The heart of the argument for NFT evangelists has always been the sense they were democratizing the world of art and commerce. Artists, they said, would be able to use a digital proof of ownership to make money off digital sales. So, what should happen when a major company known for predatory practices—such as, for instance—a textbook publisher, says it too would like to make money every time their owned work is sold second-hand?
Bloomberg first reported last week based on calls with reporters after Pearson’s latest quarterly report that company CEO Andy Bird was gung-ho for blockchain tech. Bird was seeing dollar signs in his eyes, saying that since print editions of textbooks can be sold any number of times after they’re released, that’s lost revenue for their company. So what if they change the game, make textbooks NFTs, and ink it into the protocol that each time a textbook is sold to a third party, Pearson can make a profit.
Bird told reporters that “in the analogue world” their textbooks are resold up to seven times, further lamenting they only make a profit off the first sale. This has been the case for the entire book market, from the first time Johannes Gutenberg printed his first poetic pamphlet, but let’s ignore that for a second. He also said he was curious what “the metaverse” could offer them and their company. Imagine being forced to don VR goggles just to flip through a digital version of a textbook you don’t even technically own.
“The move to digital helps diminish the secondary market, and technology like blockchain and NFTs allows us to participate in every sale of that particular item as it goes through its life,” Bird reportedly said.
A Pearson spokesperson declined to answer Gizmodo’s specific questions about what NFTs would mean for the textbook publisher, but in a statement they did say that while they don’t have any specific plans for this technology, “we are certainly interested in how it can make learning better for students and bring more value for other stakeholders. Blockchain is an interesting technology that provides transparency to everyone and has the potential to be good for authors and students.”
Transparency? Perhaps, or perhaps not, but a new form of monetization? Absolutely. Putting NFTs into a system that’s already renown for being anti-consumer would likely exacerbate existing issues in textbook sales, and create new problems out of whole cloth, according to consumer advocates Gizmodo spoke with.
Why get our knickers in a twist over something that might not even happen? Well, what makes this rather lame supposition of cashing in on the crypto craze different from other, cringe-level crypto promotions is what it proposes for industries that are similarly monopolized, especially those with captive audiences who may have little choice but buy into these new monetization structures.
Consumer advocates and anti-monopoly authors we spoke with wondered what NFTs would mean for other captive markets. Would NFTs force adoption if they were used in health care? What about necessary utilities like water? Though it’s mostly startups and small companies proposing to bring necessary services onto the blockchain, there’s potential that if some big players make the switch, others would follow.
Textbook Companies Have Been Nickel-and-Diming for Years
Of course, digitization has also eroded long-held concepts of ownership, textbooks being an especially poignant example. Internet users waving the skull and bones flag have regularly relied on piracy to get around textbooks’ expanding costs.
The fact remains that college textbooks remain a functional monopoly. Five companies dominate the scene, including Pearson, but also Scholastic, McGraw-Hill, Cengage Learning, and Houghton Mifflin Harcourt. These companies have sought to legally hammer pirates into the dirt for providing free copies of their books online.
In a 2021 report by U.S. PIRG, a federation of advocacy nonprofits, writers Cailyn Nagle and Kaitlyn Vitez found that while 65% of 5,000 college students surveyed reported they skipped buying a textbook due to high prices, a rising percentage of students said they skipped buying an access code to online textbooks, hoping to make up lost homework grades on tests and other coursework.
College textbooks have long been the most-quickly inflating aspect of higher education, according to the U.S. Bureau of Labor Statistics. The fact that college-level courses often mandate textbooks means students are spending upwards of $500 on textbooks, according to a 2021 report from the National Association of College Stores. Their research also shows the use of digital textbooks are on the rise.
Pearson sells a copy of Fundamentals of Nursing for over $70 for the print copy. They’re sly about how they advertise the ebook version, saying it costs only $10 per month for a subscription, though there’s a minimum of four months so the total cost for the book is $40 for the absolute minimum. A copy of Statics and Mechanics of Materials costs $75 for print, or over $100 for the edition that contains access to coursework.
“Everybody hates textbook companies,” said Matt Stoller, the director of research for the left-leaning think tank American Economic Liberties Project. He’s written about monopolies before, and says textbook companies are a… ahem… textbook case of monopolization. More than that, he did not mince words when calling crypto “a scam,” and “useless garbage” without an actual use-case to promote wide-scale adoption, other than monetization.
