The textbook business

This is a followup on my previous post about the challenges of open educational resources (OER) production and adoption. I’ve come to the conclusion that the key aspect holding back the “OER dream” is not the lack of collaboration tools or the ability for teachers to discover material, but the quality of the content. You can’t write a textbook by committee. It’s as simple as that!

I wish collectives of qualified authors/teachers could come together to create the free textbooks and other educational material, but it seems human nature doesn’t work this way, and it’s very difficult for multiple authors to “sync” their thoughts together and come up with a coherent narrative for book-length projects.

The key to the production of quality educational content is to set the right incentives for knowledgeable authors to write. I’m thinking graduate students writing tutorials, blog posts, HOWTOs, books, and generally living from the proceeds of their work. Rather than wishful thinking about “collaborative projects” where multiple authors come together to write a book, why don’t we focus on single-author textbooks? Rather than a “commons” approach where nobody owns the project, let’s have a single author “own” the project and make them personally involved with its success. I believe the monetary incentives will be enough to make the author invest the time needed to make the book/project/resource a success.

It’s possible to replicate, and generalize the business model I used with the MATH&PHYS, and LA books with experts in other fields: chemistry, biology, economics, psychology, history, etc. If a young person (think an M.Sc. or a Ph.D. student) with practical and teaching experience in a particular subject writes books, I can guarantee the book will be a success.

 

Business model

The beautify of the matter is we don’t need to invent anything new. We’ll use a very traditional business model, where we sell products to make cash. The authors will make a significant profit from each copy of the book sold, and will thus be incentivized to produce quality content that sells.

The publisher (Minireference Co.) will also make profits from the book sales and be able to fund software development, marketing efforts, author advances, and generally take care of the business overhead for running operations. The main innovation of this business model is that, rather than the publisher being in an exploitative relationship with the author, they are equal partners. Rather than authors making 10% royalties, at Minireference Co. authors earn 50% royalties. The publishers takes care of the boring stuff and allows the authors to focus on the hard task—writing, polishing, and curating the content. Equal partners, with parts of the proceeds.

The market(s)

The main audience for the textbooks will be students, but students in the broadest sense of the term. We’re talking advanced-level high school students,  university students, parents, and adult learners. By setting a price point for the products around $29 to $39, we’ll make sure the books are affordable for everyone, but also make enough money to sustain the authors so they can keep producing more books.

 

Okay, so where is the OER in all of this?

By now, my dear readers, you might be wondering if there is no case of “bate and switch” going on here. We started with the promise/mission to make open educational resources more accessible to students and adult learners around the world, and somehow we ended-up with a reaffirmation of a business plan to make money from selling books. Perhaps there is some of this going on, but you must agree that building stable organizations with individuals who earn a living by teaching is a step in the right direction.

The approach that I imagine for getting achieving the “OER dream” is to encourage authors to sell their university-level books, but contribute primary and high school material as OER. I think the “university for money, but high schools stuff for free” approach will work for two reasons. Some authors might start from an altruistic point of view, and want to do something good for society by releasing some introductory lessons for free. Other authors might be motivated by purely capitalistic incentives, since releasing the high school material for free is an excellent way to promote their work.

 

Focus, focus, focus

There’s only a limited things one person can do in their lifetime so it’s important to focus on the things that make sense, and which have potential for growth and high impact. I’ve invested the past 5+ years of my life in the math textbook business so I think it’s important to continue that project instead of changing priorities or working on other projects.

The beauty of this idea is that it doesn’t require any miracles, breakthroughs, or external funding. All it takes is an evolution of the project I have currently going on, so I can work with more authors. Life always tends to make things more complicated over time, so starting with a simple plan, and keeping the focus is generally a good way forward. Vamolos; ándale!

Annual general update

It’s May. Winter is done now, so it’s time for spring cleaning! In addition to cleaning your living space, Spring is also a good time to clean out the “project plans” and focus on one or two key goals for the summer. This is what I intend to do in this post. Read on to learn about the recent developments, and the strategic plan for Minireference Co. for the coming year.

