 Thank you very much, Mary. Yeah, thank you. And I am going to be speaking mostly about open textbooks. And that's sort of the primary context here for this, but I think some of the discussion we could extrapolate out to more broadly open education resources. My name is Eric Frank. I'm co-founder and president of Flatworld Knowledge. And I'm going to start the session by providing a about a 10-minute overview of Flatworld Knowledge's commercial business model around open, and particularly around publishing openly licensed textbooks. And from there, what we'll do is move into sort of a discussion mode. So I've sort of prepared five assumptions, many assumptions and a little bit of data, one to two minutes of additional data around each of those, and then just open up and engage in a conversation around those. But we can change the agenda a little bit on the fly if you want to. I think the most important thing in these questioning or assumptions sessions is that we actually end up having some fruitful conversation that yields something useful for people when we walk out of the room. So the way I've prepared it may not be the way we want to ultimately do it. And this is Nicole Allen. She's with the Student Public Interest Research Group. And she'll be taking notes and building our report back for the group. Oops. Basically, we started Flatworld Knowledge about four years ago because of this. And we just thought it's an extremely dissatisfied, deep and sustained, deep dissatisfaction in the college textual publishing industry. Students are clearly angry about the cost of materials, frustrated about the lack of options that they have in the marketplace to solve that problem. Many faculty are affected deeply by the student cost side problem, but are also frustrated by their own problems. They want to be able to basically stop teaching around a textbook and actually have a textbook better aligned with what they want to teach, but it's a static black box and they can't do it and take advantage of its full capacity to be part of the integrated curriculum. Authors only get paid royalties when new textbooks are sold in the industry. Every year, less new textbooks are sold in favor of students renting textbooks, buying used textbooks, sharing textbooks legally, illegally sharing textbooks. So, author royalties have been sort of eroding year on year. And then ultimately, colleges themselves have historically stayed away from textbook issue and said it's a faculty issue. But it increasingly has its importance for them to increase graduation rates and generally with less public funding if you're at a public institution. They're now looking at textbooks a bit more strategically and saying, wow, these are actually working against our mission. They're actually forcing students to drop out of courses and they're making it difficult for us to achieve our public mission. And so basically, nobody's happy. And so into that environment, we decided to launch a commercial open textbook publishing company. And it's really around four critical bets that we made. The first bet was that we had to have exceedingly high quality and in turn key quality. That it had to be something easily adoptable and it had to be a very high quality product for a faculty member to adopt it. And then if it wasn't, if they felt like it was a significant step back from where they were, then we would be doing to the fringes of the marketplace. The second bet that we made was control. That faculty wanted control. They are the local expert. They know their students, they know the topic, they know the subject. And if you could pass legal control and practical control for them to be able to manipulate and adapt and change the textbook, then you would lead to a more relevant and better learning product. The third one is that students wanted choices. Some students want to read in print, some students want to listen, some students want to read on a device, some students want to read on a computer. And they ought to be able to read in the way that best suits their learning style and their lifestyle. And then ultimately, we could leverage innovative business models and technology to do all of that at a dramatically lower cost per student and basically solve the cost problem in the textbook market. And so those were the four bets that we made around building an open textbook publishing company. But just a little bit more detail on each by quality, I just mean we actually chose to pursue textbook publishing in a fairly traditional way. We go out, we identify and recruit who we think is the top author. We either lead a scholar or a teacher in their field. They write a textbook for us under a contract. We develop it with editors and illustrators and other professional development and do extensive peer review in a fairly traditional peer review process and ultimately we build packages, supplements for faculty so that the whole process is very term key in terms of adoption for faculty. So in that regard, we're no different than a publisher. We're no better either. We're just on the playing field at that point. Where we start to differentiate ourselves from that playing field is this transfer of control. And we do that two ways. Obviously the first is via an open license. Now we use a buy and see SA license and we can talk about that a little bit later in more detail. But in essence that's the open license that we've chosen to use for our textbooks. I'm not going to explain what that means because I think everyone in this room understands it. But we also said if people are going to really take advantage of what open licenses legally enable them to do, they're going to need a platform to do it. If I handed someone a textbook, whether it was physical or digital, and said here you have the legal right to change this, everyone would say that's great, then they'd sit down at their desk and they'd go what do I do to it? How do I change it? If it's a PDF, if it's a print book, what do I do to this thing? So we built a platform called MEO or make it your own for them to be able to do that. Just to give you a brief example so you can get your head around it. This is a psychology book in our catalog. Anybody in the world could click Read This Book Online now and it's free so everybody here could read this psychology book during the session if you get bored. And you could click Customize This Book. And you enter an editing environment. It's a cloud-based editing environment where you can now rearrange contents, edit contents, insert contents, and basically make it your own. And just a few examples. So if I want to reorganize, I literally just click and drag and drop sections and chapters anywhere else into the table of contents where I want them. Frequently, faculty don't want to cover all the material in the book. Now you can just delete it with a click of a trash can and it's gone. And if I wanted to edit something, I wanted to go into this experience of emotion section 10.1, I simply click it and load up that section of content. And by clicking on any element in the section, I can now edit it. I can insert new objects like new paragraphs, bulleted lists, numbered lists, annotations, exercises. I can upload documents like Word or PDF documents. I can insert video clips into the textbook. And I can edit existing content. So if I click on a paragraph, I open up a web editing