Open ed fwk sustainability

Open-Access Textbooks and

Financial Sustainability:

A Case Study on

Flat World Knowledge

John Hilton III David Wiley

http://johnhiltoniii.org http://opencontent.org

What is Flat World Knowledge?

Beta Test – Winter 2009

Six FWK books were used as the

primary textbook in 27 classes. In

total, approximately 750 students

enrolled in these classes. All of these

students had access to the free

online version of the textbook and

no purchase was required of these

students. Of these 750 students, 442

students (59%) placed at least one

order with FWK, with the average

student spending $28.20.

Beta Test – 2009

In total 294 printed textbooks were

purchased by students. Thus,

approximately 40% of students

chose to purchase a print copy of

the textbook, even though the free

online version was available. Some

of these purchases included not only

the textbook but other goods (e.g.

audio chapters) that were bundled

together with the textbook.

Beta Test

Items Purchased by Students

Item (all sold by

chapter)

Total Sold (excluding

products bundled with

textbook)

Flashcards 608

Audio book 144

Audio study

guides

80

Printable PDFs Data not available

Online Quizzes Data not available

FWK began allowing public adoptions of 10

textbooks at the start of the 2009–2010 school

year. We gathered data from this academic

year from FWK’s internal systems.

Revenue

A total of 16,461 print

textbooks were purchased over

the three semesters, generating

$479,259 of revenue. Of these

print copies, 10,970 (67%) were

purchased through a campus

bookstore. In total,

approximately 29% of enrolled

students purchased a print copy

of the textbook.

Revenue

Digital

Products

Made up

~21% of

FWK

Revenue

Revenue – How Many Made

Purchases?65.7% of students taking a class that used

FWK materials registered on the FWK

website. Approximately one in four of

the students who registered (16% of total

students) made a purchase through the

FWK website. The average buyer made

1.3 purchases, with the average purchase

totaling $30.89. Because many of these

purchases were collections of resources

bundled together the number of total

unit purchases (181,563) is much higher

than the average number of purchases.

Costs

FWK published its first 10

textbooks at an average cost of

approximately $150,000 per

book. Since these first 10 books

were published, the average cost

of producing a book has

decreased to $120,000 per book

due to increases in operational

efficiencies.

Costs

Authoring (writing) fees (average

$15,000, which is the upfront fee

paid to authors and does not

include royalties paid on book

sales);

Peer reviewing (average $20,000);

Design, illustrations, art (average

$15,000);

Costs

Production (XML, proofing, QA,

etc.) (average $25,000);

Alternate versions (audio,

handheld, etc.) (average $15,000);

Instructor ancillaries (average

$15,000); and

Student ancillaries (average

$15,000).

Costs – Faculty Adoptions

For the academic year 2009–2010, FWK

reported that the average cost of faculty

acquisition was approximately $900.

Gross profit per adoption climbed above

$300.

It takes a faculty member using the

textbook for three semesters in order to

pay for the costs of acquiring that faculty

member.

The company hopes for full payback of a

faculty acquisition in a single semester by

the academic year 2011–2012.

So What Is the Bottom Line?

1 Textbook at current enrollment =

~ $61,000 annual revenue ($48,000

(book), $13,000 (ancillaries)).

Many of the costs are fixed. Current fixed

costs are such that at current enrollment

FWK would not be sustainable.

But, enrollments grew from 900 to 58,000

in one year. If large enrollment growth

continues, FWK could be very profitable.

2011 update: Approximately 270,000

enrolled students, and more students

buying textbooks.

So What Is the Bottom Line?

From http://flatworldknowledge.com

Questions?

John Hilton III David Wiley

http://johnhiltoniii.org http://opencontent.org