Overview of the education market dynamics with publishers and content owners as the intended audience. Also of interest to private equity and other investors.
2. Introduction
Michael Cairns is a publishing and media executive with over 25 years experience in
business strategy, operations and technology implementation. As a business
executive, Mr. Cairns has successfully managed several troubled and under-
performing businesses, creating new business opportunities, developing new funding
sources and enhancing shareholder value for investors. His years spent as an
operating executive have largely been with brand-name publishing companies such
as Macmillan, Inc., Berlitz International, Wolters Kluwer Health, Reed Elsevier and
R.R. Bowker. As a consultant, Mr. Cairns has worked with clients as diverse as
AARP, Hewlett Packard, InterPublic Companies and Reed Elsevier with an emphasis
on business strategy, market development and corporate development.
His skills and experience include:
▪ Business and corporate strategy development and implementation
▪ Operations management and business transformation
▪ Traditional and digital publishing and operations
▪ Print-to-digital transformation and adoption of new business models
▪ Software development and software services
Mr. Cairns holds an MBA (Finance) from Georgetown University and a BA from
Boston University. He has served on several boards and advisory groups including
the Association of American Publishers, Book Industry Study Group and the
International ISBN organization. Additionally, he has public and private company
board experience.
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Michael Cairns
Information Media Partners
Strategy Consulting
New York, London, Melbourne
Tel: 908 938 4889
Michael.cairns@infomediapartners.com
Find me:
LinkedIn
3. Information Media Partners
Michael Cairns established Information Media Partners in 2006 as a boutique strategy
consulting firm focused on the information and education publishing segment. The work
conducted by the firm includes product development, corporate development, sales
management and corporate reorganizations. We work with established businesses, private
equity owners and potential acquirers.
Examples of our work include:
▪ Reorganized and re-focused a $25 million software publishing company by aligning
business operations with client priorities; implementing internal collaboration tools and
project management standards; re-building executive team to focus on effective and
efficient management
▪ Defined a new business strategy for a large non-profit association and advocacy group,
expanding their business model into global markets to exploit their core knowledge and
expertise across a broader market
▪ Led an information technology capabilities review at a large international advertising
holding company. Completed over 200 interviews in 15 international offices and multiple
group focus sessions to define the operational ‘gaps’ between existing agency capabilities
and those necessary and important for client delivery by region
▪ Completed a sales management effectiveness review for a global software company and
defined six key project initiatives to improve sales effectiveness, market development and
account management
We approach our client engagements in a standardized, logical manner which creates the best
environment to identify key business drivers, administrative and logistical road blocks and/or
product or market definition issues. Our investigative approach leads to better insights into
your businesses and supports the development of workable solutions and recommendations
for success.
Visit the Information Media Partners website for more information.
Sample Client List
5. K-12 market overview
▪ Historically a large industry
exhibiting attractive and
stable growth
▪ English language
instructional market is highly
concentrated
▪ US market influenced by
periodic significant changes
in government policies
▪ Growth shown minimal
impact of periodic economic
recessions over time except
during 2008-2013
5
An Immense Market
Over $600million spending power
14,000
Public School
Districts
5.7M
Personnel
$13B
Spent on
instructional
Materials
$60B
Spent on
computer
Equipment in 10
years
$607B
Spending
2008-2009
$618B
Spending
2012-2013
$679B
Spending
2015-16
$691B
Spending
2016-17
Based on National Center for Education Statistics (“NCES”)
projections growth will 1-2% each of the next three years
6. K-12 market overview
▪ US market spending on education surpassed $1.3T in 2014 (7.4% of GDP)
▪ Renewed focus on outcomes and improvements. Legislative programs
include:
❖ No Child Left Behind (NCLB)
❖ Race to the Top (RTTT)
❖ Focus on outcomes will transform education through the convergence of content,
technology and delivery
▪ Movement towards integrated educational approaches combining content,
assessment and services aligned to standards and student performance
❖ Schools will become more data driven supporting performance and assessment
▪ Education providers must demonstrate capabilities in instructional design,