toolbar. I can change things. I can insert links out to the web. You know, I was at a talk at University of New Hampshire last night where they're slowly swapping out examples and using examples from the regional Durham, New Hampshire area in business textbooks as an example. So you have that level of control. And ultimately I can create new content. So let's say I wanted to make this the freshest, most current textbook I can during the semester and I want to talk about what's going on in the Middle East and what happens psychologically to a society when a society erupts in protest. It doesn't have a long-term effect, short-term effect, no effect. So I want to put that in my book. So I create, make a new section. Type in the psychology of protest for my section, save it. And then I just start adding content. I can cut and paste some learning objectives in here or I can type them in using the editor. I could insert a paragraph into the textbook. I can go ahead and insert a video. So in this paragraph I talk about watching Egyptian protests of 2011 and look out for certain things. So I insert a video using a video toolbar you can insert videos from YouTube or BlipTV by inserting URLs, providing a description as a citation and you click save and then I'll finish my section by adding some exercises about the video and call it a video comprehension check. And what's nice is once you click save it instantly takes that material and formats it to look exactly like the rest of the book so it applies the design and the style of the textbook to all of your new materials so that you have a seamless, it's adapted, it's a derivative but a seamless new product that looks and feels like a textbook. And when you click publish it, I'm ready. I'm done. I've made changes for my class. I'm ready for my students to have at this material. I click publish. And what our system is doing in the background, we basically started with the expert book. We used Mio to edit it. Now we move into an automated publishing environment and what happens is automatically in the database everything is renumbered so all the figures, numbers, tables, charts, everything renumbers, table of contents, reorders, the index rebuilds so everything that you moved, every page, reference gets updated on the fly. And then within a few minutes we generate all these different file formats. HTML, PDF, EPUB, Moby, which is for Kindles, Daisy, readable files and BRF files which are digital braille files and we don't actually generate an MP3 on the fly but we do basically remove anything you deleted from that MP3 and we actually reorganize the MP3 file based on your changes. If you've added content we're not yet doing text to speech to create an MP3 on the fly although that's coming. I don't think the tech is quite there yet. And ultimately what does all that do? It allows students to consume in a way that they want to. They can consume through any browser over the internet. They can choose to use the PDF file to generate a soft cover via print on demand partnership with R.R. Donnelly and ship it to bookstores or to students where they can download and print the PDF themselves. They can obviously put it on a device. They can use EPUB files to put on just about every reader to take advantage of the innate reader functionality. The Kindle has a proprietary format and then naturally students who have print disabilities are the ones taking advantage of the accessible format and then obviously audio books one is listening to. One of the key problems that we felt like we had to solve is in open source software I think one of the greatest challenges in using open source software as a user for example at our company is you've got this cannon out there this code base and you say that's great I want to use that CRM system to manage our customer data but I want to use it openly I want to use an open one because I want to make modifications to it I want to improve the workflow for our business and so you go and you do all that and then they come out with the next big version of that CRM and you're stuck you're on an island, you've got all your stuff changed, it's not upgrade safe you can't merge those two things and now I'm owning a CRM I don't want to be in a CRM business I don't want to have to maintain it and I like some of the new stuff they did in the new code base but I can't access it and I think we're doomed in this movement if ultimately we ask faculty to make adaptations and derivatives and basically fork them onto an island away from the original wait a minute, I don't want to maintain this whole textbook I just want to add these three new sections on topics I care a lot about or these references so we actually felt like before we really launched this we had to solve that problem and so we've done that we basically built technology on the back end that says hey we in essence treat everything like a bunch of database objects and if you add material you're just adding objects into the database and when you make changes we're just actually not changing files we're just adding new references think of them as like transparencies if you add a word to your book it's like the original book sitting there in the database and you add your transparency with your word on top of it and when we render it out to all those formats we render the original and insert your new word in there and so what we're able to do is if everybody in this room had a derivative and I publish a second edition of the core textbook where our author does I can generate a delta report for each of you that says hey, here's the difference in addition and I do have a choice as a customer you can either reject mine entirely I like mine yours better you're happy, fine you can say you know what let me take yours and mask I don't care about my changes anymore you've done a better job or you can merge and see the conflicts and merge them individually and say you know what I like what you did here I like what I did there and you can merge it and end up with a common textbook and I think in many ways that's a problem that had to be solved to get scale around use and adaptation and open the last piece of that model then is choice and cost I already described how we produce all those different formats for students basically this is what students are doing today that web version that you saw is free so that's our free through the browser version anybody in the world 44% of students today are taking advantage of free only in the classroom 56% are buying something and they're basically buying in these percentages across those formats we're seeing some change in this each semester primarily some decline in print and some increase in e-books as the base of e-readers on campus grows slowly and that trend I think will continue so we're estimating about $80 per student savings even if you take a traditional book and give that book the benefit of the doubt of new books, rented books used books, everything else the blended average spends about $100 per student per class the flower world ends up as a blended average of $20 per student per class when you blend free and paid readers together so some quick snapshot of results as a company how are we doing building a sustainable model around this we've got 135 authors under contract and so that represents about 65 unique titles right now 50 of them published and some more just