A presentation on the financial sustainability of Flat World Knowledge based on the 2009-2010 academic year.

1. Open-Access Textbooks and
Financial Sustainability:
A Case Study on
Flat World Knowledge
John Hilton III David Wiley
http://johnhiltoniii.org http://opencontent.org

2. What is Flat World Knowledge?

3. Beta Test – Winter 2009
Six FWK books were used as the
primary textbook in 27 classes. In
total, approximately 750 students
enrolled in these classes. All of these
students had access to the free
online version of the textbook and
no purchase was required of these
students. Of these 750 students, 442
students (59%) placed at least one
order with FWK, with the average
student spending $28.20.

4. Beta Test – 2009
In total 294 printed textbooks were
purchased by students. Thus,
approximately 40% of students
chose to purchase a print copy of
the textbook, even though the free
online version was available. Some
of these purchases included not only
the textbook but other goods (e.g.
audio chapters) that were bundled
together with the textbook.

5. Beta Test
Items Purchased by Students
Item (all sold by Total Sold (excluding
chapter) products bundled with
textbook)
Flashcards 608
Audio book 144
Audio study 80
guides
Printable PDFs Data not available
Online Quizzes Data not available

6. FWK began allowing public adoptions of 10
textbooks at the start of the 2009–2010 school
year. We gathered data from this academic
year from FWK’s internal systems.

7. Revenue
A total of 16,461 print
textbooks were purchased over
the three semesters, generating
$479,259 of revenue. Of these
print copies, 10,970 (67%) were
purchased through a campus
bookstore. In total,
approximately 29% of enrolled
students purchased a print copy
of the textbook.

8. Revenue
Digital
Products
Made up
~21% of
FWK
Revenue

9. Revenue – How Many Made
Purchases?
65.7% of students taking a class that used
FWK materials registered on the FWK
website. Approximately one in four of
the students who registered (16% of total
students) made a purchase through the
FWK website. The average buyer made
1.3 purchases, with the average purchase
totaling $30.89. Because many of these
purchases were collections of resources
bundled together the number of total
unit purchases (181,563) is much higher
than the average number of purchases.

10. Costs
FWK published its first 10
textbooks at an average cost of
approximately $150,000 per
book. Since these first 10 books
were published, the average cost
of producing a book has
decreased to $120,000 per book
due to increases in operational
efficiencies.

11. Costs
 Authoring (writing) fees (average
$15,000, which is the upfront fee
paid to authors and does not
include royalties paid on book
sales);
 Peer reviewing (average $20,000);
 Design, illustrations, art (average
$15,000);

12. Costs
 Production (XML, proofing, QA,
etc.) (average $25,000);
 Alternate versions (audio,
handheld, etc.) (average $15,000);
 Instructor ancillaries (average
$15,000); and
 Student ancillaries (average
$15,000).

13. Costs – Faculty Adoptions
 For the academic year 2009–2010, FWK
reported that the average cost of faculty
acquisition was approximately $900.
 Gross profit per adoption climbed above
$300.
 It takes a faculty member using the
textbook for three semesters in order to
pay for the costs of acquiring that faculty
member.
 The company hopes for full payback of a
faculty acquisition in a single semester by
the academic year 2011–2012.

14. So What Is the Bottom Line?
 1 Textbook at current enrollment =
~ $61,000 annual revenue ($48,000
(book), $13,000 (ancillaries)).
 Many of the costs are fixed. Current fixed
costs are such that at current enrollment
FWK would not be sustainable.
 But, enrollments grew from 900 to 58,000
in one year. If large enrollment growth
continues, FWK could be very profitable.
 2011 update: Approximately 270,000
enrolled students, and more students
buying textbooks.

15. So What Is the Bottom Line?
From http://flatworldknowledge.com

16. Questions?
John Hilton III David Wiley
http://johnhiltoniii.org http://opencontent.org