 Hi, everybody. So for those of you who were here in the last session, I'm Nicole Allen, director of the National Textbook Abortability Campaign for the Student Public Interest Research Group, which is a national nonprofit advocacy organization that works on a variety of public interest issues, environment, consumer protection, governmental form. We have chapters on about 100 campuses across the country where students engage in these campaigns. And my job is to direct our national program for textbook abortability. And the purpose of this session is to just dive in a little bit deeper into kind of where open textbooks are at right now. So four years ago when I started working on this campaign, open textbooks wasn't really a thing. Open educational resources were definitely developing into really burgeoning movement. But it was really more focused on the more resource type things, the multimedia, the modules, and things like that. And the idea of an open textbook kind of hadn't entered the mainstream yet. And we've just sort of seen how open textbooks over those years have become not only mainstream within our community but really covered by the national media and something that a lot of professors and colleges are aware of and actually enacting policies to support. So just want to take a look at where open textbooks are at right now and kind of what the trajectory is for the future. My half of the presentation is going to be focused on kind of just what faculty think, what students think, what we've been seeing in the media. And then Eric, my co-presenter of the president of Flatworld Knowledge, is going to share some of their sales data with us and just the data they've collected on usage and what students are buying, what faculty are saying. That'll give a really great snapshot of what the state of open textbooks is now. So I think everybody here knows how expensive textbooks are. And I guess I am reusing a few slides. For example, popular capitalist textbook, 224.95. Students are spending over $1,000 per year on textbooks on average according to the college board. So this is just a huge problem, not a surprise that open textbooks have really become a very appealing solution to so many different people. And then if you put that just in context with what students are spending on tuition, the GAO found that students in community colleges are spending pretty much almost as much on textbooks as they are on tuition. So oh, and then also prices have been increasing dramatically and it's only continued to go up. Actually just in the past four years, prices have gone up 22% on average. So obviously the market is right for a solution, open textbooks provide that solution. And just to quickly review where we're at right now, open textbooks have been adopted over 3,000 classes. They're used at some of the nation's top institutions, Harvard, Berkeley. And we're seeing a lot of models developing to support sustainable development of open textbooks. And then just to give you two examples of open textbooks, this is one published by an individual professor. There are a lot of free digital options and you can also get a hard copy down book for $25 or print it out. I want to take off a little bit more to print it out just because it's not as efficient. And then here's an example of one of Flatworld now which is open textbooks and the various options that are offered for that free online version and then optional digital versions and study aids and hard copies. And then we also have a lot of other cost saving measures out there on the market besides open textbooks. We see e-meters, we see e-books, used books, renting. And this is just a kind of a summary of how much students can save by taking advantage of all of these options. So I mean some of them are pretty great, like renting 61%, that's pretty substantial savings. But if you think about it, not every student wants to rent their textbook, not every student wants to buy an e-book and just putting that all in perspective if every student took advantage of, who wanted to take advantage of rentals, e-meters and each textbooks actually did, that's the maximum amount that they could save that we would reduce textbook costs for students. So open textbooks far and away are the top solution and why we really want to prioritize moving forward with open textbooks. So now I'm just gonna run through a few statistics we've gathered over the years on what students and faculty think. So we, in a recent trade show, we surveyed faculty who came by our table and just gauged their awareness of open textbooks and their interest in them. So about two thirds had heard of open textbooks, which is pretty good when you think about it, that this was a concept that just wasn't in existence about four years ago. 33% about a third actually could give a good explanation of what open textbooks were. 13%, so more than one in 10, had considered using an open textbook, which is great. I mean that, like if 10% of all professors everywhere, it doesn't necessarily translate, but that's considerable pressure on the market of 10% or 13% are considering these options. And then actually 3% and 300 had actually used an open textbook. The great thing is that 96% would want to use an open textbook if they could find one. Students, we have a few student surveys over the past couple of years, just to look at where students are at. So about 75% prefer print, 25% prefer digital. That means that what we need is kind of a blended option, something where students who prefer print and prefer digital can use their preferred format and aren't forced to choose one or the other if they're really expensive. About two thirds want to keep books for future use, so renting