E-Textbook as the new change in textbook industry. Professor Harry Lindsol has study the texbook business model and strategy. The case also analyzed the competitors and issues in E-textbook business. The

1. Members
1.Nabduan D. : 5520212002
2.Phornpat R. : 5520212004
3.Omar N : 5520212005
Harry Lindsol’s
Textbook Decision An E-book or
a Traditional College Textbook

2. Case Summary
 Harry Lindsol found that when
student indeed purchase textbook
they prefer to go to bookstore
 No shipping time
 Purchase all textbooks in one place
 Can resell to the store
 He also found one significant trend
most of student have they own
device, can use as e-reader.

3. Traditional Business model
 In U.S the large-scale textbook publishing.
 Important part of the textbook publisher business model
was the use of acquisition edition editors who recruited
professors to write textbooks for their publishing
company.

4. Traditional Business model
Before internet
came there are
2 main way to
convince
college
professors to
use their book
The books themselves
Book representatives
 Company relied on representative to make contact with professors and
publicize
 Heavy cost-intensive for publishing company since they have to pay salary,
travel expenses and cost to entertaining professors.

5.  Since the internet came publishers offer PDF version
Not popular
Can’t
The Platform
 Publisher try to began to make their virtual book more attractive to
both professor and student
 The way to solve is using online platform or interactive online
software that encourage people to use their product not competitors

6. The Platform
Allow professor to
choose from many
options
online homework
notes
Progress report
Quizzes
bring student to the
topic that they don't
understand
Can adopt to each
individual student
learning style and
ability
Real time diagnose
students progress
and move to
appropriate pace

7. Competitors

8. Competitor
Used-Book
 Publisher only receive money
when from initial sale
 Used book become a big
competitors because of when
student sold their textbook at the
end of the term
 Rise of the internet provide more
convince, student can search and
find local store via internet
 publishers could not complete
effectively with the sellers of used
textbooks because used books
were priced at big discount

9. Competitor
Rental textbooks
 Usually it's a brand new and
student were expect to keep them
in excellent condition
 Good in long run
 Reselling the book was often
less than rental price
 cyclical nature of textbook
editions (2-3 years)

10.  New editions could come up with
Competitor
New editions
 All-new or significantly modified chapters
 Chapter organization or might be the same just adjust minor change and
update typically an examples, common in history, calculation.
 some student can detect the book aren't significant difference from previous
version then they brought the old one for discounted prices online
 Rapidly evolving subject like computer science aren't too late for wait 2-3
year to public. This is opportunity of ebook, it’s more easier to update or
modify the book.
14th Edition 15th Edition 16th Edition 17th Edition 18th Edition 19th Edition

11.  Need to have international edition
because it was too expensive for
students outside the U.S
 Student in U.S adopt and buy
international editions so publisher
began to making content
significantly with international
editions
Competitor
International Editions

12.  Connect to Kindle store that has more than 1.3 million titles, and 1
million other title for free.
 The store allow user to read description, summary and user
reviews. and buy
Competitor
The amazon Kindle

13.  launched in year 2010
 Offer same benefits as
Kindle but significant
expansive than Kindle
 Customer prefer
 High qualities
graphic and color
full screen
 Display near actual
size
 Had more use than
reading
Competitor
iBooks

14. Problems of e-book
 Student not prefer e-book for reasons
 Inabilities to take note/highlight
 Need internet and a computer to access to the book
 Inabilities to have a copy
 Adoptable of e-book
Both iPad and Amazon offered the ability to highlight and take notes
Apple created Student card

15. The economic of e-books
 A major issue facing of all publisher was how to balance the e-books
and traditional books. traditional one require ink, paper, binding
materials but e-book doesn't. so it's has room for more profit.
 College textbooks are the most profitable section of the publishing
business
 Physical book
 Book retailers(on campus) generally pay publishers about half of the selling
price. authors typically get a 15% royalty
 Estimate cost to print a book about 10% of the selling price.
$25 $12.5(50%) $2.5(10%) $3.75(15%)

16. The economic of e-books
 Ebook have prices set by the publisher, typically get about 70% of
the selling price. typically authors get roughly 25% royalty.
$13 $9.1 (70%) $2.28 (25%)
 Even though selling price of e-book are lower but e-book would gain more
volume.
$3.75(15% from $25) $2.28 (25% from $13) >

17. The economic of e-books
E-book pricing - Agency vs. Retail pricing
 In early 2012, Apple and several book publisher had lawsuit
 They conspired to fix the price of e-books.
 has a huge number of e-books almost
monopoly ebook market
 Set price very low $9.99, making loss to
company but gain more market share
 Apple was upset because of apple sale at
regular price $15 where customer can buy
at $9.99
 Many publisher don't like it, they don't
want customer to validation the book drop
so low.

18. The economic of e-books
E-book pricing - Agency vs. Retail pricing
 Under the normal pricing model, publisher provided a suggested
retail price for the book
 After retailer bought the book they had option to price it however they
wished
 The agency model
 publisher was able to set the final retail price of the book
 Amazon forced by publisher to accept new pricing model.