Since the LA book is finished, I will have more time now to focus on software projects and push forward all aspects of the business. Being in content-sprint-mode on LA applications for the past year really didn’t leave much time for updating the website, communicating with readers, twitter outreach, and developing sales and marketing channels in general. It’s like the business side of the company is asleep for one year.

Business is going strong, but to grow to 10x current size we’ll need a good strategy. It’s time to extend the product line to Web, Mobile, ePub, and Kindle. It’s also time to develop new products like email courses, exercises, jupyter notebooks, youtube tutorials, and maybe even audio lessons. A younger version of me would try to do all of these at the same time, but now I know that technology for the sake of technology is an empty pursuit. (That being said, sometimes quick wins can be had using the right tech, so any project that can ship in less than a week is OK.)

I need to think strategically, and also not think too much and focus on shipping.

The big picture

Let’s first figure out the overall mission. What do you want your readers to become? I want all my adult readers to become awesome at math. Also, I want all the analytically minded youth to be aware of the System. I want everyone to have affordable access to university-level science knowledge. Okay, so how do we do this?

Content

Writing books is a lot of work, but there is no way to avoid this. If I want to ensure a consistent high quality of explanations and the logical coherence of the lessons, I have to be involved with all the books. I don’t need to be the main author though—I can be the developmental editor. I think this is my true calling in life.

Each book takes about two year to produce, so as long as it’s just me writing, Minireference Co. will always be on the flat part of the hockey stick growth graph. The best thing for growth right now is to find qualified authors that can help me scale to 10x current number of books in two years. Somewhere out there there is a chemist with years of tutoring experience who can write the No bullshit guide to chemistry in no time at all. Somewhere out there there is an economics grad student who can explain all the ideas from macro and micro economics in a single 200pp book. Same for differential equations (can be written either by a math student or an engineer, or a collaboration?). I definitely need a stats book too, written by a real statistician.

Content TODOs:

  1. Write pitch for authors along the lines of “Think you have a book in you? Join the Minireference Co. content team, and get paid to write about your favourite subject.”
  2. Update website, adding a new /authors endpoint.
  3. Think about revenue sharing models. Contractors? Royalties? Advance? Write contracts.
  4. Write a white paper on self-publishing tools. Package and release LaTeX templates and ePub production scripts for use by other authors.
  5. Develop scripts for publishing workflows based around text sources (md/tex), github repos, diffs, typo fixes, and multi-author collaboration. [BACKLOG]

Distribution platforms

Given the effort involved in producing educational content, it makes sense to distribute it as widely as possible. We need a multimedia approach. The print books are good.

Distribution TODOs:

  1. Create the split-versions of the first book for Kindle: No bullshit guide to math, No bullshit guide to mechanics, No bullshit guide to calculus. [June 2016]
  2. Finalize LA book, and push it to Lulu, Amazon, and Ingram channels. [August 2016]
  3. Release a iOS and Android apps with book content. Keep it simple: use a basic  ListView for browsing the topics and  WebViews (HTML+MathJax) for each topic.  [Summer 2016]

The above goals are easy to achieve and totally worth doing. The last thing you want to do in business is to waste time. Every week that I’m not on the kindle store means hundreds of dollars of unrealized sales. The LA book needs to ship ASAP too. People have been waiting, for so long.

New products

Books are good and all, but we need to think about the future. Will print book still be around 50 years from now? Maybe. But surely technology can play some role. Below are some product ideas that I plan to test in the coming years.