is not a complete solution. And having access through open textbooks is a great way to fill that. And this is a really startling statistic, about 70% of students report not buying one of their textbooks due to cost. So there's a significant issue with access to materials. And success in classes that open textbooks could correct. And most of those students actually believe that doing so will hurt their grades. Now, just quickly looking at media. Many of you know that open textbooks have started to enter the mainstream media, have been covered by a lot of different major outlets. Just looking here, the number of unique articles mentioning open textbooks over the last three years. So on the right, far left, it's 2008 to 2011, we're up over 200 a year, which is amazing. And then just, we started a little bit late, so I'm just gonna skip ahead a little bit and just run through a quick sequence of how much open textbooks can save students. So we found that on average, switching from a traditional textbook to an open textbook will save students about $100 per student per class. So that means that 100 student class are saving $10,000. Assuming up five classes at a particular school, that's $50,000. And two semesters in a year, that's $100,000. Times, how many professors, how many institutions across the country, so they're just tremendous cost-saving potential. So I'm gonna turn it over to Eric from here to give us more of a snapshot of where flat-willed knowledge is numerous. Great, thanks everyone. So I'm gonna just try to provide a little snapshot of just one commercial open textbook company's numbers. So to take this sort of macro perspective and bring it to a sort of more specific and micro level. And what I'm gonna talk about is sort of authors and faculty adoptions over a three-year period, looking at the curve on those things, look at both formal adoptions in classrooms, where an open book is displacing the use of a proprietary textbook, that's how I define a formal adoption, and also informal use data, purchase data, what are students use, and when they're confronted with free in a series of paid choices, what do they do? And then some success data, maybe the most important thing, is it having a positive impact on students' performance in the classroom or not? So I'm not gonna cover this extensively, I think I've gone over this a few times in the last few days and I think there's some familiarity with it, but basically our commercial open textbook model is really made up of these three things. So we publish textbooks the way the traditional industry has. We go out, we actively recruit a leading scholar or teacher in their field to write an exclusive textbook for flat road knowledge, we apply a lot of, sorry, editorial resources to that textbook. So we have editors, we have people who fact check, we have extensive peer reviewers, peer reviewing the work, and we develop it into a textbook, and then we fully support it with teaching supplements, test banks that fit into LMSs, PowerPoint slides, instructor manuals, and things people are used to using in order to adopt the textbook. That's all basically about equity, it's about getting on the playing field with traditional publishers. Where we differentiate and offer more value in our view is by making them open. So we apply a creative commons open license to those books when they're published, transferring legal control to faculty. So now think of this book as a platform instead of a static textbook. And we provide a platform which we call Leo or make it your own. It's a web hosted platform where faculty can come in and they can pretty much do anything to that textbook. They can click and drag and drop chapters and sections into a new order. They can click on any element within the book like a paragraph, open up a web editor and links to it, swap out an example for a local example students might be more familiar with. Maybe make a book more locally, culturally relevant to their students. Insert documents, so you can go in between paragraphs and sign up and upload a Word document or a PDF document. You can insert video from BlipTV or YouTube and it'll render the player directly in the book. And all of that is sort of point and click. When you're done and you click publish, our publishing engine will automatically make that book with those changes available within minutes in multiple formats. HTML, PDF, EPUB, Mobi, which is the file for the Amazon Kindle, digital Braille, and daisy readable files. And so all of that becomes available to the student and then we build a business model around how to make that available to them. And that's where we get to sort of the third part of the model, which is student choices. So the student enters through a free online version. So everybody in the world can go to the catalog today and read all the textbooks for free online through any web browser. What we charge for is basically saleable format. So if you want to get off the web and download something to your device, to your phone, or to your computer, you can do that. So you can buy those EPUB files for your iPad or your iPhone. You can buy those Kindle files for your, the Mobi files for your Kindle. You can download a PDF that you can then install in device, computer, or print. You can buy black and white or color copies, which we print on demand through a partner to ship directly to students or through college bookstores. And we also provide optional study aids for students. So every chapter of every book has an audio study guide, set of flashcards, and quizzes that students can purchase by the chapter or by the book. That's fundamentally the business model. So let's talk about authors and adoption. So just so