- What we’ve heard from Cengage’s competitors is true; most of the authors were not given significant notice prior to the announcement. This was done for reasons of competitive secrecy; Cengage didn’t want the word to leak out before they were ready.
- Because Cengage Unlimited doesn’t officially launch until August 2018, the company believes it will have time to work out the details with the author.
- Cengage has stated that it intends to honor existing contracts with its authors but also claims that those contracts grant it the flexibility it needs for Cengage Unlimited.
- There is precedent for coming up with pricing models. Publishers already bundle products together and have contractual provisions in place to handle pricing for such bundles. So legally, they have a precedent. But how this would apply to an “everything” bundle is far from clear.
- A key to figuring out author royalties on these bundles will be usage, which means new technology tracking and some uncharted territory in terms of metrics. For example, Cengage says that the student just putting a product in their digital locker is not sufficient to count as usage for royalty purposes. But then what is? And does the publisher have the ability to track this usage reliably? And how intrusive would this tracking be?
- The lawyers quoted in the article definitely give the impression that there is a lot of gray area—and variability—in terms of what author contracts do and don’t permit. So there will be Intense negotiations and quite likely some lawsuits (although author lawsuits against textbook publishers is apparently relatively common).
- The argument given by Cengage to its authors is that the authors have as much motivation as publishers to get back to a world in which all students buy their curricular materials, even if it’s at a lower price.
I see a couple of main take-aways from this. First, we should not underestimate the complexity of the move that Cengage is making from legal, technical, and financial perspectives. And they definitely don’t have it all figured out yet.
Second, the question of royalties and what counts as usage is going to raise all sorts of analytics questions, some of which many overlap with student privacy concerns. Who has a right to know how much students are using books in which ways? And what steps are taken to keep those data properly anonymized for people who need the aggregate but not individual data (such as authors or their lawyers)?
Third, all this complexity is definitely going to incentivize Cengage to use as much content as possible that they either own outright or can adopt under a Creative Commons license.
And finally, the argument that Cengage is making to its authors brings to mind yet another analogy to a disruptive service in the tech industry. We’ve already seen analogies to Spotify, Netflix, and Amazon Prime for Cengage Unlimited, but it may be like iTunes in one important respect. The idea is that it reduces incentives for piracy by giving students easy access to the product at a reasonable price is exactly the same argument that Apple made to the music industry.