Closing The Book On The College Bookstore Scam

It's an archetype nearly as old as music itself: a duo hits the road, recruits an all-star band, and completes a mission from God. You’re familiar with The Blues Brothers, but a decade earlier there was a real-life version. Except they weren’t brothers – they were a married couple. And they weren’t winding their way through the Midwest to a big show at the Palace Hotel Ballroom on Lake Wazzapamani; they toured the UK and Europe, ending in London. And they weren’t chased by Good Ole Boys from Bob’s Country Bunker, but one of them could have been one. Finally, the musicians they recruited weren’t Matt Guitar Murphy, Donald Duck Dunn, or Mr. Fabulous. But they had equally fantastic names: Slowhand and a guitar player called Mysterioso who might not have been on a mission from on high, but sure wrote a lot of songs about God.

In 1967, Delaney Bramlett, a session musician from Mississippi, met and married singer Bonnie O’Farrell. Soon, the two formed the nucleus of Delaney & Bonnie and Friends, a rock/soul act with a live performance that blew back the hair of some very long-haired, very famous musicians. After seeing Delaney & Bonnie in concert in 1969, Eric (Slowhand) Clapton picked them to open for his new supergroup, Blind Faith. But Delaney & Bonnie proved to be a tough act to follow and – not for the first time – Clapton changed horses and opted to tour with them instead.

On December 1, 1969, in the midst of the breakup of the only band he’d ever known, George Harrison went to the Albert Hall to see Delaney & Bonnie and Friends (including Clapton, Leon Russell, Dave Mason, Billy Preston, Bobby Whitlock, Bobby Keys, and Rita Coolidge). Seeing how much fun they were having on stage – a place he hadn’t been (rooftops aside) for over three years – the Beatle who most hated touring decided he wanted in. The next night in Bristol, at the back of the stage in a black Stetson hat and fringed buckskin jacket, stood the Quiet One – appropriately credited as Mysterioso.

George needed fun, and he got it. Over the next two weeks, on the tour bus, in line at motorway cafeterias, and backstage, he engaged in food fights and juvenile pranks like sending fruit-shaped wind-up figures across the stage to distract their opening act. On stage, alongside world-class players jamming to Things Get Better and Only You Know And I Know, he remembered why he became a musician in the first place. But he got a lot more. A number of Delaney & Bonnie’s friends joined George five months later to record his career-topper All Things Must Pass. Delaney also taught George to play slide guitar, a sound that became – in the words of one biographer – as “musically distinctive a signature as the mark of Zorro.” And at the tour’s conclusion at the London Lyceum on December 15, John Lennon joined the party on stage, marking the last time the founding Beatle would perform live with another member of his band – a solemn end to the 60s.

But the real beneficiaries of the greatest tour you never saw were fans who bought tickets for an obscure rock/soul act and ended up seeing two of the world’s greatest guitar players and songwriters at no additional cost.

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It feels good to get things included for free. I used to think including textbooks and other course materials in the cost of college was a good example. After all, when they’re not included, few students buy all recommended books. Given the increasing cost – an average of more than $1,000 per year – who can blame them? But studies indicate their performance suffers. Moreover, 33% of students report opting out of a class due to the high cost of course materials. And why not bundle course materials when colleges are throwing in everything but the kitchen sink: libraries, sports, student activities, research, healthcare, and all kinds of advising and support from countless associate deans. If colleges are going to bundle anything with classes, materials surely belong at the top the list.

This was the logic of Inclusive Access. While Federal Student Aid rules had prohibited colleges and universities from charging for books, President Obama’s Department of Education (ED) carved out an exception where “the institution has an arrangement with a book publisher or other entity that enables it to make those books or supplies available to students below competitive market rates.”

With major challenges to growing revenue from abundantly-priced textbooks, publishers grabbed onto ED’s lifeline. It wasn’t hard to sell colleges on Inclusive Access by demonstrating discounts from inflated list prices – publishers were happy to lower prices on digital textbooks as margins are much higher than print – and by touting the benefits of universal access to digital course materials (inclusion being the name of the game). Today, nearly half of all students get course materials through Inclusive Access programs: all digital course materials (textbooks, supplemental reading) are available on the first day of class through the campus learning management system and continue to sit there unless students proactively opt out. Eight years into Inclusive Access, colleges boast about how it saves students millions of dollars each year. But many students are still surprised when additional charges of ~$72 per course (or ~$300-400 per semester) show up on their bursar bills.

In a rare moment of progressive irony, the most inclusive ED in history wants to usher Inclusive Access off the stage. In the current negotiated rulemaking process, ED proposed dramatically narrowing the exception to a demonstrated health or safety reason (hard to fathom that scenario) or where there’s simply no other way for students to get the materials – effectively flipping the switch from the current opt-out model to opt-in. Driven by consumer advocacy groups, ED wants more transparency and choice for students. Through the process, ED has revealed it believes purported savings are no great shakes – particularly comparing Inclusive Access with the lower cost of digital textbooks – and that students may be paying for access to resources they don’t use, and in some cases aren’t aware of. In addition, the opt-out process can be complex and confusing. Worst of all, because required online homework platforms get bundled with Inclusive Access, opting out is not a realistic option. In the Biden Administration’s view, Inclusive Access is more bungling than bundling and, as a result, has emerged as a new front in its war on “junk fees.”