you can see, in blue is basically our new author contract signed year by year since we started the business in 07. So we were sort of averaging somewhere in the 25 new books per year that we get under contract. And then, of course, it takes a while to start to develop those. But you can now see the number of titles we're publishing annually is starting to grow. Collectively, we're up into the 60 titles now, aimed to have 125 within 18 months. Most of those are business economics books or the big core general education courses. Faculty adoption. The first book we published was really, we started to do some data testing in classrooms in 2008. We had 352 faculty, unique individual faculty, formally choose to adopt one of the open textbooks that fall. If you fast forward a year, 889. If you fast forward to this semester that we're in right now, 1700, roughly. So a good growth trajectory for us. And we can expect that to continue to grow exponentially because we add more textbooks. So we can continue selling the ones that we have. So we should see some really healthy growth on that number by next fall. Those 1700, if you look at how many institutions they represent, 737 unique colleges in the mix. So actually getting really sort of widespread usage, which what's important about that for us is it's creating a lot of footholds in a lot of different places. And what we see is once we get an adoption somewhere that turns into two adoptions within a semester and then we start to see a diffusion pattern. What kinds of schools do those make up? That's the breakdown of the 737 schools I lost for somehow in the data. But basically 20 international adoptions where they formally adopted lots more international usage but not formal adoption. 37 high schools which are basically using college textbooks in the high school curriculum. 162 year, 216 four year private and 304 year public. I expect this number a year from today to be the biggest one that the 35 first books we published were business and economics. They skewed to a four year business school curriculum. But as we publish more Gen Ed books we see huge growth in the community college space. International adoptions are coming from everywhere from Austria, Belgium to Kosovo, Malaysia, Switzerland to the UK. An interesting number that I haven't quite figured out yet. When we look at the age demographic of adopting faculty the number one demographic was a shocker for us and it's been consistent every time we do this which is people who've taught over 20 years in the classroom. Then the next biggest one is the one I would of of course expected to be the biggest which is people one to five years. And I actually kind of get this, right? This I understand. I'm not weighted to print textbooks and I'm much more computer savvy and open to new things. This I've actually in conversations I think figured out it's I actually am so comfortable with what I do in the classroom that I'm willing to take more risks. I don't really, I'm not worried that if the book blows up on me I'm in big trouble. I've got my notes, I've got everything and so I'm willing to do something that's gonna benefit my students. These are all over the place and I have no idea why. Can't figure that out. When we asked faculty who adopt the top reasons for adopting a textbook, why did you do it? These are the top 10 reasons that we get. Free online is the biggest driver by a significant factor, the quality of the content of the book, the prices of all the alternative formats being affordable, the availability of those format choices. Number five, just simply I believe in this idea of an open textbook and was drawn to this. Six, the availability of supplements, the ability to customize the material, the ability to have more control over new additions. No publisher's gonna come and say you have to change to a new one, we allow faculty to change if and when they want to. Adoration with the LMS and author reputation are the reasons for adopting. Top reasons for not adopting. So when we asked faculty who looked at the books, why didn't you adopt? Basically not surprising, people have very unique ways of teaching and the book didn't fit my way of teaching and either it was too different to use your custom engine to change it or I'm just not interested in spending the time to do that. Number two, not surprising, too busy. That's pretty consistently the top reason faculty don't change from a traditional textbook to another traditional textbook. Didn't like the contents, strong relationship with my current publishing representative. Not teaching this semester. Didn't like the teaching resources. They came with it, fearful of a new company and whether it's gonna be around for the long term. Didn't get a desk copy, that's not a good one from our point of view. Requested a desk copy, never got one. Don't understand how to adopt it. It's different, it's a different process. I don't just fill out a requisition form and give it to my department assistant to bring to the bookstore. Didn't understand how my students were gonna actually get to this material and use it and that made me nervous and then sort of the ubiquitous all other. On top of that formal adoption traffic, we have about over 200,000 students this semester and formal classes using it. But in September and October of this month we also had 157,000 and 145,000 informal learners. So people who came in and entered the reading environment read more than three pages of a textbook but weren't in a formally adopting classroom. So lots of informal access and usage of the open textbooks as well. Purchased data. So what are students doing given that range of choices? 