Elementary & High School publishing is a black box.
In the world of higher education, the formula is pretty simple: textbooks and other course materials are selected by college and university faculty. Itâ€™s not so easy for the nationâ€™s primary and secondary schools. They must buy textbooks selected by shadowy state adoption committees. Because adoptions tend to fall on certain years, the El-Hi segment can be somewhat volatile. Last year, for example, revenues from adoptions were $650 million, down 28% from the $900 million rung up in 2005. The Book Industry Study Group estimates that adoption revenues will increase to $760 million in 2007, $900 million in 2008, and $950 million in 2009. Not surprisingly, they are also projecting robust overall sales increases for those years.
The adoption process was first implemented after the Civil War, because Southern states wanted separate textbooks that told its version of the war between the states. There are 22 states that formally participate in the textbook adoption process, with the remaining 28 comprising what is known as â€œopen territoryâ€. The selection process in adoption states has national implications because most non-adoption states purchase textbooks selected by neighboring state adoption advisory committees.
The State Advisory Committee selects teachers and lay people to review textbooks that have been submitted for adoption. Based on the evaluation of the â€œexpertsâ€ and input from the public, the State Advisory Committees makes adoption recommendations to the State Boards of Education, who, ultimately, make the final decision. Textbooks are selected for six-year cycles.
Critics of the textbook adoption process say it has resulted in the â€œdumbing downâ€ of primary and secondary education. Publishers, they say, are so concerned with covering every item on a stateâ€™s list of teaching standards, and avoiding politically incorrect references that may offend the adoption committees or their constituents, that they end up producing bland works that donâ€™t engage either students or teachers. Publishers point to benefits of the adoption process like teaching texts that have six-year price and availability guarantees, regular review of curriculum, equal access to materials, elimination of redundancies, and a control on manufacturing specs.
In their essay on El-Hi publishing that appeared in Book Industry Trends 2007, Stephanie Oda and Glenn Sanislo describe a market dominated by four publishers accounting for 70% of total revenues: Pearson Education, McGraw-Hill, Harcourt Education, and Houghton Mifflin. There are also many new players in the market who joined the fray during the period of rising enrollments in the 1990â€™s. As important as state adoptions and enrollment are, however, Oda and Sanislo correctly identify the No Child Left Behind Act (NCLB) as the single most important force in school publishing today.
The NCLB Act of 2001 was signed into law in January 2002. It was intended to improve the performance of primary and secondary schools through standards-based education and mandated that states, school districts, and local schools be held accountable for â€œpositive outcomesâ€. States must show that its students have achieved basic proficiency (as defined by the states) in reading, math, and science, and teachers must demonstrate â€œsubject expertise.â€ NCLB created a huge demand for training, assessment, and testing materials, resulting in a windfall for some publishers. On the other hand, increases in NCLB funding to states have been offset by cutbacks in general operating funds. Positive or negative, the influence of NCLB on school publishing has been nothing short of profound.
According to Book Industry Trends 2007, the El-Hi publishing segment generated $4.75 billion in net publisher sales in 2006, a 1% increase over 2005 and 13% of the book industry total last year. Thanks to growth in state adoptions, the Book Industry Study Group projects healthy increases of 7.3% for 2007, 6.9% for 2008, and 7.2% for 2009. Growth will dip to 3.5% for 2010-2011. Sales of net publisher units in 2006 was 177.2 million, a decrease of 1.5% from 2005, and 6% of the industry total.
BISG projects increases of 4.8%, 4.7%, and 5% for 2007-2009, slowing to around 1.4% for 2010-2011. Average dollars per unit was $26.80 in 2006, an increase of 70 cents over 2005. BISG projects average dollars per unit will increase another 70 cents in 2007 and increase every year until it reaches $30.30 in 2011. Over 96% of El-Hi publications are sold through domestic channels, and 96% of domestic sales are to schools.
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