, including different price points for different versions of 
Stewart. These include:
        1)  If a professor who wishes to choose a 12-chapter, shorter 
        version of the book, but wants all the media that accompanies 
        the text, they can do so; this version, Stewart, Calculus: 
        Single Variable Early Transcendentals, 5e, sells for $81 net.
        2)  There is also a 6-chapter multivariable version that sells 
        for $73 net.
        3)  If the instructor or student does not want the media, the 
        single variable text is also available without the technology 
        in two volume splits priced at $35.00 net each. No other 
        publisher offers this option
        4)  Thomson also offers professors customized versions of the 
        Stewart text that meet their specifications so the student only 
        pays for material that the instructor actually covers in the 
        class.
        5)  Since December 2000, Thomson has offered low cost option to 
        our customers for a three-semester calculus text: Swokowski, 
        Calculus: The Classic Edition, which is available for $68.75 
        net.
        6)  International Pricing is a reality of the marketplace.
             -  To ensure worldwide access to quality educational 
            materials, publishers set regional prices in the context of 
            local consumers' purchasing power and other social, 
            political and economic conditions.
             -  If Thomson did not sell Stewart, Calculus 
            internationally at appropriate regional prices, the price 
            of textbook in the U.S. would be higher because the fixed 
            costs of creating the text would be spread over a smaller 
            number of copies.
      It is also important to note that because many students 
sell their textbooks back to bookstores for 50% of the price they 
originally paid, their effective cost can be less than $25 per 
semester. It is difficult to see how this could be considered a 
burdensome part of the total cost of a student's education.
      The Stewart revision cycle is four years, not three years 
as CALPIRG's letter claims. Even though the principles of calculus may 
not have changed dramatically, its applications change all the time, 
requiring new teaching methods. New editions are created to provide new 
pedagogy and improve instructional techniques. Examples and practice 
questions also must be updated frequently.
      Revisions to the most recent edition of Stewart's 
Calculus were prepared with extensive input from many faculty around 
the country who considered it very important that we maintain the 
accuracy and approach that has made Stewart a best seller. In addition, 
faculty wanted new problems, (to prevent students sharing the answers) 
and they wanted to see more extensive integration of our technology 
teaching aids. The problems are a key part of the core content in 
mathematics. They are not peripheral.
      Thomson spent nearly $1 million developing the 5th 
edition of Stewart's Calculus, which contains literally hundreds of 
improvements including new examples, new margin notes to clarify 
explanations, more effective artwork, new references to relevant 
websites and other sources of supplemental information, and integrated 
references to interactive learning tools like a CD called Tools for 
Enriching Calculus. More than 25% of the problems in the book are new 
and there are five completely new projects. These changes go well 
beyond what CALPIRG erroneously called ``cosmetic.''
      When the new edition came out, professors had the option 
to stay with the old edition for more than a year; some chose to do so, 
some wanted to change immediately to the new edition to take advantage 
of the improved integration of technology, new teaching and learning 
aids for students and professors, and new examples, problems and other 
updates in the text.
      Electronic versions of textbooks do not cost less than 
printed textbooks. Only 3% of students have purchased an online 
textbook (Student Monitor), so publishers need to provide both print 
and electronic versions when e-books are requested by customers. Hence, 
the costs of producing a typical e-book are incremental, and simply add 
to the base costs of publishing the printed book, rather than 
decreasing those costs.
    At Thomson Learning we believe that our textbooks are among the 
finest in the world, and that our pricing practices are fair and 
reasonable. That said, we share the concern about rising costs and are 
working diligently to develop lower-priced and/or digital alternatives. 
For example, in February the company introduced the Advantage Series, a 
set of books and electronic versions sold for at least 25 percent below 
the price of typical hardcover texts, and Digital Discounts, a special 
limited-time offer on digital versions of leading textbooks. These new 
products were two years in the making so the CALPIRG press release had 
no bearing on this offer.

    July 28, 2004

                                 
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