  1. Email course. Adult learners who are learning math and physics on their own need a little structure—a series of emails to keep them on track with their studies. Imagine a sequence of 10 emails that walk you through the sections of a chapter. Each email can contain links to lessons, video tutorials, exercise sheets.
  2. I’ve been experimenting with video tutorials and notebooks. I’m very impressed with the efficiency of teaching using jupyter notebooks and SymPy. I also like the “walkthrough” model of teaching, based on the book. But do the video lessons work? Are they effective at delivering the knowledge? Should they be at 1x, 1.5x, or 2x playback by default?
  3. Mobile applications. Everything has to be mobile these days. There is an opportunity to reach a wider audience through the Google Play Store and the Apple App Store. The plan for this project is in two steps: MVP as a Free app (lessons, concept map, exercises) [DEMO] Introduce paid apps based on feedback and experience of the free app
  4. EXERCIS. No learning is complete without putting the new knowledge into practice. That’s why I need to develop an exercises framework. It’s time I invested some dev efforts into this. I won’t be starting from scratch, but use khan-exercises or edX stack. I can offer it to readers either as a free bonus (incentive to buy book), or as part of the “deluxe” edition of the book. With the exercise framework packaged as a standalone JavaScript application, it can be distributed to students to use offline, or used from inside a WebView in the mobile applications.
  5. STRUCTURE. For as far back as I can remember, I’ve been obsessed with building a graph-like structure to describe the connections between all subjects, topics, and concepts in science and math. Now’s the time to finally build it! Strictly speaking, the graph by itself is not a product but the base for other products. For example “a concept browser” could be used to help people orient themselves in any field. Also a “what to learn next” recommender system can be build based on the knowledge of prerequisite structure between concepts.

These are all nice projects, but each of them requires a lot of development effort. I will need help. I could potentially try to pull it all off on my own, but it would be much faster to get interns to help me, or hire contractors. It’s not something I’m experienced with, but I think if I write solid specs for all these products, I could get external help.

 

Marketing push

With the two books in print (through lulu, amazons, Ingram) and digitally (gumroad, kindle), it’s now time to invest some cash and effort in a marketing campaign. A friend of mine who works in advertising recommended using a 30sec youtube video ad. Given a budget of \$20k for this, producing the video would take around \$10k and another \$10k would be used for the ads. If the video is good, such a campaign could lead to \$20k in sales. And if ROI>0, then I should do it, right?

I should really have a presskit for the company, and reach out to the tech news outlets and the startup community. Surely there is some free publicity to be had. The general themes of expensive textbooks will surely receive attention. Not sure how to spin it, but it’s definitely worth investing into this now that v5.1 of the math book is solid, and once v1.0 of the linear algebra book comes out.
Exercise framework

I’m a little disappointed by the referral page I setup for Shoutly. It’s probably my fault for not putting more thought and effort into it. Despite this failure, I still think there is a lot of potential for a referral program when setup right. If I can reach one student in a class of 300 undergraduates and incentivize her to recommend the book to her classmates, then I’m golden. Giving her a cut of sales profits could be good, but maybe there are other ways too? What if she can setup a “discussion group” for her class, with a unique URL. She won’t be “pushing” the book directly, but setting up a community for her class. Then again, I’m sure there are facebook groups for this already.

 


 

I’ve got many other ideas brewing too, but I don’t want to spread myself too thin. Instead of hiring authors, I could focus on the publishing technology, content curation, and recommendations. I recently bought EZOER.COM which would be a nice home for such a project. The best part about OER is you can still sell the print book. You can’t charge a huge margin, but it’s not like I’m very extractive right now either.

 

So, lots of things for Summer 2016. I better move my desk closer to the coffee machine

Books vs Apps

I just read (actually the computer read it to me) a Business Insider interview with Jeff Bezos in which he talks about book pricing. Specifically, the conversation seems to be about eBooks, but the conversation seems to cover books in general—as a medium.

The most important thing to observe is that books don’t just compete against books. Books compete against people reading blogs and news articles and playing video games and watching TV and going to see movies. Books are the competitive set for leisure time. It takes many hours to read a book. It’s a big commitment. If you narrow your field of view and only think about books competing against books, you make really bad decisions. What we really have to do, if we want a healthy culture of long-form reading, is to make books more accessible.

Part of that is making them less expensive. Books, in my view, are too expensive. Thirty dollars for a book is too expensive. If I’m only competing against other $30 books, then you don’t get there. If you realize that you’re really competing against Candy Crush and everything else, then you start to say, “Gosh, maybe we should really work on reducing friction on long-form reading.” –J.B.

Good point. I never thought of it this way. Books, taken down from their high-horse position as the vehicle of intellectual thought, are forced to deliver the same entertainment-per-dollar value to the consumer.