about to hit we've done about $3 million in licensing deals with colleges I haven't actually talked about this part of our model but in addition to individual faculty adopting and students coming along and choosing which is where we have 3,000 individual formal faculty adopters today and we launched our first book in spring 09 so from spring 09 to today 3,000 individual faculty about 270,000 students in those classes but we've also licensed our portfolio of content to an institution and they can pay us for access to that portfolio of content and we've got about $3 million in those licensing deals done in the past year and a half so we are generating real revenue around an open textbook model we've raised about $30 million in venture capital so I think it says there's some capital out there that sees an opportunity around open models in commercial open models in particular and what's interesting is we have some key venture capital backers Bessemer Venture Partners for example is the top 10 global VC firm but maybe more interesting is Bertelsman the world's largest privately held media company and Random House the world's largest publisher are both investors in cloud world and I think that's an indication that you're starting to see some bifurcation in that publishing industry and some players saying this might be a way in against the old guard and I think you're starting to see some real stirring up of some interest in open models as potentially a way to get in and beat the big card players at their own game Outsell is a media industry and an analyst group they provide analysis and data to Wall Street about important trends and every year they publish a 30 companies to watch lists about companies that are doing things that are disrupting an industry and this year we were on that one of those 30 companies along with Apple Facebook, Google, Thompson Raiders and a few other little companies but again significant and then it says people are watching this and saying this is real and this has real scale potential and then ultimately in conclusion this is probably the most important result of everything which is we're starting to get data back and it's incremental and it's not yet I don't think a story that I feel we can credibly tell in the marketplace we're getting close where users who switched from proprietary textbooks to open textbooks are starting to see real substantive data driven improvements in student performance particularly in course completion rates where they're seeing rises from 10 to 20% on the number of courses who actually complete a course when they get rid of the prohibitive textbook and actually seeing some increases in grade growing averages as well and so we're actually seeing costs come down and student performance go up and that's a huge winning formula for I think the open textbook movement and I gave a talk in New Hampshire and I put this in there last night because the talk I was giving University of New Hampshire was about technology and business and what I wanted to remind students was it's not about technology it's about people and at the end of the day I just every day I remind myself that there are people like Shannon so we ran a Facebook campaign and asked students if you saved money on textbooks what would you do with it and we had thousands of students right in but Shannon was particularly moving for me which is I have 4 kids I'm in college full time it leaves little money for extras if I saved the money I'd give my daughter an awesome 6th birthday party this September she was willing to settle for dinner at McDonald's and candy bar as a gift because she said Chuck E. Cheese's is too much money she deserves more than that and there's just tens and thousands and I think that entrepreneurship has an opportunity and open in concert with entrepreneurship to solve that problem and the dean at Virginia State said at the best what she said our students have always had the ability in the intellect now with open textbooks they finally also have the resources so with that I'm going to conclude sort of the overview of Flatworld and move into the sort of discussion piece so the big assumption here that we're supposed to be debating is whether commercial activity is counter to the goals of OER or to the OER movement in particular this is kind of a big assumption so I thought I'd hold this one for a bit maybe that could be the last thing that we spend some time talking about and tackle some smaller pieces of this so this is an assumption I hear frequently you know there's plenty of open content out there the problem isn't it's not on the supply side and there's sort of I think generally a view that if we build open content and put it somewhere in a place that's findable on scale that masses of people will come and use it and frequently I think we're disappointed in the results so I just wanted to give one quick snapshot of something that I think is kind of sobering but then discuss that a little bit which is kind of a hard to read slide but this is a quick snapshot of what we do when we publish a textbook so we take a textbook, we get it done assuming it's from a leading scholar it's been vetted, the quality is good we do a bunch of indirect marketing we do a lot of peer to peer stuff to help people pass the word along to other people, provide them with tools social media to prefer flat world to other professors we do a tremendous amount of public relations work so that we get coverage stories related to open textbooks we do lots of webinars over the web to faculty presenting open textbooks in the model we show up at lots of conferences so we're talking to lots of faculty we do a lot of direct marketing so every time we publish a book we release the data of all the faculty who teach that course around the United States we publish a book in advertising we release 2100 faculty names we load them into a CRM we get their contact information we do a video who loads up all that email contact information we launch really sophisticated email campaigns with lots of data driven activity behind it we do direct mail to faculty to make them aware of our offerings we do review copies for free we have to send out expensive print books and spend $200,000 a year sending out print books to faculty we need to review and print we have sales tools for sales reps we do retargeting campaigns so if you show up at flat world site today you're probably going to see an ad for your flat world book on your Zappos site saying come back and check out the free textbook we do lots of all that stuff comes to our web we spend a lot of time on our website basically getting faculty to convert from an anonymous visitor to a lead so we know who a lot of them are when they click on an email but a lot of people come from PR let's say or from a peer we don't know who they are so we offer them things whether it's downloadable white papers and traditional sort of lead gen strategies we generate leads we score them we pass them to an inside sales group those inside sales people call them back we have some outside sales people out doing bigger committee presentations we spend a lot of time optimizing all that we do that then we have to close them we have to provide tools for them to adopt on the site to provide information to their bookstores to provide ISBNs for them to be able to do this to get them the supplements in a seamless