In a phone interview with Gizmodo, Stoller openly wondered why Pearson would consider NFTs beyond any other form of DRM, seeing this latest mention of breaking into the realm of crypto and the often ill-defined “metaverse” as an attempt to seem hip to the latest tech. But monopolies will always try to tighten their grip on their industry. He likened it to United States v. Alcoa (AKA Aluminum Company of America) which showed the company guilty of monopolization for buying up any aluminum scrap to cut out competition.
“There’s a lot of history about how firms try to prevent having to compete against their own like secondhand products,” he said.
Those who’ve studied the textbook market remain very skeptical companies like Pearson would reduce prices for first textbook purchases. Even though Pearson advertises its own digital subscription service, and says its ebooks are less expensive than physical versions, they’re still a massive drain on students.
“Digital textbooks have made it easier for publishers to shut down the secondary markets, because it’s a lot harder to sell a digital textbook because of DRM that’s put on it,” Stoller said. “Now they’re looking to go to the next level with NFTs.”
After writing the PIRG report last year, Nagle now works as a program manager for the Michelson 20MM Foundation’s Open Education Resources—a service that tries to provide open source course materials. In a phone interview, she said the entire move to digital by textbook companies has been a way to restrict the second-hand market, which still remains the cheapest way to acquire a textbook.
“It’s not a big leap to think of [NFTs] as the direction the entire textbook monopoly wants to go into,” she said. “I think we should see this in the context of them slowly chipping away at the U.S. textbook marketplace for generations.”
In the end, it’s about ownership. Forcing students to pay up to the publisher for buying a used textbook is simply in line with that corporate thinking. Already, Pearson’s existing digital format does not sell students textbooks, but offers them a license to view them. Because of these licenses, companies can revoke people’s access to their purchases relatively easily.
“But ultimately what is happening is textbook publishers are just trying to squeeze authors who write textbooks, and then also people who buy them,” Stoller said. “They’re just trying to get rid of the idea of ownership.”
There is still legal confusion about whether NFTs actually confer ownership of the thing itself, though in reality, they are simply a digital receipt signifying ownership. So really, Pearson’s interpretation of the tech is in line with what it’s capable of and what other companies like Meta are already doing, even if it’s against the proposed goal of decentralizing digital ownership.
Proponents Don’t All Agree if It’s In the “Spirit” of Crypto
But the idea using NFTs in this way to effectively de-democratize ownership is a little startling, even for some blockchain proponents. Christian Catalini, the founder of the MIT cryptoeconomics lab, told Gizmodo that to some extent, use of NFTs like this flies in the face of crypto’s stated purpose. Instead of removing an intermediary between users and the content, it puts up additional barriers.
The pie-in-the-sky dreams of big-name executives for blockchain integration with existing Web2 systems seems doomed to failure. To adopt this technology in such a way that stays true to the original promise of NFTs would mean completely restructuring their business model, Catalini said, which is not likely to happen anytime soon.
Though some blockchain diehards see it as the natural progression of this technology. Dr. Merav Ozair, a fintech professor at Rutgers business school and blockchain proponent, said in a Zoom interview she had expected some company to go this route, saying NFTs are “the only way that you can really protect your creator’s rights” due to the blockchain-based authentification process.
“This is exactly how it should be done,” she said. “Digital content, whether as a freelance or an answer sheet publication company—anyone who writes—their rights should be protected.”
She said this could potentially cause Pearson or other textbook companies who adopt this tech to lower prices. The Pearson spokesperson similarly stated how they were interested in “democratizing digital texts to make them more affordable and accessible. NFTs would be no different because it would allow us to deliver better quality content than print books and at a lower price.”
But there’s little precedent for these companies to fully reduce prices, according to Nagle. Online textbooks often do cost less than a physical book, but not less than a used, second-hand copy. There’s little precedent for companies reducing prices overall, she said, especially not with the proliferation of access codes.
If companies like Pearson go this route, it would also basically transform every online edition into an NFT, otherwise the system wouldn’t allow them a full cut of the second-hand market. Forcing students to participate in a complicated, still largely unregulated system like blockchain tech, especially those tied to older systems like Pearson already uses, could end up hurting students, Nagle said.
Publishers are already trying to be less “textbook company” and more “education technology” companies, or more so, companies that rely on user data. Nagle said that her PIRG study they asked students if they knew how textbook companies were collecting and storing their personal data, and on a scale of one to ten, most students rated themselves a “2.”
“I don’t think it’s reasonable to expect students to be able to navigate these pretty complicated terms of service, so are we really asking freshmen, with their first year at college, to navigate the blockchain?” Nagle asked. “That doesn’t really seem fair.”