But that’s a very mechanistic and anti-intellectual way of looking at things, don’t you think? Who said books are for entertainment? Who said delivering the feeling of “information buzz,” commonly associated with news articles and feed-based apps, is the universal goal of all media?

Aren’t books valuable precisely because they are different from the torrent of superficial-level information that is the Internet. Isn’t the main point of a book to summarize and distill information (which is plentiful and free) into a high-value package that earns the reader’s attention, not for it’s entertainment value, but for its quality of insight?

If you ask me, we should optimize for value-per-page (or value-per-unit-of-attention if you prefer) not compete on price with other media. The price of a book should be proportional to the value it brings to the reader. The Internet is an amazing tool that allows anyone to access gigabytes of information on any subject in the click of a button. This abundance of information is actually a problem for readers, as they have to separate the wheat from the chaff. This is where knowledgeable authors come in, whose curation and distillation of ideas brings order to the chaos. When we buy books, we don’t buy ideas, we buy the synthesis of ideas.


In the internet era, almost all of the tools for reading have been reducing the friction of short-form reading. The internet is perfect for delivering three paragraphs to your smartphone. The Kindle is trying to reduce friction for reading a whole book. It’s working. […] We’re making books easier to get, more affordable, more accessible. You are getting more reading. Mostly things have gotten better, and we live in a world where I hope things continue to get better. Surely making reading more affordable is not going to make authors less money. Making reading more affordable is going to make authors more money. –J.B.

Hm. That’s a big step in terms of logic. Bezos’ claim is that lower prices will lead to more readers, which in turn will lead to more revenue for authors. It’s a question of two rates: if the authors’ margins decrease at a rate higher than the rate at which their readership increases, the new publishing paradigm will be a net loss for authors’ bottom line.


Overall, I will qualify the Interview as an advanced-level PR effort to dismiss this summer’s battle between Amazon and Hachette over contol of book pricing, which in turn is tied to the existence of non-amazon sales channels. Amazon’s CEO used this interview as a platform to reiterate the same talking points—that Amazon is out, fighting for better prices on behalf of readers. This is a convenient position when you’re in the business of competing on distribution through economies of scale, and your business model is based on offering the lowest price based on the distributor discount offered by manufacturers and publishers. It’s a neat business model, which attracts customers in troves. It works. Good job. But pretending amazon is doing all this on behalf of the customer is a bit intellectually dishonest. The price on amazon is 10–15% cheaper than anywhere else so that Amazon can maintain and increase its market share, and not some sort of act of robynhoodism.

Book pricing for optimal growth

I had a meeting with a business mentor last week (a McGill professor who has started dozens of companies). He helped me realize the most important thing for the company right now is growth—not margins. The success of Minireference Co. depends on how many students read the book by the end of this year, and by the end of the next. We’ll work on the margins once we have scale.

Below are some observations about book pricing for optimal growth.

Amazon technique

Since I listed the book on amazon.com/.ca/.co.uk/.de/.fr, all the print book sales have gone to them (mostly .com but a bit of .co.uk). Why would you buy the book from lulu.com for \$29 when you can get it from amazon for \$25? People are not stupid, even though I link to lulu.com from the main site, they all go to amazon to check if it’s available and order from there.

To be honest, I think the print quality of the books from lulu.com is superior to the book produced by amazon CreateSpace and IngramSpark. I think lulu.com has been in the “print on demand” business for the longest of the three companies, so they know what they’re doing. The print quality of lulu books is very uniform and crisp, unlike the CreateSpace version which had some pages in darker ink and some in lighter. The main reason why I like lulu.com is because their paper is thinner, which makes the 445pp book actually look much more approachable; we’re talking about a difference of 3-4 mm in overall thickness, but the psychological effects are important.

How can I communicate this difference to my readers? Maybe something like “I recommend you purchase the book through lulu.com, because of the higher print quality and thinner paper” could do. Though is this better print quality worth the \$4 extra, which is really \$10 extra when combined with the shipping. I guess I should tell my readers the facts, and let them decide for themselves.

Ingram channel

The other new channel I’ve been working on is the “serious” distribution to bookstores via Ingram. Printing through IngramSpark makes the book available through all kinds of online distributors (e.g. barnesandnoble.com) and also makes the book available to order from the Ingram catalog, which is how most physical bookstores order their books.

