Will the CafeScribe Acquisition Give a Boost to Electronic Textbooks?

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Will the CafeScribe Acquisition Give a Boost to Electronic Textbooks?

An interview with CafeScribe CEO Bryce Johnson

4/16/2008

By Linda L Briggs

As a student, I was frustrated. I ended up doing a project on e-textbooks. I wanted to try to figure out what in the world happened to the idea. I remembered all these major analyst agencies out there predicting that e-books were going to be a $5 billion market in the U.S. alone. Considering that the entire worldwide book market is a $25 billion market, e-books was going to take a pretty big chunk.

But when I did my research, in the first week I found that total revenue globally for e-books sales was around $9 million.

CT: This was around 2002, and sales were at just $9 million?

Johnson: Yes. Not even a drop in the bucket.

I started looking into e-textbooks and trying to figure out whether anybody had really taken a run at them. I found that publishers, indeed, had tried to [do] something in Adobe format, and a couple startups in Chicago tried to create a piece of hardware. I decided, "There's something missing here. Someone has not sat down with a student to figure out what would help break the [barriers]."

I'll be the first to tell you that the textbook, as much as it has its deficiencies, is also a comfortable medium. It's easy to flip through pages, and it's been around for 500-plus years, since Gutenberg.

So I sat down in multiple informal focus groups. I went from college campus to college campus.... I got resounding feedback: "Yes. We would love to have all our textbooks on our laptops. We could search them, I work in study groups, it would be great if I could network with other students. Can you create an automatic summary?" and so forth.

CT: So that's why your business model at CafeScribe incorporates that social networking component? Because student feedback told you that it's important?

Johnson: Exactly.

CT: Are we at the tipping point with e-books because of hardware like the Amazon Kindle?

Johnson: [In my study] ... I looked at hardware as well. In fact, [we] had a piece of hardware that was identical to the Kindle. For the first eight months [of launching Fourteen40], that's what I was pursuing. We rolled it out at Stanford as a pilot and students said, "How much is this? $400? No way. I just want [content] on my laptop."

CT: So what's different now, as opposed to when you first looked at why e-textbooks hadn't caught on?

Johnson: Here's what I see as the changing dynamics of the marketplace. We have 70 percent of students at the university level required to have laptops. That's growing 15 percent year over year.... So many more students have laptops--that's a big change.

The second thing is digital rights management. Publishers have been very hesitant to send out a file [without some copyright protection].... This is their bread and butter, after all. So we're doing some digital rights management. [Basically], we fingerprint that file so only a [subscriber's] laptop can un-encrypt the file and the student can read it...