46% of them are reading for free only. They access the web version, good enough for them and that's what they do. That means 54% are purchasing something. The biggest chunk of that are black and white textbooks. We sell almost no color textbooks. So students clearly place more value on a less expensive black and white than the potential pedagogical value of color. PILIs, there are PDF files that they can download and use on their own and these didn't come out right. But this is audio books at 3% and this is eReader files. This is basically the EPUB and the Mobi. When you buy an eBook from us, you download both of those formats so that if you ever switch from a EPUB reading device to a Mobi device or vice versa, you've got both on your bookshelf. We also see lots of those getting installed where we think. We don't know where those are going actually. That's the issue. I don't know if they're being read on a laptop, on an iPhone, through an eReader or through a handheld dedicated eReading device but 6% of students are buying those. Student success data. We actually have one of the authors of a study, basically Bob Livingston, a professor at Cerritos College. And their perspective was if students are dropping out of courses and having hampered success because of the cost of textbooks, if we remove that barrier, what will happen? Logically, they should be more successful. So Bob actually led the adoption of those books in the study and the president of the college published an article a while back where they said that they saw in these three introductory business courses total course completion rates rise between 10 and 15%. Interesting piece of that. I didn't give all the detailed data but a small bit of that was in traditional classrooms. Huge chunk of that came out of the distance learning courses. So students in online programs did significantly better when using open textbooks. And no statistical difference in GPA. Student comments are pretty interesting. Give us the necessary tool. These are students in those three classes. Give us the tools to succeed, we will. Expand open source textbooks to other classes. I like open source books because of cost availability and flexibility. I'd recommend them to my friends. I recommend and encourage other students to sign up for classes that use open source textbooks. These are interesting comments because these are the pressure points that I think are starting to exert themselves in the marketplace as students start to become aware that this option exists, they're starting to ask for it and going to the classes where it's been used. Bob just did a study recently and forwarded us some of the data. So one of the big issues for students when they start in classes, I don't know how to use an open source textbook. It feels new. And so in the most recent survey, how difficult is it to use 86% not difficult at all? Pretty easy to figure out. 80% said they actually thought the quality of the open textbooks were better than the quality of the traditional textbooks they were using in other classes. And as Bob put it in his data, the AHA number is that 96.5% of students said that the department should continue to look for more open source textbooks for more classes and they're beginning to sort of go and flow to those places where they're being used. One other data point, Virginia State, they use open textbooks in now 16 business classes. They started with their eight core required business classes that was last year and eight more this year. They're about to publish a study. So I couldn't give specific numbers, but they're willing to let us say that early indicators that more students are staying in those classes or course completion rates and they're seeing similar, I think, results through what Suriyos was seeing. And they have data showing that for students who actually took advantage, registered, logged in and utilized the resources versus those that didn't, they saw statistically almost a full percentage GPA point difference between those using the materials and those not using the materials. This was the number. So they were trying to figure out, does it matter? If we solve this problem, does it really make any difference? So in three of the courses where they took a snapshot, there's the GPA with the textbook for students who logged in and utilized for students who had never done so. There was the GPA without access to the textbook materials. And then I'll conclude with a, I'm looking forward to some of this data. So we did a partnership with the University System of Ohio through the Chancellor and the Board of Regents and they're using open textbooks across six community colleges in a fairly significant pilot with an IRB approved formal study in place. And so you can see that, it's about cost savings for the system that they're trying to figure out if that's gonna work. But more importantly, I think is teaming up to measure student learning and see if ultimately open textbooks demonstrate improved student learning. And if the snippets of data we're seeing in other places play out here, that's gonna be a pretty significant finding, I think. So with that, we've got five minutes remaining so we can take questions or discussion. Yeah. One of the things I thought I would hear you guys mention a compelling reason for digital textbooks in my mind is the single word search. Is that something that people find really compelling and you can see it in like a list of reasons? Yeah, I actually had a student data that I didn't present on the things that they like about things and price was number one. And but I think if I remember, number three was the ability to search. So number two was, and it's just a pedagogical feature, we pull out all the key terms into the margins when