A Textbook Case of Arbitrage

For many years, it has been an unfortunate reality of higher education that most students are burdened with a four, five, or six hundred dollar (sometimes worse) bill for textbooks. Add on the cost of sourcebooks and other school supplies, and it is not hard to see how a college education can easily be perceived as a luxury for the well-off. Many students put little to no thought into the pricing practices of publishing companies; some students don’t even bother to comparison shop. But textbook prices are not set in stone; they are subject to the laws of demand and supply. And in the case of textbooks, publishing companies have long relied on unsophisticated student shoppers to prop up prices and cash in on unsuspecting consumers. A new student business, Redline Textbooks, takes aim at precisely that shameful business tactic.

Redline Textbooks, which was started by eight Harvard juniors in Currier House, offers students an alternative to The Coop. They offer students lower priced textbooks for fifteen Harvard courses—with reductions between $20-50 off Coop prices. And they offer next-day delivery right to student mail centers. The Redline Textbooks website advertises that already the business has helped Harvard students save over $10,000.

What Redline Textbooks has capitalized on are two well-documented and publicly-known strategies of the publishing industry. First, Redline exploits the simple fact that publishers often sell the same products overseas at huge discounts. Second, Redline has saved students money by cutting back on the superfluous spending that results from unnecessary chapters or software which is often bundled to boost book prices. These added products are often discarded by professors and students alike, but students typically pay for them because they don’t have any convenient option not to.

These tactics and others, such as the frequent issuing of needless new editions, were described in a study released early this year by the California Student Public Interest Research Group (CSPIRG), which found that the average student forfeits roughly $900 each year for textbooks. The study seriously called into question practices of publishing giants, whose drive for profit, the group says, has led to the release of ever more frequent editions of textbooks, often bundled with unessential software. According to an article in the Washington Post last Monday, “the academic-publishing industry has insulated itself from traditional market forces to increase profit. The constant reissuing of editions, in particular, is viewed as a way to force professors and students into using and buying new books.”

Shortly after the CSPIRG study’s release, national legislators called on the General Accounting Office (GAO) to launch an investigation of publishers, ensuring that they were not engaging in price fixing or other dubious acts to keep costs high for students. CSPIRG’s report, “Ripoff 101: How the Current Practices of the Textbook Industry Drive Up the Cost of College Textbooks,” also led to hearings this summer before a subcommittee of the U.S. House Education Committee.

In general, the price of textbooks has skyrocketed. According to The National Association of College Bookstores, textbook prices have risen nearly 40 percent over the past five years. If the GAO concludes that the publishing industry is swindling students, they must be reprimanded and Congress must ensure that they are held accountable in the future. New textbook editions and software add-ons must be warranted in order to relieve the financial burden on students.

In the meantime, Redline Textbooks is a welcome new addition to the textbook market. Cheaper, quicker and more convenient than The Coop—and all from a room in Currier—it makes one wonder why The Coop hasn’t followed suit in similar ways to cut down on costs for students. Hopefully, as more companies like Redline start up, seizing the advantage of arbitrage, publishing companies will be forced to lower prices to compete. When buying books this fall, students must remember that as a collective group, consumers do retain some power on their own to force publishing companies to curb their practices. But that power must be exercised—be it online, abroad or at a used books sale.