Pearson says NFT textbooks will allow it to profit from used sales
Textbook publisher Pearson suggests blockchain technology could allow it to take a cut of secondary textbook sales, capturing a part of the book market that has so far eluded it. As quoted by BloombergPearson CEO Andy Bird believes non-fungible tokens, or NFTs, could help publishers make money from reselling textbooks, though he stopped short of detailing specific plans.
“In the analog world, a Pearson textbook was resold up to seven times, and we would only participate in the first sale,” Bird said after the company announced its latest quarterly results this week. “The transition to digital is helping to reduce the secondary market, and technologies like blockchain and NFTs allow us to participate in every sale of that particular item as it goes through its life.” Bloomberg suggesting that this would mean allowing buyers to resell e-books, which has so far been a rarity in the publishing world.
It is not clear how, when, or if NFTs might appear in Pearson’s catalog. But they may mark a new stage in a long-running publishing war. Thanks to legal concepts like the first sale doctrine, physical book buyers usually own the media they’ve purchased outright and are allowed to sell it without the original publishers making any money. But e-books have complicated that calculation. Any digital transfer creates a new “copy” of the work, and third-party sales of used e-books (along with other sales of used digital media) have faced serious legal challenges as a result.
That has historically given physical books a built-in advantage for students, who can buy or sell them used to cover their often extraordinary upfront costs — without the publishers taking any of the money. Allowing e-book resale can make this benefit less dramatic.
As with many common crypto applications, NFTs do not provide an obvious technical innovation to this question. Bird talks about the way crypto ledgers track an item’s ownership from “owner A to owner B to owner C,” but this has always been possible using a digital database. A blockchain offers a decentralized version of that database, but the odds of Pearson using a fully decentralized, open system are about zero. It will almost certainly extend an existing copy protection scheme to stop non-NFT owners from pirating their books. That would make NFT a fig leaf on top of an old-fashioned digital rights management or DRM framework. NFTs can theoretically be sold on third-party marketplaces that aren’t approved by the creator, but big companies like Ubisoft certainly haven’t followed that principle, and Pearson might not either.
NFTs have had a real impact on the media world. But they’ve mostly functioned as a kind of digital purse – something fans buy to support and feel closer to a favorite creator. (Fandom is a strange world, but I feel comfortable suggesting none really love their textbook publisher.) Sometimes they provide access to social spaces like Discord channels or voting rights on a platform like Snapshot, but it’s most useful for independent publishers and authors who don’t already have a massive digital platform. Most NFTs notoriously do not control who can see a specific work – only who “owns” a token corresponding to it, and even that is often confusing.
Nothing prevents Pearson or other major publishers from allowing people to sell e-book licenses using non-encryption DRM. In fact, third-party sellers like Tom Kabinet and ReDigi have been trying to create digital second-hand markets for years. But publishers have generally been hesitant to open the door to digital resale, especially as they try out methods that give book buyers even less control, including subscription services like Pearson Plus — which Bird described glowingly during the earnings call.
So what has changed? Possibly nothing. Pearson hasn’t committed to NFT textbooks, and Bird doesn’t lose anything by spouting off about the future value of a vibrant (if recently flatlined) new technology. A cut of a resold textbook is probably still less lucrative for Pearson than the subscription model it prefers. But NFTs seem to have a psychological effect – they make people feel as if they own something, even if the ownership is quite abstract. Textbook producers may see this as an opportunity to push digital markets in a new direction.
This can be a mixed bag for students. On the one hand, some resale opportunities are better than none – something people often get with e-books. On the other hand, a publisher-controlled resale market will almost certainly be tilted to favor the publisher. Library e-books have self-destruct conditions that require you to buy new copies after a certain number of check-outs, for example, and an NFT e-book may have a similarly limited number of resells. On a more abstract level, it short-circuits a real legal debate about whether people should have the right to control their digital purchases. And it gives yet another incentive for publishers to make buying physical textbooks as unpleasant and difficult as possible because, from their perspective, they’re just losing money on them.
Anyway, Bird says that Pearson has “a whole team working on the implications of the metaverse and what it might mean for us” – and if they have to make money somehow, I guess NFT books make more sense than Fortnite shine.