The list price is \$29, and the printing cost are \$6.7, which means there is \$22.3 of “value” to split between me, Ingram, and the bookstore. There are two options for the wholesale discount I can offer 55% wholesale discount (bookstore margin: 35%-40%) or offer 40% wholesale discount (bookstore margin: 20%–30%).

If I provide a wholesale discount of 40% (a.k.a short discount or academic discount), the wholesale price is 17.40, which leaves me with 17.40-6.7 = \$10.7 of profit per book sold.

If instead I offer 55% (industry standard, a.k.a trade discount), the wholesale price will drop to \$13.05, which leaves me with 13.05-6.7 = \$6.35 gains per book sold.

After yesterday’s conversation with my mentor, I’m switching to the 55% discount. Give everyone a cut. We’ll jack-up the prices when everyone is hooked on the knowledge buzz that learning mathematics provides 😉 .

eBook pricing

In parallel to the print book distribution, there is the question of eBook pricing. Both the print book and the eBook version have been \$29. Historically, eBook sales have been very good to me, but ever since the book has appeared on the amazons, the eBook sales have slowed to a trickle. Why would you buy a eBook for \$29 if you can get the print book for \$25?

I’m thinking of dropping the eBook price to \$19. Hopefully this will make more sense for potential customers. Surely the years of effort invested to write the best calculus book there could be is worth a twenty…

Devaluating the book

The other consideration to keep in mind in the face of these price deviations from the old price of \$29 is the psychological effects of “perceived value” of the book. How could this be a good book if it’s just \$25? Mainstream university-level math and physics textbooks cost hundreds of dollars. Specifically, \$190 for precalculus, \$209 for calculus, and \$192 for physics. How can your book cost only a fraction of that and be of comparable quality? No way, I don’t believe it!

I had picked the price \$29 to be as low as possible (looking out for the student’s interest) while still making the book business profitable for me. As the price is dropping below \$29 due to discounts, the situation with the “this book looks suspiciously cheap” problem is getting worse. I might think about bringing the price up to \$39 for the 6th edition, to better communicate the value.

Take home message

There is a general lesson to learn here, which is advice I’ve heard from several successful entrepreneurs, but I never took seriously until now. Price your products for growth not profit. You might lose some money at first, but reaching a wider audience is worth much more than short term profits.

Scaling sales, a quantitative appoach

Yesterday I watched an excellent video tutorial about startup growth tactics by Adora Cheung, a guest lecturer in Sam Altman’s startup class. The speaker has experience from user-testing 13 business ideas so you can tell she knows what she’s talking about. Growth, cohort analysis, and segmentation are all essential tools startup founders should know about.

It made me think about how little analytics I’ve been doing for minireference.com and this blog. What happens when a visitor comes to the homepage? Do they read the whole page? Do they click on any of the questions? Do they download the free PDF tutorials? Most important of all, do they click on one of they Buy links.

Let’s find out…

I previously evaluated the effectiveness of the landing page and found 3-4% conversion rates for the print book and similar rates for the Buy PDF link, and I remember being pleased about those numbers.

These days I see similar numbers: combined Print+PDF conversion is ~= 7.7%.

Looks good right? (Please, ignore the abysmal mobile conversion rates. I’m on bootstrap2 and everything will be fixed when I upgrade to bootstrap3 in a few weeks.)

The problem is many potential readers drop off after clicking through to lulu.com and gumroad.com. I lose contact with my potential customers as soon as they leave my site, so I don’t know how many of them actually bought something. Today I set out to calculate my real conversion rates by cross correlating the data form the google analytics, lulu.com, and gumroad.com.

Burst analysis

My main “marketing channel” is hacker news. Each time I release a new printable PDF tutorials, I post it to HN. It’s an elaborate ploy to gain readers’ trust by gifting them something useful (e.g. a 4-page printable tutorial) and upsell them to buy one of the books. I consider this to be ethical advertisement.

Because of this mono-site marketing strategy, the traffic on minireference.com is generally calm, but every now and then there is a huge spike that occurs when I post something to HN. This bursty nature of the traffic allows us to do a deeper analysis of the conversion rates.