curriculum development, alignment to standards and delivery at scale to
drive efficiency
❖ Only companies with financial strength will be able to invest sufficiently to provide
integrated solutions
▪ As the US economy continues to improve this will enable growth in budget
spending
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8. Macro issues impacting k-12 education
▪ Education in flux due to
fed government change
▪ Expect states to drive
assessment and
standards
▪ More students will fall
behind
▪ Digital share of
supplemental and core
textbooks rising 4-5% per
year
▪ Buying decisions for
digital often originate with
teachers
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9. Core K-12 standards are in flux
▪ States struggled to meet NCLB requirements
❖ Department of Education granted formal state waivers to
common core state standards
❖ Defined knowledge and skills students need to succeed
in college
❖ More than 43 of 50 states have adopted these standards:
spending on instructional materials, assessment
technologies, and professional development initiatives to
comply with the regulations
❖ Some states saw significant declines in student
performance requiring intervention
▪ Current administration are revising/not enforcing
education standards
❖ Unclear direction and/or long term impacts
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10. Societal issues impacting K-12 education
▪ High level of research by schools/districts into
instructional integrity
❖ Continuation of quality creation and delivery of
educational materials
▪ Curriculum and lesson plans
❖ Wave of start-ups moving to help education
professionals map and design new types of
curriculum
❖ Peer to peer marketplaces; teachers pay teachers
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13. Course material development is complex
Development increasingly
driven by:
▪ Products that are
proven effective by
scientifically based
research (SBR): no
child left behind
▪ Demonstrate causal
relationship between a
specific educational
treatment and a specific
learning outcome
14. Annual Horizon Report 2017 - Themes
Themes and Ideas
▪ Progressive learning requires culture
change
▪ Learners are creators: marker places,
collaborative rooms, coding/robotics
▪ Inter + multi discipline learning breaking
silos
▪ Wide spread use/access of technology
doesn’t create equal learning
environment
▪ Continually measuring learning is
essential to performance improvement
▪ Fluency in technology is not the same as
understanding it
▪ Authentic learning is necessity – hands
on learning and teaching required
▪ Schools incorporating data analytics and
critical thinking
▪ Learning spaces must reflect new
approaches
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Key Trends
Larger trends
▪ Coding as the ‘new’ literacy
▪ Rise of STEM learning
▪ Growing focus on measuring learning
▪ Redesigned learning spaces
▪ Creating cultures of innovation
▪ Deeper learning approaches
Challenges
▪ Authentic learning environments
▪ Improved digital literacy
▪ Rethinking the roles of teachers
▪ Teaching computational thinking
▪ The (societal) achievement gap
▪ Sustaining innovation through leadership
change
Important developments
▪ Makerspaces
▪ Robotics
▪ Analytics technologies
▪ Virtual reality
▪ A/R
▪ The IOT
Source: 2018 Horizon Education Report
15. Student outcomes are substandard
▪ Student
preparation for
education
success differs
markedly by
family
circumstances
and race
▪ Student
success at
elementary/
secondary
school is
distributed
unevenly by
economics,
income,
geography and
race
16. The economic influence of education
▪ 77 Million Students in US
❖ 19% of students can’t
read
❖ 1.2M drop out of
school every year
❖ 80% of low income
students are behind
one grade level
❖ 13% of students have
disabilities
▪ US Test rankings versus
rest of the world
❖ 20th in Reading
❖ 30th in Math
❖ 24th in Science
behind Latvia and
Slovakia
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▪ Estimated that each drop out costs the US
economy $200K in lost lifetime tax revenue
▪ Over the next decade the U.S. will fall 3
million workers short of the 22 million
students with a college degree needed to
meet the demands of the workforce
▪ Many drop outs show signs of dropping out in
6th and 7th grade.
17. K-12 school districts
17
14,000
Public School
Districts
90,000
Public Schools
7,000
Charter
Schools
30,000
Private &
Parochial
Schools
Growth drivers:
birthrate and
migration
West & South
growing
NE, Midwest
Flat/no growth
215,000
District Personnel
3.5M
School Personnel
120,000
School Personnel
500,000
School Personnel
14,000
Public School
Districts:
70% educate less
than 2,500 students
25 largest educate
10% of total students
18. K-12 Enrollment
▪ Increased 3%
between 2001 and
2004
▪ Projected to increase
2% 2014-2026
▪ 3.4M student
graduations in 2018
rising to 3.6M in
2025 but falls to
3.2M in 2032
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19. Total public and private high school graduates by
race/ethnicity
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Source: Inside Higher Ed.
