Potential cost savings of OER – Part 1

I’ve been thinking a lot about the potential cost savings of OER in K-12. I know that in these times of state financial crisis, a silver bullet like free textbooks is very appealing.

Personally, I think that the educational advantages of having resources that are licensed in a way that they can be legally remixed and adapted to differentiate instruction are much more important than the economics. Having said that, I understand that cost savings are likely to be an important driver in OER adoption.

Recently, Texas State Representative Scott Hochberg, who was a leader on the “open source textbook” legislation* there, was quoted as saying “We were due to spend about $225 million to replace the grades six through 12 literature books in the state. We can buy the content for under $20 million. Someplace between $20 million and $225 million, there’s a cost savings.”

This sure got a lot of people’s attention. But where did these numbers come from? We’d need Representative Hochberg to tell us for sure, but here are my thoughts. The $225 million appears to be drawn from the total maximum cost figures (what TEA will pay for these textbooks) in the Proclamation 2010. (The figure for just grade 6-12 literature books is more like $195 million; the figure goes up to $227 million when you add in things like ESOL and AP English books.)

In another article, Hochberg was reported to have asked a company for the cost to deliver digital files and was told it would cost $14 million. It is unclear whether this was for statewide rights, a work-for-hire type arrangement, or actual open licensed content. (I’m guessing the first.) Based on my own experience, development costs for one grade level of a major basal textbook series can run in the $2-3+ million per grade level range, which is roughly in line with Hochberg’s figures. That doesn’t include printing or distribution costs, which may be a part of the difference in figures.

So the question then is how much does printing cost? This has long been a subject of wiggling on the part of the publishing industry. When pushed on pricing of digital materials, they have long contended that the vast majority of curriculum costs are in development. I do think this is true, based on the relatively low cost of printing in the large volumes they run.

My very rough cost for printing and distribution of student and teacher editions is somewhere around $17 million. So…$14 million + $20 million (rounding up) is still quite a lot less than $225 million.

What’s left? Ancillaries (a big $ number and an interesting discussion). Sales expense (also a big number). Profits.

More on those and other potential areas of savings for OER in Part 2 of this post.

* It is worth noting that as the proposed rules on this currently read, these materials do not appear to be intended to be open-licensed, but rather state-funded and owned. While this is may not be relevant in terms of this cost discussion, it is very relevant to others who might or might not benefit from Texas’ initiative. Hopefully, this will be resolved in the final rules.