For their part, colleges can’t believe it, writing letters to Secretary Cardona hailing Inclusive Access as an “access and affordability program… developed by colleges and universities during the Obama-Biden administration” and tapping student body presidents to write op-eds accusing ED of wanting to “leave more students on the hook for high textbook prices.” As the rulemaking process has progressed, colleges have thrown everything at the wall to see what sticks: increasing disclosure, clarifying opt-out procedures, somehow ensuring there really are cost savings. But what’s most interesting about the fracas is that schools are so hot and bothered.

While colleges have tried to come across as neutral third parties in this publisher-student skirmish, they’re not. They’re not because of the central role played by campus bookstores. Before Inclusive Access, faculty would list required and recommended course materials and students could buy, rent, rental-buyback, beg, borrow, or steal them from anywhere. That could be the campus bookstore. But it also could be an independent local or online retailer. With Inclusive Access, colleges choose one retailer and – surprise! – it’s always the campus bookstore or a purpose-built online campus bookstore. That’s why the 2020 class action lawsuit filed by independent booksellers against publishers and campus bookstores included this mic drop: “In reality, it should be called ‘Exclusive Access’ as there is nothing inclusive about it.”

While some students may be saving money, the primary effect of Inclusive Access has been a dramatic increase in campus bookstore wallet share, putting some stores on firmer financial footing than the colleges they serve. For while some colleges continue to run bookstores themselves, they’re a small minority; most are operated under contract by the likes of Follett and Barnes & Noble, yielding Inclusive Access brands like Follett ACCESS and First Day.

With no physical textbooks, foot traffic, or need for school-branded paraphernalia, what value do Follett and Barnes & Noble add to digital course materials from publishers? According to the National Association of College Stores, “stores are often best placed in the institution to lead Inclusive Access programs because they have established relationships with faculty, publishers, and students.” But in reality, stores are merely middlemen between publishers and students. They’re not – as one bookstore manager acknowledges – purchasing books, paying shipping, or putting “any time or effort into returning unused books or paying restocking fees.” They’re not modifying or supplementing the digital files they receive from publishers. What they’re doing is taking full advantage of a monopoly bestowed by federal financial aid.

The feedback I’ve received from edtech companies is that Follett and Barnes & Noble have been acting like gatekeepers of Amazon-like proportions when it comes to incorporating courseware in Inclusive Access programs. (I suppose Barnes & Noble learned this lesson the hard way.) Leveraging Inclusive Access, campus bookstores either mark up the price of digital products by 40% compared with direct student purchases or capture the margin by forcing companies to reduce their selling price by 40%. It’s a useful reminder of the peril of true monopolies, even very local ones.

But bookstore companies aren’t only eating students’ lunch, they’re also taking advantage of colleges. For while colleges typically receive 5-10% of revenue under bookstore contracts, most don’t distinguish between hoodies and higher margin courseware. (While there’s no authoritative study of bookstore margins on Inclusive Access, I’d bet dollars to donuts that courseware is the most profitable thing campus bookstores sell.) In fact, according to a bookstore contract library compiled by SPARC, where commissions do differ between physical and digital products, college revenue share on courseware is significantly lower, often by as much as 50%. Meanwhile, Follett and Barnes & Noble make sure they can continue to raise Inclusive Access prices; 33% of contracts allow for uncapped annual increases and another 21% allow for twice-annual increases. It’s clear that the big winners from Inclusive Access are Follett and Barnes & Noble. Why do colleges put up with it? Perhaps to maintain those sweet 20% campus bookstore discounts for faculty and staff?

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Remarkably, in an era with an unprecedented amount of free educational content, the impact of Inclusive Access has been to create a monopoly for college bookstores. In the meantime, colleges have missed the boat on open educational resources (OERs). These online books and other digital resources are “open” because they’re free to students. And if students want to print an OER as a printed, bound “textbook,” they can get one for $13. OERs like OpenStax actually lower the cost of college. (OpenStax provides free digital textbooks for over 60 courses, many now incorporating high-quality video.) Instead of cajoling faculty to explore, adopt, and conform curricula to OERs, colleges spent a lost decade on Inclusive Access. Educational content wants to be free, except on college campuses, I guess.

Consumer protection advocates in higher education can go too far, as they have on third-party servicers and loan forgiveness. But they’re right as rain about Inclusive Access. It’s a fine thing that the immovable object known as College, Inc. has finally met its match in the unstoppable progressive force that is President Biden’s Department of Education.

In supporting Inclusive Access for pennies on the dollar – University of Arizona-level financial mismanagement? – colleges have once again taken a position that is in their own economic interest and counter to students. Unfortunately for American higher education, this is becoming as “distinctive a signature as the mark of Zorro.”

As Delaney & Bonnie sang in Only You Know And I Know, backed by Slowhand and Mysterioso:

You know, you can't always go and get your own way
‘Cause if you do, it's going to get you some day

Colleges don’t need to be on a mission from God. Pretty much any mission besides their own bottom line will do.