The Business Section of the New York Times for 12 May 2007 reports that Thomson, the Canadian information and publishing company, said it will sell its education and educational materials businesses to two private equity funds for about $7.75 billion in cash.
The unit was put on sale a few months ago because it “did not fit the all-electronic model that is used to sell information and services to the medical, legal, scientific and financial communities.” The article says that Thomson had earlier said this was part of a strategy to realign itself toward business information. According to Thomson’s CEO, there were no concerns about the unit’s financial performance as textbooks are a high-margin product.
Thomson was also frustrated by its inability to persuade educators, even at colleges, to move away from textbooks and lectures to new ways of delivering education using the Internet. The article reports that Thomson had been successful in other markets in shifting customers to new technologies by showing that doing so would improve efficiency and increase revenues and profits. But “such issues are not concerns for most of the educational community.”
The article notes that the company was based on the publishing empire started by Roy Thomson several decades ago that at one time owned the Times of London. and that the unit was the last traditional publishing part of the business.
This is yet another example of the massive changes going on as the Internet matures. Here we have a business that began by publishing newspapers, then later moved into publishing textbooks, and now doesn’t publish anything unless it can do so it in digital form! Indeed, Thomson is trying to buy Reuters, the international news organization.
Simply put, Thomson has bet its future on digital publishing and the Internet. My bet is that they have made the right bet, and that we’ll see more changes in traditional textbook publishing, though as a consequence of the the inertia of the educational establishment this will occur at a slower pace than in other industries.
Last week I had a discussion with a colleague about the traditional textbook industry in this country. He used to work in a job where he dealt with many textbook publishers and he said he had argued the Internet was going to dramatically change their business but they didn’t seem concerned. For example, he thought that it was only a matter of time until enough teachers starting using collaborative techniques such as wikis to produce lesson plans that could be shared and so provide an alternative to some traditional curriculum materials and they would so have less reliance on textbooks.
When I mentioned this to my wife a few days later, she said she found textbooks served a valuable function, especially in providing good graphics and illustrations, but she then gave an example of a lesson that day where a student had to report on a certain kind of cell. The textbook discussed several kinds of cells, but not that particular kind, but the student was able to find some information about that kind of cell on the web in just a few minutes.
And then I realized that the same kind of componentization that has taken place in the computer hardware business over the last two decades, and that is now going on more and more in the software industry with the use of open-source implementations of standards, is also going on in the textbook industry. For example, I’m sure a great deal of effort goes into producing a comprehensive index for each new textbook. But that effort no longer adds any value, as the index we all rely on is that provided by the search engines we use every day. The textbook index has become a component but not all the players have realized it yet, especially given the years-long product cycle that is currently required to produce new textbooks.
Which means real change is just a matter of time, though it’s too early to say just what form it will take.
For example, fifteen years ago every IBM secretary had on her desk a copy of a publication called “The Airline Travel Guide.” It gave the schedules of airline flights. To book a trip you had to consult that book. It came in a small version that listed just the flights for major cities and a large version of several hundred pages that had the flights for most cities in the U.S. There were updates every few weeks. Putting out all those documents was a great business since subscribers needed those frequent updates.
Then along came the web. I stopped seeing those published travel guides years ago. I just checked the web and see that the company still survives, as OAG, but now it’s just one of scores (or more) of travel-booking businesses based on the web. And now there are meta-booking businesses. For example, a friend recently mentioned a company I hadn’t heard of before, kayak.com. Traditional web-based bookers like Expedia compare airlines and report the best deal. Kayak apparently goes one step further. It compares the bookers and reports the best deal.
Thomson has already booked its flight out of the traditional textbook industry. It will be interesting to see how soon others book the same trip …