During its New York-based media event this morning, Apple announced its plans to get into the digital textbook publishing business. We have a good recap of the event in case you missed it, but the gist of it all is fairly straight-forward.

Using new applications like iBooks 2 and iBooks Author, Apple plans to disrupt the textbook industry by making it easier for folks to publish and consume educational content. And what’s more impressive, they’re giving the tools away for free…

But don’t be fooled. Apple’s intentions are far from philanthropical. The company is trying to get in on an $8 billion dollar per year industry. Here’s a breakdown of the economics behind Apple’s textbook initiative.

The price cap for publishers has been set at $14.99 per textbook. This means that they can price their books however they want, as long as it’s not over $15 dollars. This could be a game-changer for college students, as college-level textbooks typically run anywhere between $100 and $300. And even used copies, if they’re available, are still half as expensive. That’s a big difference.

But with such a big price drop, why on earth would publishers agree to all of this? Consensus from Apple’s publishing partners seems to be that they figure that the amount of money the’ll lose on the cost of each book will be made up in the total volume they’ll sell in the long run. iBooks, remember, are non-transferable.

And now for Apple’s piece of the pie. Early reports claim that the company will be taking its usual 30% off the top of whatever the publishers make, just like it does with apps and developers. It’s a familiar business model that has, so far, served Apple quite well.

While everything looks good on paper (or should we say tablets), only time will tell if Apple’s move into the textbook industry is worth all of the hype. It still has to convince tens of thousands of schools to adopt the platform, which involves putting a $499 tablet in every student’s hands. And that could prove to be a difficult task.

[MacRumors]

  • If schools purchase iPads, they will expect to hand down the iPads to the next class each year. No need to transfer the iBooks as they are already on the device. Schools cannot expect every parent to fork over the money for an iPad + the books. And do schools really have the money these days. Not in California for sure. IF the publishers make money it will be from cost savings from the actual print and publishing costs.

    • Chris Nichols

      1 x $500 for a single iPad + 8 terms * 5 classes per term * $15 per digital textbook = $1100 for a 4 year program

      8 terms * 5 classes per term * $100 per textbook = $4000 for a 4 year program

      Makes sense for a university student.

      • Anonymous

        Also, $100 per book is being generous. Well, depending on the degree.

      • Yes, for college this makes sense, but Apple is focused on the K-12 market. In New Zealand when a school required that every student buy an iPad the parents revolted.

  • It makes me wonder if Apple is preparing to release a cheaper tablet for consumers or at least for educators. If that happens this new format will be widely accepted.

    • Anonymous

      Bingo. At the very least, Apple will keep the iPad 2 around for $399 when it unveils its next-generation tablet. I also wouldn’t be surprised if it introduced an 8GB iPad model a la the iPhone 4 with an even lower price.

  • I’ve downloading whatever school books I can get from iBooks. Besides the money it saves me, its so awesome to have an iPad instead of a 20lb stack of books that sits 12 inches tall.

  • What every forgets is that books you can save 100s of years, a functional ipad you cant. Dont get me wrong, i think it is a great idea but if this eventually will kick out paper books (which i doubt) it would i guess be worst for mankind =) let me know your thoughts

    • Anonymous

      But you’re forgetting that when I purchase the third-generation iPad, and the fourth and so on, all it takes is me typing in my Apple account info and all of my previous purchases are available on the tablet. This includes videos, music, apps and yes, iBooks. The fact that the article mentions that iBooks are non-transferable simply means that one student cannot lend, gift, or sell his iBook to another student with a separate Apple account. Make no mistake about it, when you purchase an iBook, it’s yours for life — as long as you stay in Apple’s ecosystem that is. ;op

      • Well that is right as long as Apple stays in business and well as long we dont get a big ass solar wind that destroys all electronics 😉 I hope they will keep making paper copies as a backup 🙂 (I do love the technology and stuff but sometimes I get a “The book of Eli – movie” feeling hehe

    • G

      Paper gets lost, misplaced, or destroyed. Digital books can last forever on cloud servers

  • Two words: government assistance (grants, loans, and scholarship) that how they plan on it. At FIU, 90% have an idevice and 50% of students have a tablet… I would say most of that 50% will goto iPads once they realize they have a reason to buy it when it comes to cheaper texts books. Hence the savings in textbooks will pay for the ipad3 and on in the first or first 2 semesters. They aren’t dumb…