way so that they have it get them information to give their students in a seamless way and all that has to be instant and many much of it automated we have to run student e-commerce to be able to convert students from free readers to pay readers in lots of different ways we do that and ultimately we have to take care of customers who adopt they expect help they expect someone to talk to to answer questions so for big customers we have this white glove customer service and they have an account manager who takes good care of them for everybody else they have access to email phone and live chat on our website so they can communicate with customer service that's a snapshot of what we do and when that's all said and done 12 months after we publish a book we're in about 3% market share 3% of the faculty in a course who could be using a flat road book or using one that's actually a success I mean because we know we're going to keep building on that but that's where we are so that's a little sobering snapshot of the if we build it they will come maybe I'm wrong and that's the part that's open for debate maybe we're doing something wrong or maybe they won't come or maybe I don't know so let's stop on that one for a minute and just talk about other people's experiences here both supporting of this concept that maybe they won't refuting it so I know I think that we can get people to come some of what you've seen any research you can think of yeah oh great and ironically enough a couple weeks ago I had a nice visit from our textbook sale rep where we usually get our intro to site book and I'm the only site faculty that's using it right now because it's part of a grant and he had a lot of questions for me and he seemed a little defensive and he wanted to ask me he's like I'm not trying to debate you but he's asking me I was very open and I told all about it and I personally am not married to any textbook as long as it's decent I think I do a good job teaching the content it's pretty much the same regardless as long as it's decent content but I teach at a community college and access to me is very important I have students that will try to go the whole semester without writing any textbooks because they can't afford to buy textbooks so I think access is really important the only thing I'm concerned about is once the grant's over and I don't necessarily have to use it I would like to continue using it and I think my college would be supportive even though everyone in the site department has a textbook how would you deal with that also this sales rep was talking to me about all these adult packages and cool things they're doing but I asked how much does that cost and there's no free option on any of what he's trying to tell me so to me it doesn't compete so I don't know how would you well that's it yeah I mean I call that the FUD factor which is the fear uncertainty and doubt and we get that all the time when you stopped it you're inevitably getting visited from your Pearson or McGraw Hill or Wiley sales rep who's going to spend the next 12 months instilling FUD in you because that's their job right and it's not an easy answer I mean I think that to some degree numbers start to matter so where you can start to go to a website and on our site we list all the schools using the book and say to your colleagues look there's 150 other schools doing this now we're not outliers we're sitting out here one of the reasons that it's so important to us to have someone like Charles Stangor as an author is he's got 75 refereed articles published he's the editor of two or three significant journals in the field he's got a best selling upper level book with Pearson you're dealing with very credible authorship and content but I think the reality is you kind of have to have that you have to stand that ground one of the conversations I had recently with someone we were talking it was fact and I said look with all due respect I understand some of the topic issues you're raising but let me ask you a question you're looking for this perfect textbook that's got everything just the way you want it and you find it and you adopt it and right now statistics are telling me that 50% of your students aren't reading it they're not buying it because it's too expensive 50% so you put those two things on a scale 100% of your students having access to a book that's slightly less than perfect for you or 50% having access to the perfect book and we're going to get better learning outcomes and that changes the debate some right because that access question is indeed a critical first step for students in community colleges and state colleges towards being successful and so I think some of these arguments we just have to sort of hold the line and argue and wing yeah cable well I'm going to come to numbers in community colleges in particular they're very compelling or the cost savings for the students so you know what the textbook is your site department and you know how many students go through your section and you know how many sections you teach so you can put there's a delta in between what they were spending for that McGraw Health site textbook and what they're spending for the flat roll book I know some of your students probably are buying and there's a delta there is 100% difference in cost and there's some of your students that are buying some of the derivative works that they sell and that's a smaller savings but one thing that you might think about and maybe working with Eric and Christine is how do you get how do you capture that because if you can save your students you know on average students who come to this site class you know spend this much compared to which spend the other how many students do you teach a quarter in this class I have like five sections of interest like 30 students each you're teaching 150 students every quarter those are big numbers and your dean is going to be hard pressed for your department chair to say yes I'm sorry that you I'm glad to save 50,000 students for the community college students but you still have to go back to the other book make them say that publicly I want to come over here another faculty member who I was with last night in New Hampshire teaches at three other schools as an adjunct and he uses flat world books everywhere and what he said was I'm literally getting students looking at my syllabus seeing that I'm using a free book and coming to my sections and not enrolling in others and it's creating market pressure on my peers and it's increasing my value because I can only be valued on the enrollments that I'm bringing into my sections and I think those market forces are critical once we get enough footholds in places students are going to begin to respond to that and it's going to become a challenging environment for people wanting to stay with $200 textbooks so long as the quality alternative is there we have a question or a point here and then over here after I am from the Netherlands and we are running a national program to mainstream all we are in the country in all the educational sectors we started the program in 2009 and from the beginning we were very keen on having a good relationship as the education publishers which are very strong in our country as you may realize so they just had to join this project because it was a national project still it is very difficult because those are traditional