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Turning the page on textbooks

Tue., Jan. 22, 2008

In her first three years at Washington State University, Abbey Holton went to the bookstore for her textbooks.

It’s a familiar story: She found it “incredibly expensive” to buy them, and hard to sell many back at the end of the semester.

Now, in the middle of her senior year, she’s trying something else – renting textbooks online from Chegg, a new company that is taking a Netflix-style approach to textbooks. She spent $118 for six books for her final semester – selecting the books online, receiving them in the mail, and pledging to send them back in the prepaid shipping container when she’s done.

“I’d definitely recommend it to anyone,” she said. “It’s just so expensive to get them anywhere else.”

Chegg is the latest entry in a textbook market that is rippling with alternatives to direct bookstore sales and the traditional textbook, following years of criticism leveled at textbook prices and practices.

Several colleges around the country have rental programs of their own, and the Community Colleges of Spokane has been trying the idea on a small scale. But many more schools have decided that it’s too expensive to start such a program, at least on a widespread basis, and Chegg’s CEO says that having a national market is important to making rentals work.

“The key to the model is being able to rent the books across the country,” said Osman Rashid.

Rentals have been a much-discussed alternative for bringing down the costs of textbooks for years. The average student now spends upward of $900 a year on books and supplies, according to the College Board, and book prices – like just about everything associated with college – have been rising faster than the cost of living. Holton spent about $268 to rent books for two semesters.

Chegg’s just getting started. It ran a “beta” program in fall 2007, and had renters from more than 1,000 campuses around the country, Rashid said. He said interest has spiked sharply in recent weeks, as colleges have started their new academic terms.

Bookstore officials are watching to see how the company does, and they raised caveats about some of the difficulties of the textbook market. Making a rental system pay depends on being able to use a book several times, they said, and textbooks are now updated very frequently. In addition, there can be problems with students failing to return rentals or beating up on the books.

Campus bookstores have seen book sales decline in the past decade as students find other ways to get classroom materials, largely from online sellers and marketplaces. But they note that it’s a difficult, complicated market, and that a few recent attempts to break into it haven’t worked – though those have been based on sales, not rentals.

“A few years ago Wal-Mart got into textbooks (online),” said Bob Anderson, director of the Eastern Washington University bookstore. “They got out of it. People don’t want to believe it, but there’s just not that much money in it.”

Big at Wazzu

Chegg has a particularly high profile at WSU, because a couple of students who interned for the company have posted fliers and talked up the company, Rashid said. He would not be specific about the number of rentals or other figures, but said WSU students represented just under 10 percent of the “user base.”

With the start of the spring semester, the company’s gotten some attention, in particular a lot of stories in student newspapers, and word of mouth has been strong, he said.

“It’s massive. It’s massive,” he said. “It’s amazing how the word is spreading.”

The company started in Santa Clara, Calif., a few years ago as a college classifieds site, but moved into textbook rentals last fall. Rashid said Chegg has 250,000 titles and that most students who use the service find all their books.

Chegg says its rentals can be 70 percent to 80 percent cheaper than buying. The company also has an environmental focus that Rashid said is popular with students – the company pledges to plant a tree for each book rented.

Rashid said that publishers and booksellers have not found solutions for concerns over textbook prices and the environmental toll of producing them.

“We wanted to bring the tenacity of a Silicon Valley startup to the problem,” he said.

He said most of the renters are freshmen and sophomores, and that during the company’s beta run it didn’t have a significant problem with students failing to return books or otherwise damaging them.

He said the company allows renters to highlight, within reason.

New ideas

Bookstores, meanwhile, are trying some new strategies of their own.

CCS is offering a few titles for rent at both of its campuses, and Catherine Scott, director of stores, said they’ve been popular. The books rent for a third of the purchase price. But Scott said expanding rentals has been difficult in part because it’s hard to get instructors to commit to a book for two or three years – long enough for the bookstore to make the rental pay.

“They’ll be lucky to get three years out of a book,” said Nancy Loomis, bookstore manager at Whitworth University – though “some books are lasting that long.”

A number of colleges around the country operate rental systems. All students in the University of Wisconsin system pay a fee to support a rental program. Appalachian State University, in Boone, N.C., has offered rentals for decades. Most successful rental programs are at smaller liberal arts colleges, and they would be impractical at most larger universities, according to a report prepared for the Illinois university system in 2005.

“Most often cited are concerns over prohibitive start-up and maintenance costs of inventory, staffing, and administration of such programs; the intellectual rigidity inherent in multiyear cycles of textbook use and uniform textbook assignments across multiple sections of the same course; the demands of rapidly changing resources in such areas as technology, medicine, engineering and science; and the role of foundational textbooks in the lifelong learning process,” the report said.

At EWU, Anderson said the bookstore is starting a small guaranteed buyback program, pledging to buy select titles back from students at 50 percent or 60 percent of the original price – even if the book’s used. Such prices would be competitive with rented books but so far only apply to 10 books.

“It’s small,” he said. “Kind of like (bookstores) who have looked at rental programs have done it – they’ve started small.”

Rashid said Chegg is going the other way – trying to start big.

“We’re actually making a difference in the discussion,” he said.


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