20. Funding sources for K-12
Federal sources of funding:
▪ Title 1 Grants
▪ IDEA special education state
grants
Expenditures per pupil
▪ $11,984 in 2016-17
▪ Rise 1% per year through 2024-25
▪ 2018 Federal funding bills
increased grants
School construction budgets expected
to grow from $50B in 2016 to $65B in
2019
▪ 56% of schools completed
construction projects in 2016
▪ 53% plan for construct in 2017
▪ 53% of all schools require updating
and investment for repairs and
modernization
21. Funding sources for K-12
Public education funding
comes from three main
sources:
▪ State funds: 46%
▪ Local funds: 45%
▪ Federal funds: 9%
Allocations to schools
generally made student
population
Property tax and local tax
revenues drive budgets
Source: National Association of State Budget Directors
23. Adoption States
▪ 19 states have education
budgets administered and
implemented by the state board
of education and the state
department of education
▪ Indiana (2011) and Arkansas
(2013) recently repealed their
state adoption statutes
▪ Some states require publishers
of state-adopted materials to use
a central in-state depository or to
ship state-adopted materials
from within the state
▪ Depositories charge publishers a
commission, typically about 8
percent of sales
▪ In other states publishers may
ship directly to schools from their
own in-state warehouse, without
going through a central
depository
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24. Adoption state criteria
▪ 19 states use adoption for review and approval of K-12
textbooks, other core materials, related ancillary tools and
resources
▪ Core curriculum materials align with state academic standards
and meet various state regulators (binding materials and
paper)
▪ Some states allow a percent of funds (30%) to be used to
purchase materials not on the list
▪ Complex set of policies, procedures, rules and timelines that
have been optimized for textbooks
▪ After civil war, southern states pressured northern publishers
to product textbooks customized to meet their requirements in
the south
▪ Distributor agreements – old days everything was slow
▪ $7B spent annually on textbooks - $2.2B in adoption states
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25. The importance of adoption states
▪ Large state adoptions in BASAL courses will materially impact
textbook profitability
▪ Most large scale BASAL adoptions cycle every 3-7 years
27. Growth and development of e-Content
▪ Digital platforms and white
boards enabling schools to
modernize delivery
▪ Single platform preferred
▪ Federal & State digital initiatives
are driving adoption
▪ Escalating growth in Fed/state
legislation funding digital
▪ Parents, teachers and students
are demanding more hybrid
solutions: supplemental content
with BASAL fundamentals
▪ Shift to digital platforms and
performance based learning is
creating data needs,
requirements and capabilities
from vendors
▪ Vendors are required to prove
efficacy of their digital products
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28. Changing dynamics for text materials
▪ Why print still dominant?
❖ School readiness, infrastructure
requires modernization
❖ Require equality of access for all
students – creates lowest common
denominator
❖ Teachers uncomfortable with
technology
❖ Changing business models will erode
textbook market further
▪ SaaS model for content sales
developing as a business model
▪ State reviewers may not be expert in
reviewing technology based content
– impediment to adoption
▪ Many unique forms of technology
are not bound by current policy,
form, procedures – process is
optimized for print formats
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Source: Experts Guide to K-12 published by SIIA Source: Simba Information E-textbooks in Education
29. Digital change is forecast
▪ Alignment to education
standards sometimes difficult
with technology based
products
▪ Content/additions/substitutions
– some states don’t allow
replacement or upgrades and
linking to additional materials
or make requirements to do so
is very difficult
▪ Some states reconsidering the
requirement for state
depositories: May become
hard to justify given growing
costs
▪ Some states offer exemptions
for e-products
Source: Curriculum for School Networking
Source: Experts Guide to K-12 published by SIIA
30. K-12 open education resources
▪ Peer to Peer
‘marketplaces’ for
teachers and
administrators
▪ Bridge gap between
‘official’ content and
more up-to-date,
innovative solutions
▪ Business opportunity
for teachers
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31. Personal learning and performance
▪ Innovation
❖ Adaptive software
❖ Collaborative learning spaces and ability to
use/incorporate MM into work
❖ Diversity of content
❖ Credible reliable databases to advance
learning
❖ Simulations/animations/virtual worlds
❖ Flexible teachers and methods
▪ K-12
❖ Closing the achievement gap requires
differentiated learning
❖ Tools allow for individual learning plans
❖ Teachers provide progress monitoring and
intervention as needed
❖ Personal online work spaces
❖ Learning management systems delivery
course materials in real time and
asynchronously to students
▪ Assessment
❖ Real time data – track projects,
achievement
❖ Personal portfolios
❖ Adaptive and diagnostic assessment tools
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32. Example of learning activities
▪ Supplemental publishing
market includes:
❖ Instructional workbooks,
study aids, digital video
products, e-learning, online,
and other computer-based
systems that enhance
traditional in-school
learning.