educational publishers and they have this idea that all we are is only something like an add-on on let's say the nice high-quality method that they are producing so my question is the following do you have any idea suppose that all the traditional publishers are gone and there are only factual knowledges that you are the total business how much would it be of the business that the current publishers are running is it 50% or 25% or 75% it's a good question there are two ways to look at that in the US the higher ed textbook market about $8.5 billion being spent in higher ed on textbooks but there is a big non-consumer market about 40% of students who aren't buying because they have been priced out of the market and another 10% choose not to buy for other reasons that's the size of the market now we are generating in a single year about probably 20% of the revenue that a traditional publisher would be and what we do differently is we get it more consistently so one of the challenges for a publisher is high investment in a book and product get it out there in the market and then sell it in the first year then watch the second third fourth years tail off in sales because of used books and other versions and then it spikes up again the next time they bring out a new edition so they watch their revenue line go like this where we're lower but steadier so by the end of four semesters or two full years we're almost equal in terms of revenue we've generated based on the same investment in the same textbook so in the end we've said if the world were absolutely out there consistently with flat worlds and piercings of the world we probably would see average student spend be somewhere around $20 a course and we're currently estimating that at $100 a course so it would be about 20% of the total market a big shrinking marketplace in terms of dollars that's the thought factor for the publisher absolutely that's absolutely the nightmare scenario for a publisher I'm in a bit of an awkward situation next week I'm doing a presentation on OER at a conference from the state university in New York the conference is on e-books and OER and it's being under an impact by FlatWay for $500 by Michael for $1,000 and by Pearson for $1,000 so I'm a little nervous about that reaction but what I'm wondering about is do you think that this is a model that the traditional textbook companies may begin to adopt for part of the year look I think if you look at the software industry I'll answer that two ways one is somebody I can't remember who wrote a nice article showing they go through sort of the typical psychological stages of development in response to and to the open source software movement right first is anger how can you do this right you're devaluing you know code and everything else and then there's denial it's not going to stay it's going to die after a while then there's sort of this acceptance like it's here but I'm not embracing it I'm not helping it and I'm not doing it sort of alright it's not going away I have a business to operate I could cut my nose despite my face so I could figure out how to accommodate my business model to benefit from this and I do think we're going to see all of that and one of the ways that I talk about this for some of my peers in the publishing industry because I was director of marketing at Pearson I got lots of friends in the industry we try to separate personal and professional but there's a lot of animosity about what we're doing and one of the things I say to them is look if you're so good at what you do you shouldn't be threatened by this this is just competition and if the value that you're adding is worth the money that you're charging then consumers will continue to buy that that's called enterprise that's called free markets and if what you're afraid of is that you're not adding a value anymore and you're going to have to drive your cost down then you have a problem in your business and it's good for you that I'm making you figure that out right and I actually say that you know Cable and I had a conversation with this this morning publishers should actually embrace this we do see I heard an NPR story last night about this partnership for malaria drug that came out between the Gates Foundation, Glaxo, Smith Klein and advocacy organizations some government organizations in Africa and it's a model of successful malaria drug development and the question was is this a new model that was what the host of the show was asking and the person on the show said well this model was around 20 years ago very successfully went away for a while but now it's coming back it's a good partnership for drug companies to rely on other sources of funding to do really risky early R&D development and then embrace it and take it to market and so publishers could think about open educational resources the same way that here's all this material bubbling up it's not generally polished for market it's not intended to be to go through that process that I described and that's an opportunity for publishers to to take a lot of that save a lot of money on failed stuff that they might have done pick out the really good stuff that's already getting some traction and then make it better and then add value to it and some of that's going to work successfully for them and some of it isn't but I think in the end that's the way this market's going to function is increasing competition and I think it'll respond and adapt and find models to incorporate so to contrast that real quickly when you just said with the way the publishers are acting with the legislation that we discussed this morning so what they're doing initially they're in the denial I have the anger stage trying to stop this from happening so do you want to give a quick stop so basically there's a some policy out there that's being promoted a government policy that says hey if it's publicly funded it should be accessible to the public under an open license a cc by license simple idea, simple policy almost every citizen that pays taxes agrees with it the publishers have inserted language into that saying basically that's fine so long as the secretary of in this case labor because it's the department of labor providing two billion dollars in funding for creation of materials that have to be openly licensed so long as the secretary does an in-depth market analysis and certifies that whatever it is that's being created and paid for by public funds doesn't yet exist or isn't in development at a commercial publishing company first and it's not just its product its service and so it's this really broad language that says basically we want to push out any competition from open we don't view it today as raw materials for us to improve and we don't view it as healthy competition obviously but I think in the end that's just the end of the competition that's what they're concerned about and so I think you can play this as look this should be good for you you should embrace this option you could lay out the alternative option for a publisher but fundamentally at the end of the day it's alright let's have a public debate about whether public goods paid for by the public should be available freely to the public and actually turn around and say all the materials developed under government funding have to be used first and only after you do that exhaustive search can you turn to a