you roll over them, it pulls up a definition. So when students are trying to study, they scan the margins, roll over the key terms and get the definitions. That was their second favorite. The third was the ability to search and to find material quickly. Because by and large, there aren't a lot of students linearly consuming textbooks. They're looking for bits and pieces of information to prepare for something. And so search helps them a lot in that method of utilizing a textbook. So how, I assume that revenue for you guys spikes during quarters or semesters? Is that true and how do you? Yeah, it spikes, it's like six weeks of the year. Although we actually generate a lot from bookstores so we start to see, the sales cycle, if you think about it over a year, is sell intensively during the spring semester. That's when faculty review and mentally adopt and make a decision. And then you start to see small sales in the summer classes if people are testing things, but most of the sales then occur in fall. So you see this kind of bookstore order starting to pour in in July and August and revenue starting to spike. And then you see really mid-August to the third week in September when all the online revenue is generated from students. And then you see a smaller version of all that when the winter semester repeats. So you see December bookstore orders and then you see a spike in January in online revenue. And then the rest of the year, it kind of peters in and out based on quarter schools and for-profit colleges and students at home schooling programs and stuff like that. It's actually the hard thing for investors to get used to, by the way. But it is what it is and there's nothing you can do about it so you just have to educate and they understand. Yeah, back to you. Yeah? One of the, by the way, the issue was how to buy the books. Right. How to adopt the books. And these are not sort of total obstacles or is it correct? Well, yeah, that's one of the, I think one of the tricky issues with open textbooks in general. I mean for us, we tried to make that process fairly turnkey. So you go to a book and whether you're in the book reader looking at it or on a catalog page the professor says adopt and it basically gives them a requisition form just like the bookstore requisition form. They fill out some information, click submit. We instantly send them, give them a page that says great. Here's the URL where you can give to your students. You can paste it into your syllabus or your LMS. Here's the ISBNs you can give to the bookstore. And by the way, we'll send it to them anyway so don't worry about it and we'll turn around and do that. And we also follow up with an email to their account that they just registered for with that same information. It also gets stored in their account so they can go to their account and get it at any time. We also put that class in a class finder. So if they forget everything and just say go to flywallknowledge.com and find it. The students go there and it says students enter here and to your class, they put it in a school and a professor and it pulls up the link and they click and they go right to the professor's book. So we've tried to make it easy and you might be able to respond sort of more broadly. Yeah, I mean the challenges you've identified are like the ones that we're observing elsewhere. Professors are used to turning in their adoption form at the bookstore. All of a sudden there's this online resource that lives online and you order online. How do I do that? Some open textbooks, yours have ISBNs, not all do. How do you handle that? So there are a lot of challenges and education is really just the key to that. Yeah, if the student, they could buy it, they could have a choice to buy it directly or through the bookstore because some bookstores charge 40% markup. Right. So if your cost is $34,000, it's plus 40%. Right, that's right. We've always maintained that we'll sell books through the bookstore and they can markup whatever they're going to but we will always have that book available for sale on our site. So the student, it keeps a governor on bookstores because they're not gonna be willing to have that much of a gap between their price and our price. Well, I mean, it's like that with any book. You can go on amazon.com and buy any, virtually any textbook you can buy in a bookstore or for less. Take one more question and then we gotta end. It's a question from actually the last presentation. Someone asked, I think, what the revenue share model is for your authors. So our authors get 20% of any dollar that we generate around their open content and that's anything, anywhere in the world. So typical industry average is 13% and what we say is, look, we're in this together. You've chosen to publish an open textbook with us. There's free content online. That brings traffic. It's now our job as a company to figure out how to make money from that and share that with you. So today they get paid for, for example, any formats that are purchased but we create the study aids and sell them and we pay them 20% of the study aid proceeds. If we generate, we've had conversations here with people about services that they provide. I'd say tutoring services or highlighting services and if we sold that and the students spent $15 for some tutoring, we would share 20% of that with the author. So the authors feel like we're lying because their sense is good. We're both in this to sort of figure out creative ways to continue to tweak the business model around open content because I'm always gonna get paid. Awesome. And traditional publishers don't share that revenue. No, not so much. Not even close. All right, thank you very much everybody. Thank you.