Using google analytics, The visitors, and the two conversions goals are plotted below:

I chose to analyze the events surrounding two bursts of Aug 29th and Oct 3rd. The Aug 29th spike is thanks to the announcement of the
SymPy tutorial on HN.

I was able to calculate the post-minireference.com conversion rate for the print book:

Buy book link --> ordered from lulu: 14%(3/21) on Aug 29 and 10%(3/29) on Oct 3

The post-minireference.com conversion rate for the PDF is:

Buy PDF link --> ordered from gumroad: 33%(3/12) on Aug 29 and 21%(3/14) on Oct 3

Not cool y’all! I better work on this. What do people not like about lulu.com? Is it because they’re not used to it, should I put an Amazon link there?

What are dem visitors doing?

Another question that’s pertinent is how far down the page to users scroll.
We can obtain this information from the graph of scroll-depth events from google analytics (I have some .js the fires events at 0% (baseline), 25%, 50%, and 100% scroll depth.

It’s hard to read anything from that graph, but I’m saving the data for posterity—I want to have something to compare with when I switch to the new landing page…

Does the free tutorial marketing strategy work?

It took me more than a mont of part-time work to write the SymPy tutorial. It’s almost like a little book, since it covers so many topics. I also incurred $90 in copy-editing costs to make sure the writing is solid, since the tutorial was to become an appendix in the book. Was this effort worth it? Let’s see the traffic that resulted.

A total of 10k people downloaded the PDF. I had to use the server logs to get this data, because many people linked directly to the PDF, which means google analytics won’t see these hits. Using zgrep and wc the count the number of lines in the logs that contain the pdf url and HTTP code 200:

  zgrep '"GET /static/tutorials/sympy_tutorial.pdf HTTP/1.1" 200' mr.access.log mr.access.log* | wc
  10058  203840 2369042
  ^^^^^

The initial link to HN pointed to the blog post announcement, so we can see some part of that traffic on the blog:

Ultimately, what is of interest is how much traffic to minireference.com did the SymPy tutorial generate. We see the tutorial led to a spike of about 300 visitors to the main page.

From the numbers we have so far, we can estimate the conversion rate for the referral strategy via free PDF tutorials to be 3% = 300/10000. The SymPy tutorial also led to a “livelying” effect of the traffic in the following days, as can be seen in the graph. Clearly, more people are hearing about minireference.com and coming to check out the site.

The final profit from sales for this spike is \$150 so I’ve recouped the external expenses, and earned a salary of \$60/month, which is not great but still positive. The 3% conversion rate is very interesting, IMHO. I’ll pursue this strategy further, because it has great potential for viral growth—wouldn’t you send a kick-ass PDF tutorial on subject X to your classmates? (caveat: some engineering schools grade “on the curve” so for these students, it is actually game-theoretically disadvantageous to share quality learning material with their peers)

Conclusions and further research

The purpose of this blog post was to reduce the level of guilt I felt about not playing enough with analytics for my web properties. I feel I’ve achieved some level of guilt-diminishment and, more importantly, now I’ve got numbers that I can use as the baseline for comparison with the new homepage. Surely the conversion rates can be improved; the book is great, I just need to have simple messaging that explains how great the book is, and how it is good value-for-money for students, and also good knowledge-buzz-delivered-per-unit-time for adult learners.

Questions to followup on:

  1. How many landing pages do I need? There are essentially three “touching points” with my potential readers. A cold visit to the homepage (e.g. google search), a warm visit to the homepage (via recommendation), a tutorial referral visitor (which is super warm). Will the same marketing message work for all three types of traffic, or should I have three landing pages?
  2. What is the optimal order of the sales pitch? (A/B/../Z-test of section ordering.
  3. Should each book have its own landing page (/noBSmath and /noBSLA) or focus on a single page with two products?
  4. A/B test lulu.com vs amazon.com for the “Buy Book” link.
  5. What channels to develop next?

Okay, enough blogging. Let’s go write some kick-ass marketing copy. And from now on, we’ll be tracking them sales!