commercially available good and those are two diametric opposites but that's the debate we're going to end up in unless there's some collaboration let's go there and then in the back so $50 million in VC funding $3 million a year and doing quite well that's excellent what possible chance do the nonprofits that are trying to get OER adopted have if with all your funding you're getting 3% yeah I think it depends on purpose and goal too right so we have a very specific goal which is take an open textbook that we make and displace the use of an existing traditional proprietary book there are lots of content repositories where there's lots of use in traffic it's just a different customer it might be an informal learner it might be a formal learner supplementing and learning with an open resource and slowly growing in the sort of mainstream adoption space so one thing is define your goals it may be that you can drive lots of traffic for a particular learner type if displacement of existence your objective if it is your objective I don't know it's a hard answer I think part of this is a bit about staying power because I think that we're starting to establish credibility some funding coming from the government is starting to create more materials and better materials and there's starting to be some processes on top of those projects that are leading to better stuff we're starting to see some data saying when you make these open materials available to students results are better so I think that part of it is just about staying power because it's been 10 years in the coming but it's quickening and the pace of adoption is accelerating and so it's not a satisfying answer I don't know if maybe someone else has an answer to that question which is how can nonprofits continue to sustain themselves and get the kind of penetration we need so I'll let someone else answer that but we'll go back here for a second so if full disclosure I work for a large traditional textbook company and I have no idea if my employer was one of those lobbying for the Congress and I won't defend it but I will say and partly an answer to the last concern is to echo what you said which is this exact conversation went on about open source 10 years ago with people desperately hoping that someone would pay attention to a poor little open source and there were always two camps one that said open source would destroy Microsoft and the other that said Microsoft would destroy open source and neither of those scenarios was ever going to be true the reality is that all of these business models are sub-center sustainability models what matters is increasing access to education and increasing quality of education as long as folks like Flatworld and folks like you continue to produce good quality open educational resources under the right license and our finding sustainability models the market will move it will become easier for your foundation to share OERs and sooner or later and I guarantee you every single one of these big publishers is having conversations privately internally about how to respond to OERs what's the right way to embrace this how do we continue to operate and the smart ones are going to realize that they're not taxable companies they're education companies and we've got plenty of challenges we can take on together but I think for those of you who are feeling discouraged or overwhelmed by the big guns if you look at not only software but also what's happened record companies what's happened with any other proprietary content industry history is on your side thank you those are great comments I agree with those yeah one of the things that I've seen with the kaleidoscope grant and I worked with the kaleidoscope grant as an instructional designer is that there's a culture that knows how to adopt a commercial text and so I think one of the attractions of Flatworld knowledge is more comfortable for institutions to say we recognize what that dressing looks like what's happened with things was like the kaleidoscope grant which is very significant is that the kaleidoscope grant isn't about generating content it's about how you adopt this content and so there's one of the ways that the grant was working was it was bringing people from different institutions together to talk about their needs talk about their student learning outcomes and then putting together the content that meets that so it's coming out of a community rather than out of a commercial publisher yeah one of the other things that you got with kaleidoscope was someone that was advocating for the OER we had the question about the psychology course what Cable did was put you in the position of going back and advocating for this and you're spare time and you're not teaching five seconds of psychology I'm a very good advocate I'm a big man and I have a problem and at full time you'll probably let me do it but I know a lot of people might not have an idea and so again giving some thought to what kind of resources we provide as a community to folks that are going back and you need to do this type of advocacy would be useful yeah I was touched on that one for a second I was Rich Crandall and the senator of overeducations from the state of Arizona and I'm curious a couple of different approaches to that question I think we have no conversation yeah I was going to say we'll talk after this there's two different ways one if a college in Arizona has a policy that says no you can't go OER we simply want a law that says you must and we've done it with K-12 forever what are you seeing policies that either incentivize do you see policies that states have that restrict the use of OER and then you see the states that incentivize yeah you might have a better answer to that I don't see a lot of policies restricting or explicit restrictions on the adoption and use of OER what I actually see much more is a lot of ambiguity and uncertainty and so it's almost the lack of the opposite that's causing the problems faculty don't know so we get the question all the time for example is this business book that you've published is it classified by the AACSB which is a certification body or will the credits for this course transfer to another institution if we use an open textbook and the truth is there's zero certification of a Pearson textbook today and there's no transfer guidelines around a textbook it's all history it's brand but the lack of that history and brand recognition and acceptance creates uncertainty and doubt in the minds of faculty and the ability to adopt it so I think there's a vacuum actually is the bigger problem then I see there being policies restricting the adoption of so we probably don't have enough policies encouraging in carrots encouraging the adoption of to get more points of light established out there if you will it feels like the bigger issue to me right now but any other response to that Pearson is a huge employer in Arizona so we're probably going to school I work at the same college as Amber and we actually have an advantage that the president of our college even a half ago actually promoted the concept of open textbooks for our school because he knows that 50% of I think the percentage is higher but at that time 50% of community college students were not buying textbooks and it's a retention issue we can't retain those students right you know we have a problem and this is one