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Digital Textbook Startup Kno Was Sold For $15 Million
Nate the greatest writes "Intel didn't mention how much they paid for digital textbook startup Kno when they announced the acquisition last week but inside sources are now saying that the digital textbook startup was picked up for a song. GigaOm reported earlier today that their sources told them that Kno sold effectively for pennies on the dollar: 'Well placed sources who were in the know told us that the company sold for $15 million with some retention bonuses for the employees. Intel bought the company mostly for its hardware-related intellectual property and the employees. Intel also was one of the largest investors in the company — having pumped in $20 million via its Intel Capital arm.' Kno had raised $73 million in venture capital since it was founded 4 years ago, and it picked up another $20 million in debt. This deal was nothing less than a fire sale, and that does not bode well for the digital textbook market or other startups in this niche. Inkling, for example, just raised $20 million dollars this summer in order to compete in a market that where one of their competitors failed."
This doesn't bode well for the electronic textbook industry, and it's their own damned fault.
In theory, I'd personally love digital textbooks. Searchable, I could carry them all with my on an appropriate gadget or gadgets the way I can access my Barnes&Noble books either on my Nook or my Nexus 7 on a Nook app, etc. I didn't think I'd like ebooks since I like the paper versions so much, but over the past two years I've actually come around to the idea and now like it very much.
But look at the history of textbook selling. Over the past twenty years they've gone to desperate measures to destroy the resale value of books that are otherwise perfectly resellable, via once-only mandatory digital downloads, problem sets that are only on line and that expire, and tricks like that. That is an unholy annoyance to any person with a sense of dignity, and it's all to inflate profits for publishers that want to sell a physics 101 textbook for $100, and then sell it again a year later regardless of how little the content has changed.
So if this is the "company" you're doing business with, why would any rational consumer be stupid enough to accept going to a digital format? If that's the way you do business you can guarantee it will be DRMed out the whazoo, be untransferrable to other devices, expire/disappear if they can make it happen, and all that other funny business. And that industry would LOVE to sell you the digital version for the same $100 they sold the paper version.
I'm glad to see the digital textbook business die at the moment, but every failed attempt is another nail in the coffin for these rapacious publishers intent on surviving by screwing over the consumer. Once they've crashed and burned, the market will be ripe for a more honest textbook seller interested in a different business model. The sharks on the market now? They can all go piss off.
Never under estimate the power of "a free an unfettered marketplace" to encourage rapacious companies to live well by screwing the consumer.
If this were Usenet, I'd killfile the lot of you.
Too long, didn't read. Should've gone with shorter texts. What did Twitter sell for again?
It's difficult to build up a large selection of publications ready for the higher education market, where one can't push out CRAP instead of high-quality education materials. Texas has little control over higher education publishing, and far too much nonsensical control over K-12, where revisionism and unadorned religious swaggery holds sway over intellectual honesty and these troubling things called "facts". Still, the bloodletting to come in the educational industry will be from the traditional publishers who fail to adapt to the new reality of digital gadgets used for reading and studying.
As much as I enjoy my Apple iPad, the popularity of 16gb devices which cannot hold many reading resources is troubling. Apple traditionally packs in the least amount of storage possible in consumer devices, with incredibly ridiculous markups to reach 64gb or 128gb of storage. If Intel pushes their own tablets with more storage at a reasonable cost, then Kno has a real future.
Back in my past, I was furious at how much college textbooks cost, and how little trade-in value I'd get -- if any, since from semester to semester the reading materials for a given course might change. The market changes of the past 20 years have had little influence on the current trajectory: digital data and high-speed distribution changes everything. While I recognize the need of publishers to employ DRM control in order to generate profits, maybe expensive university systems should change their models to remunerate professors who research and publish -- while the learning materials decrease in price. There's little use for the existing publishing and distribution system if higher education can publish and distribute at will.
I don't believe that MOOC will make much sense until there are big changes to how multibillion dollar universities position themselves at the forefront of sharing knowledge with those who need it the most.
Remember kids, if you're not paying for the service, YOU ARE THE PRODUCT THAT IS BEING SOLD.
