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Hot New Market: Electronic Textbooks

A look at the companies competing to be top of the class in the digital textbooks market
e-books, tablet, e-readers, textbooks, electronic textbooks

Ipad: iStock; Insert: Courtesy Kno

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College tuition continues to rise, but textbooks may be getting cheaper—and a lot more portable. Instead of lugging a backpack filled with heavy volumes, some students have begun using electronic textbooks, which typically cost less and can be read on a laptop or tablet. Although the market for these e-books is still small compared with that of traditional textbooks, it's growing quickly—about 50 percent a year. Simba Information, a market research firm for the media industry, predicts that e-books will account for more than 11 percent of the nearly $5 billion college textbook market by 2013. Here are four of the start-ups jockeying for position.

1. CourseSmart
Several major textbook publishers, including Pearson, McGraw-Hill, and John Wiley & Sons, joined forces to launch CourseSmart in 2007. Collectively, the publishers supply the San Mateo, California-based company with more than 20,000 digital titles. Students can read CourseSmart books on any device with an Internet browser. The company also offers dedicated apps for the iPad and iPhone and Android devices. Users can read sample portions of the books before buying, and once a book is purchased, it can be printed at no extra charge.

Number of users: 2.5 million

2. Flat World Knowledge
Instead of digitizing textbooks from other publishers, Flat World Knowledge produces its own content. The company, based in Irvington, New York, recruits authors from traditional publishers, and Flat World allows professors to modify books to fit their courses. So far, professors at some 1,200 colleges have added Flat World's titles to their syllabuses, says Jeff Shelstad, the company's founder. Students may read any of the textbooks for free on the company's website, but it costs $25 to $35 to download or print the material.

Number of users: 175,000

3. Kno
When it launched last year, Kno was developing a tablet computer for college students. Now, the Santa Clara, California-based company makes an application that lets students buy and read textbooks on the iPad (see photo above). Kno has a large selection—more than 70,000 titles—and the management team has experience in the textbook market. Kno's CEO and co-founder, Osman Rashid, helped launch Chegg, the popular online textbook rental service. By this fall, Kno plans to release an online version that lets students buy and read books without an iPad.

Number of users: more than 25,000

4 Courseload
Mickey Levitan, a former Apple employee, launched Courseload, an Indianapolis-based company, in 2000. But the market wasn't quite ready for electronic textbooks. Levitan relaunched the business in 2009. Universities pay Courseload to procure digital versions of traditional textbooks for their students. So far, about 15 colleges have signed up. The cost of the books is included in students' class fees. Students may read the electronic textbooks on a variety of electronic devices and print the materials at no extra charge.

Number of users: 7,000

The Line: CourseSmart is off to an early lead, with a large number of users and close ties with several textbook publishers. Flat World Knowledge and Courseload seem to be carving out niches, but newcomer Kno, which already offers a vast library of textbooks, may prove to be the dark horse in this competition. Once the company expands beyond the iPad, a device that only a fraction of college students own, it will be poised for rapid growth.

From the September 2011 issue of Inc. magazine




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