I get uncomfortable talking about because we at Flower World we very much ally ourselves with faculty they're the gatekeepers to these decisions and we need to provide value for faculty to adopt but that is the biggest conundrum right now it's actually possible I think to get institutional support at the president level and other levels of institutions saying this makes sense we have a crisis we have a graduation crisis we need to graduate a lot more students by 2020 than we're currently on a trajectory to do and the biggest piece of that is attacking the cost fire on higher education and most components of that spiral are spiraling the wrong way right now tuition is spiraling up fees are spiraling up and textbooks are for community college students a shockingly high percentage of this fed right it's actually the second biggest attackable piece the cost fire of higher education it's a meaningful strategic lever for an institution to pull in order to improve graduation rates the problem is the institution doesn't control the adoption decisions and there's a huge amount of historical sensitivity to the individual faculty's right to adopt whatever they want so we have a very dispersed decision making process and as we all know frequently when there's support of something at the top there's almost opposition of it from faculty because there's some feeling that there's something behind this or this is a slippery slope if we allow you to tell us we have to use open then what's coming next right so there's a lot of rich challenge there you know and so we've continued to focus at the individual faculty level but at the same time we're starting to talk down conversations and say how do we create incentives for faculty there is a switching cost can we create grant incentives for them over the summer can we figure out ways to take that out of the savings the government state and federal governments paying a huge amount towards tax books and they're paying the top dollar because vouchers are generally only usable at college bookstores which is the most expensive place to purchase a book if you took that cost down from here to here and took out a sliver of the savings and turn that back to faculty to compensate them for their time to switch and adapt and improve materials we might start to see some real movement so I think there's some opportunities here for exploring policy that aligns faculty with the institution where everybody says look this is a crisis a student crisis and learning and we all have a role to address it but figuring out meaningful and scalable ways to do that at the faculty level I think remains one of the greatest challenges in this movement back here and then over up front so real quick Washington state has done a couple of things to apply some incentives to materials and including textbooks they jointly funded the open course library with the Gates Foundation and which is taking the top 81 highest enrolling courses and creating openly licensed creative commons CCB materials for all 81 courses including and those courses can use traditional textbooks up to $30 and so as you know several of the textbooks are actually level knowledge books but the faculty were empowered to go in and actually have some other time purchase to be able to have the release time to go and create those resources which are then shared openly and the first 42 get launched on Monday actually so we're excited about that but the other piece is the policy levers that were also called the state level and the legislation and the legislation for example that recommends that there is legislation that recommends that faculty choose the least expensive of all comparable textbooks and now that legislation includes the word open educational resources so adding little things in on the policy level to sort of pave the way and say it's okay to go there don't forget to take the policy and so the state board introduced an open policy saying any optional grant money that comes through the state board you got to hopefully license whatever gets created as a result and so all of the good policies that encourage without requiring I'm with you 100% about not requiring as soon as you start to mandate you've created a problem now there may be steps and I want to come up here it's a requirement and I can see a pathway of carrots and sticks a system that can work without requirement and lead to some tipping point or scale totally hypothetical I think incentives and grants for faculty and then soft follow up lots of, I mean it meant a lot in Ohio when the governor brought 10 faculty to the governor's mansion to celebrate their adoption of open content as teaching innovators so once you get those wins celebrate them but in order to get them I think providing some incentive makes a lot of sense whether it's teaching on your teaching reviews you get points for doing this whether it's financial incentives that I think we have to be serious and very hard headed about where to pay for those because they're not coming out of budgets today they have to come out of some savings that are going to be incurred here but I think doing that is a good carrot I think there are some healthy sticks quite honestly I think if you're a public servant being asked to at least write and document from the public record that you've considered rejected open alternatives and why it is a perfectly valid thing to ask somebody to do I think if you're a faculty member of a public institution you have a public responsibility to spend tax dollar payers wisely and to educate students to the best of your ability and no one's saying you have to use the open textbooks but they're saying you have to at least acknowledge that they exist and why you chose not to use them and I think that's it'll be a fight but it's not an unfair fight and it creates a huge amount of awareness instantly amongst faculty well what are these things and the need for education let me get up to speed on these things and actually healthy pressure if I'm going to say I didn't do it because they don't use the right Keynesian cross and aggregate demand and aggregate supply model in section 13 and chapter 4 is that justifiable to ask for $200 spend versus 20 if I feel good about that I'll put it in the public record and I'll defend it as the gatekeeper of good education but if I don't feel good about it I'm probably not going to do it but I think there's some healthy combination of some positive incentives and some sticks that aren't mandates that could lead to a much more rapid uptake and then I think we're going to see students actually as I talked about earlier exerting market pressure higher ed opportunity act saying that an ISPN and the cost of a textbook needs to go in a schedule we are already seeing when faculty put free textbooks in a schedule it's like the giant sucking sound that's where the students go and that's going to create all kinds of tensions and then we're going to have to start the resolve so I think there's ways to get to that tipping point it's not entirely linear but I think it's indeed possible Yeah I'm from at Babasca University in Canada and what I see I call it the Puttenhead Wilson Phenomenon where he wrote about the guy with the two heads Mark Twain and one had drank and the other had got the hangover part of the problem with faculty is they don't pay for the book they choose the book