▪ Drivers:
❖ Product ease of use
❖ High levels of technical
infrastructure
❖ Common core standards
❖ Federal sponsored internet
connectivity programs
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39. Digital assessment tools in class
▪ Digital tools face
credibility test
▪ Trends point to
more use and
more acceptance
of assessment
tools
▪ Education
‘community’
seeking more
effective outcomes
40. Assessment market growth
▪ Assessment
market will outpace
other segments of
the k-12 content
market
▪ Ed-tech investment
is chasing new
companies in this
space
41. Growing need for more teachers
▪ Demographic
movements
▪ Teachers less
than 3yrs
experience are
dropping out
▪ Poor pay, poor
materials, other
opportunities
▪ Rural vs metro
divide
43. What is “Ed-tech”?
▪ The intersection of technology tools and
education content
❖ Data analytics platforms
❖ Content and other marketplaces
❖ User generated tools and applications
▪ To provide access to information and learning to
obtain skills and knowledge
▪ In other words – the application of technology to
support learning
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44. E-Tech products and markets
▪ Emerging K-12 Ed-tech markets are frequently ill
defined and highly fragmented
▪ Product offerings are relatively undifferentiated
(and sometimes difficult to understand)
▪ Few companies have sales forces of any size
▪ District purchasing processes evolve slowly and
sporadically
▪ Technology at point of delivery remains uneven
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45. Big picture trends – 2017 Horizon Report
One Year or
Less
▪ Bring your own
device
▪ Learning analytics
▪ Adaptive learning
Two – Three
Years
▪ Augmented and
virtual reality
▪ Makerspaces
Four to Five
Years
• Affective computing
• Robotics
Investment money has accelerated in the past five years
chasing start-up opportunities but may have reached
saturation.
45
50. Product segments in Ed-tech
▪ Learning management
systems
▪ Early childhood education
▪ Broad online learning
programs
▪ Enterprise learning
▪ Next gen schools
▪ Tech schools
▪ Online to offline
▪ Testing & remediation
▪ Digital course materials
and courseware
▪ Test prep
▪ Curriculum production
▪ Search
▪ School administration
▪ Next gen study tools
▪ Language learning
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52. Ed-tech/education business drivers
▪ The internet “network effect:” enables accessibility to
vast collections of education materials
▪ Technology has facilitated ‘new learning models’ which
had redefined how students integrate learning into work
and personal development
▪ Expanding life-time earning ‘gap’ of those educated at
higher levels supports the value of education
▪ Broader workflow automation is eliminating old-line
employment paths causing acceleration in worker ‘re-
education’ needs and requirements
▪ Rapid growth of non-English markets for education
content ‘technology leap’ embedding technology
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53. Implications for educational content producers
The results of the Edweek
Market Brief suggest that more
than 70 percent of
administrators expect their
investments in educational
technology to grow over the
next year. Google will almost
certainly continue to soak up
the largest share of those
additional dollars.
Edweek Market brief special report – May 8, 2017
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54. Thoughts on trends impacting Ed-tech
▪ Traditional content
▪ Access models
▪ Platforms
▪ Accreditation
▪ New technology
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55. End of traditional content?
▪ Open educational course materials
▪ Textbook form factor eroding
▪ Battle for attention
▪ “entrepreneur culture” forcing a rethinking of the
entire educational experience
▪ Online vs offline – generational shift
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56. Access models
▪ Flattening of supply chain – enabling direct relationships
▪ But, complicated with more platforms, distributors,
outlets, etc.
▪ Business model transition from “one off” sale to varieties
of subscription models is difficult
▪ Publishers need to rely on direct relationships wherever
they can
▪ Subscriptions/memberships assume higher engagement
with customer
▪ “On the verge of learning about your consumers
intimately. Need to wake up to this and learn from this”
▪ Institutional sales (B2B and B2B2C) more predictable
56
57. Platform wars
▪ xml first workflows
▪ Mobile: Apple vs
Android
▪ Bring your own device
▪ Functionality
▪ International markets
▪ Acquisitions and roll-
ups: beach heads are
valuable
▪ Dependence on
hardware and/or good
connectivity is likely to
fail – lowest common
denominator may be
very low
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Edweek Market brief special report – May 8, 2017
58. Changing accreditation and degrees
▪ Work experience
▪ Badges and certifications
▪ Changing test and assessment requirements
▪ On demand, in situ learning needs for career
advance
▪ Life long learning
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59. New technology
▪ Virtual reality
❖ Interesting for distance and/or remote users
❖ In class headset is potentially a distraction
▪ Augmented reality
❖ Significant opportunity in education and career
development
❖ Turning 2D drawings into 3D models which can be
played with
❖ Non-headset on the way?
▪ Makerspaces
59
60. Google retains significant advantage
▪ “Image you have been
asked to hire one of
the following
companies to improve
student achievement”
Edweek Market brief special report – May 8, 2017
61. How do you expect your spending to change?
Edweek Market brief special report – May 8, 2017
62. And spending over the next five years?
Edweek Market brief special report – May 8, 2017
72. The bulk of this material was created as
part of an ‘envisioning’ session with a
client to foster a further discussion about
business strategy.
Michael Cairns
Managing Partner
Michael.Cairns@InfoMediaPartners.com
908 938 4889
LinkedIn
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