This presentation describes a number of studies examining the impact of giving away ebooks and course content on the purchase of print books and course credits.

1. When Your Intuition Lies to You: The Impact of Free/Open on Sales David Wiley (John Hilton and Justin Johansen) Department of Instructional Psychology & Technology Brigham Young University

2. Download These Slides http://slideshare.net/opencontent/

3. If You Want to Complain @opencontent

4. I’m Committed Free / open since 1998

5. Originally for Moral Reasons If we can, we should

6. Expressions Are Different To give a book you must give it away

7. E.g., Online Book We can all read simultaneously

8. The Cathedral and the Bazaar Eric Raymond’s seminal work

9. Reputation Worth more than money to some people

10. The Instructional Use of Learning Objects My first book

11. Citations Worth more than money when you’re new

12. “ Obscurity is a far greater threat to authors and creative artists than piracy” Tim O’Reilly, 2007

13. Market Fundamentals When you buy one, you expect to get one

14. Publicly-funded Research When you (pl.) buy a research article, you should expect to get one

15. People Want to Profit For a wide variety of reasons

16. When Intuition Lies If you give away things for free, people will stop paying for them

17. “ Resilience to Data” Persisting in beliefs despite clear, empirical evidence to the contrary

18. Some Examples Where we can empirically confirm our intuition is lying to us

35. SFL 110

36. BUS M 418

37. TMA 150

38. Earth 41

39. GEOG 41

40. GOVT 45

41. Differences? Increases in four courses Decreases in two courses

42. Equivalent Course Enrollment Data as Control Control for external influences on enrollment trends like economy (Unstandardized, so slope only)

43. SFL 110 - HIST 322 (.94)

44. BUS M 418 - I SYS 101 (.76)

45. TMA 150 - SFL 100 (.79)

46. Earth 41 - ALG 41 (.89)

47. GEOG 41 - HUM 41 (.94)

48. GOVT 45 - GOLF 81 (.88)

49. Differences? Only one clear difference

50. No Significant Difference There is no clear impact on enrollment trends

52. Average Monthly Attributable Enrollments Per OCW Course Course Strong Weak University Courses 1.39 9.06 High School Course 1.28 16.72

53. Sustainability (Strong) Course Type Estimated Conversion Cost ROI Years Anticipated 4-Year Enrollment Typical Tuition Rate Estimated 4-Year Revenue Margin for Sustainability University $282 4 66 $444 $29,600 0.96% High School $1173 4 61 $124 $7605 15.50% All Courses $728 4 $18,434 3.95%

54. Sustainability (Weak) Course Type Estimated Conversion Cost ROI Years Anticipated 4-Year Enrollment Typical Tuition Rate Estimated 4-Year Revenue Margin for Sustainability University $282 4 435 $444 $193,140 0.15% High School $1173 4 803 $124 $99,572 1.18% All Courses $728 4 $146,356 0.50%

55. QUESTION: Does OCW publishing threaten BYU IS financial viability?

56. No At profit margins of 1% or higher for university registrations At profit margins of 15% or higher for HS registrations

57. QUESTION: Could OCW publishing be sustainable over the long-term for BYU IS?

58. Yes In fact, OCW publishing appears to be a money-making proposition for BYU IS

59. Future Work Replicate this study with a larger number of courses Gather more data

60. Deseret Book Study Impact of free downloads on print sales

61. Eight Books Typically low sellers (low risk)

62. Free PDFs Online No marketing, no link on the website (low risk)

63. Purchase Link On the page where the free download was available

64. Total Downloads

65. Visits to Product Page

66. Seasonal Effects?

67. Sales / Downloads

68. Correlation = 0.65 The more a book was downloaded, the more print copies it sold

70. “ Most people who download [a book I wrote] don’t end up buying it, but they wouldn’t have bought it in any event, so I haven’t lost any sales, I’ve just won an audience… After all, distributing nearly a million copies of my book has cost me nothing.” Cory Doctorow, 2008

71. Bookscan Study Impact of free downloads on print sales

78. Lesson? Doing a half-way job may be the worst thing you can do

79. Flat World Knowledge Study Impact of free downloads on alternative media sales

80. Flat World Knowledge Study Impact of free downloads on alternative media sales

81. Flat World Knowledge Study Impact of free downloads on alternative media sales

83. 16,461 / $479,259 29% of students bought a printed textbook (Another 5% bought something else)

85. Average Buyer 1.3 purchases Average purchase of $30.89

86. $48,000 / $150,000 Average annual revenue Average production cost (At 09-10 adoption levels)

87. Summary Our intuition lies to us about the impact free / open may have on sales

88. Summary People still want printed books (People still want university credit)

89. Summary If people ever become truly comfortable with e-readers, things may change

90. Summary For the foreseeable future, you CAN have your cake and eat it, too

91. Thank You [email_address] http://davidwiley.org/