they don't even know the price of the book and students pay for it that's part of the problem but we are approaching the tipping point in Canada on this and it has nothing to do with the price of textbooks is we're an open university all our students are online our students are now using tablets and small mobile devices the world is going that way the US will follow the ouch but the point is this they get a proprietary textbook you can't buy it you license it you can't copy, you can't paste you can't print it out they put a a kill date on it so it disappears suddenly from your machine after the licensing is if I show it to my wife I must immediately take it off my computer and notify the company I've committed an offense and they put in digital rights management and they're monitoring everything you do you have no privacy and they have every right to do it and on top of that when you click on the license you've agreed that you have no fair use rights you've agreed to that and the contract overrides your fair use rights so our faculty are suddenly maybe beginning to understand it a bit sooner than others because you're still dealing with paper books but the world isn't going to stay with paper books we're going towards digital books and we cannot work with proprietary textbooks it's just as impossible you just try it, you just find out what your faculty are doing they cannot do their job with a proprietary textbook and I think that's the important thing that's an important point the cost is the driving issue now here around open I think from our point of view we strategically focus on that although we tactically always continue to bring up your ability to adapt and to improve it and make it more relevant but by default as the form function shifts more digital the barrier around being able to do anything with it becomes much more obvious and frustrating and I think that those are all part of the big macro trends that are sort of putting history on our side here so we have five minutes left where do we want to go here it's been a good conversation we have more comments, we want to continue in this vein that's a big question, then we didn't get to you so let's do the big question which is let's see let's do that one so let's finish our five minutes on this one opinions, refutations of that statement supporting comments of that statement data, experience related to that I think OER supports business it's a better business case in the long run I mean, as you pointed out about the stability of it I think it's real business it's a marketable what we have is sort of a a group of companies and they're controlling the market because of does anybody have a point of view that says I fundamentally think that the goals of commercial activity are really counter to the goals of the OER movement I'll go there oh, you want me to defend that please defend that all right, jeez if you don't we don't need to create unnecessary debate if we're all in agreement we need to create an incentive in this case money incentive structure basically says you have to maximize money then you're going to create a disincentive that's going to emphasize something else so anytime you say, well, here's a company and ostensibly they provide education or education for education materials and their goal is to make money then they're going to say does good for education, does good for money I'm going to pick money so you've got to pull them out of it as much as possible because the incentive in the education system should be for better education not for somebody who will lie to you and say, no, no, I'm making this for education reasons money reasons but if less and less students are buying their books they've got an economic problem if they're given the right information if they're offered the opportunity but the problem is they're not doing right because this entity that makes money can lobby Congress can lobby faculty directly can lobby institutions can do all sorts of things I think we should sweep the money changers to the level good, I like the opposition state we'll go here and then we'll go there and then see you I do think in some ways they are counter not counter but they can always exist in the same space if that was vigorously operated we're going to milk this for all we can look at it and probably die so, I mean in some cases it's hard to just exist in the same space maybe you can right, that's fair yeah did you not I was on the red shirt in the red shirt I had you and then let's see what time we're at here so you're venture fund and so what you're I'm sure as you're pitching DCs they're looking to extract the maximum amount of profit out of education if they can, that's why they're investing the balance of that is there are a lot of things we don't do well so to your previous point that when it comes to a commercial entity with all of these marketing dollars and all of these expertise trying to effect change how can a non-profit ever hope to do that that's what it's saying in the lab world we need lab world we need VC dollars to effect change if you look across US higher education institutions and look at what is the first enterprise application software, open source software that they adopted they bought the luminous platform from SunGuard and made a license for it and that was their path into open source and they most likely went from there to Moodle but if you look at Lehigh they went from Uportal to Moodle to being an investing partner in Wally Library that's the change that we're able to take and even though the venture funding makes it complex it does allow you to do things that education does not do well for itself and education does not know well how to create broad adoption that really does require some of the resources that you're pouring into marketing that have to happen and we're going to see this change take a lot more or it'll be pockets of extremists with their crazy ideas doing interesting things that the rest of the education have never met so let's stop there because those are the two eloquent arguments for both sides and I'll just conclude by saying look I think there's truth in both of those I live in them every day and it's not always easy right there's no question that the questions from the board come sometimes why do we have to have this open license anyway why can't we just do this but I think what's interesting and this is where we all have to keep ourselves honest the minute I answer that question dishonestly right because of ideology or philosophy is the moment I'm actually in trouble right so when I could argue that there are business reasons why open is providing us an advantage because it's transferring value to our customers and this is our competitive advantage and that's why we have to hold the line on that if that remains true they'll keep answering that question okay I hear you if I actually am saying it and it's not true people don't value the open license they don't do anything with the open license they don't adapt content over time it doesn't need to improve learning outcomes then this is going to run up against a wall at some point and I feel like there are valid commercial arguments to say our interest are aligned not always but sometimes in ways that we can be effective but the underlying basis of it has to be true so with that thanks this has been a fun session for me I'll see you next time