19. The benefits of E-books
 publishers no longer had to wait the standard 2 years to update a
textbook.
 No shipping lead time
 No need to wait for printing

20. The benefits of E-books
 publisher could update edition depend on them, McGraw-Hill
called this model "evergreen edition" where information can
update frequently or infrequently as possible
 Completely bypass the used bookstore market
 In 2012 Ebook not become a standard in college class room
yet

21. 1) Pricing policy: predatory
pricing vs agency model
2) old editions vs new editions
3) international editions
4) how to balance the production
of e-books and traditional books
5) Consumer perception of price
and quality
Other Problems

22. E-Textbook Now
 E-Textbook industry hasn't reach
full maturity as of yet
 There is still a lot of growth to
come according to Lindsol.
because of the higher
percentages authors received
from E-textbook.
 Lindsol believes he might be able
to persuade professors to only
use strictly ebook publishing
company that he planned to start.
 Lindsol believed that the ebook
segment is the fastest growing
product in the textbook industry
and would soon overcome and
overtake traditional books.

23. E-Textbooks
5 Forces Analysis

24. McGraw Hill
STP
o Segment
All kinds of book publications
o Target Group
Students and writers of all age groups
o Positioning
Best books for education with quality
information and best authors

25. Competitors
E-Textbooks
SWOT Analysis
Strengths
 Great Background in
printing and publication
since
 Leading education company
focus on digital learning &
educational services
 Strong financial position
 Excellent distribution of
books and digital content
Opportunities
 Commercial and business
printing
 Expanding more operations
in Europe and Asia
 Providing subsidies for
developing countries like
Pearson
Weaknesses
 Core concentrate on
education sector
 Over dependence on US
market
 High prices which is an
obvious hurdle for
developing countries
Threats
 Increase in online books and
supplement information
 Competition from other
global players
 Improved publications of
local players such as
Uni-tech publications

26. Case Analysis
Business Model
Traditional Textbook
 The textbook Publishers business model
To acquire the editors who recruit professors
who writes the textbooks to have broad appeal.
 The Representative business model
To relied on the representative to make contact
with professors and publicize textbooks.
E-Textbook
 The Platform business model
The publisher use interactive online software to
encourage professor to use the company’s
product
 The evergreen edition business model
The publisher could update the content
frequently as possible.

27. Functional Analysis
1. Human Resource
2. Operation
3. Marketing
4. Accounting
5. Finance

28. Functional Analysis
Human Resources
• 4 cores employee concentration at McGraw hill
– Purposeful
– Collaborative
– Results-driven
– Passionate
• Support career development and growth inside and outside the
workplace with training, programs and tuition reimbursement.
• Support diversification in organization

29. Functional Analysis
Operation Management
Traditional Textbook Estimated cost about 10% of the selling price.
E-Textbook Estimated cost about 10% of the selling price.
$13 $9.1 (70%) $2.28 (25%)
selling price of e-book are lower but e-book would gain more volume.

30. Functional Analysis
Operation Management
Allow professor to
choose from many
options
online homework
notes
Progress report
Quizzes
bring student to the
topic that they don't
understand
Can adopt to each
individual student
learning style and
ability
Real time diagnose
students progress
and move to
appropriate pace
Focus on content student want to learn by
preview, read, practice and recharge

31. Functional Analysis
Marketing
Marketing channels
Websites Social Media Direct Sale
Marketing Mix (4Ps)
Product
 Physical book
 E-Book
 Online
platform
Price
 Depend on
subject
 Student
volume
Place
 Bookstore
 Online
 University
tuition fee
Promotion
 Discount
 Free
shipping


32. Functional Analysis
Accounting
In 2013
 10% revenue
growth to $4.9
billion
 19% adjusted
net income
growth to $931
million
Reproducing of the E-Textbook
Direct Material : Reduced
Direct Labor : Constant
Over Head : Tiny increased in Server expense

33. Functional Analysis
Finance
 The year-end
share price
increased to
$78.20 in 2013
 The shareholder
return five-year
cumulative total
return increase to
$228 in 2013
 The revenue
increase to
$4,875M in 2013
 The dividend per
share increase to
$1.12 in 2013
 These numbers
reflect the good
performance

34. Refer to performance of the company over a financial year
Formula
ROAE = Net income / Average stockholders’ equity

35. E-Textbook Future
 More interactive with reader
 Devices compatibility
 Cheaper price of e-Book and e-reader
 New e-reader innovation
 More user volume
The Global e-book revenue from
2009 t0 2016 tend to increased
worldwide.
Credit
http://www.statista.com/statistics/2802
49/global-e-book-revenue-by-region/

36. Thank You

37. References
 http://investor.mhfi.com/phoenix.zhtml?c=96562&p=irol-reportsannual
 http://www.mheducation.com/careers
 http://www.mbaskool.com/brandguide/media-and-entertainment/5651-
mcgraw-hill-companies.html