Isn't just for textbooks. I work for a public school system. I had my media person ask questions about ebooks for kids. When he told me the various forms of licensing from big distributors they've basically tried to recreate an even worse version of physical books with their restrictions at the same or higher pricing that often also requires extra "subscription" or "maintenance" fees on top of already having to lease books STEAM style but with limits on numbers of downloads and time limits on auto-selfdestructing titles. That's on top of having to buy a device to read them on (Kindle or Nook are the only thing anyone has ever heard of unfortunately). It's fucking ridiculous and driven by unbridled avarice. I told him not to buy anything for the time being.
CAPTCHA: tedious
I create ebooks - specifically law ebooks, they are authored by a barrister who is very good at what he does. I run the technical side of things, we tried to make it easy for people to access the material, either via a website or on platforms like the Kindle, no DRM involved because as we all know DRM is useless anyway. After trying to do this for a few years my opinion is that its almost impossible to make money from it, mainly due to piracy. People wanted a cheaper alternative to textbooks that were tens if not hundreds of dollars to buy so we started creating ebook versions, all that happens is people rip us off, even if we are selling the books for $3 a piece. They also rip material off from our website, someone subscribes, pays for one account, then copies everything and distributes it via email. We at one point had Amazon remove some of our books from their store because they accused us of ripping someone else off, that only got rectified when we proved we were the original authors. I would love for there to be a DRM system that allowed people to use the ebook on any device of their choosing as long as it was their device, I dont care if people have several devices so long as they have paid me for their book. But it needs to be a DRM system that works, that is really locked down but that also allows people to sell or gift their books to others. But not to copy them freely and rip off small micro publishers like us. Sadly piracy is accepted as the norm, even when publishers are practically giving stuff away for free. People just share stuff, they dont think about what goes into creating the stuff they are sharing, they dont think that people need to make money from what they create in order to pay bills and mortgages. The original paper book is a fantastic device, you buy a copy, its yours to do with as you please, if you decide to give it to someone else or lend it to them then you can do so easily however you are giving away your copy, you cant create a copy of a physical book, at least not easily, thats is the inbuilt protection for the author and the publisher, the fact that is is a single item. Until the same principle exists in electronic publishing then it will be impossible to make money from it.
Honestly, I'm more than a bit surprised that they were picked up for more than the value of their office furniture, plus whatever it would have cost Intel to just hire their more promising employees piecemeal.
The notion of a 'digital textbook startup' is simultaneously seriously limiting (so, you've developed a hardware and/or software platform that can distribute book-length text documents; but you won't sell it to me unless I'm a student or slinging educational materials?) and guaranteed to bring you into direct conflict with bigger fish who have no interest in your success. Entirely unsurprisingly, the Kno hardware lineup, with bespoke linux-based OS and compatibility only with themselves, was first to die. Was it superior for books, at 14 inches? Very possibly. Was that going to save it in a world where e-ink readers are damn cheap, full android tablets are moderately cheap and widely available, and iPads are the software-ecosystem juggernaught? Hahaha, you make funny joke, yes?
On the content side, they faced the prospect of either DIYing it (doable, if massive, for K-12 sausage-text-to-Standards stuff, nearly impossible against any more specialized area, where they actually want specific books) or cutting licensing agreements with publishers, most of which have their own dreams of digital domination, instant content expiration, and eternal rents, and don't feel like sharing. Kno might have been more competent than those competing options (it would be hard to be less competent, in many cases); but the publishers have the copyrights to the texts Kno needs, so how does that help them?
On the software side, while epub is moderately different from HTML, it's not as though epub readers are expensive or thin on the ground, so what do they have? Yet another epub mangler with some integrated web features nearly indistinguishable from any free blogging site with far too small an audience to attract an idiot with a fat wallet?
Why did they pay $15M?
Kno-one Knos.
Money is the most essential & powerful elements of the world. Everyone wants money & i also want it.
That sound you hear is the new bubble popping. Sell now, folks.
I went to a £30,000/year school (on scholarship, so it actually cost my parents £0/year).
Yet all our textbooks were hand-me-downs from the previous year.
This was brilliant, really. The best books were bought exactly once, kept as long as they are relevant (which at high school level for e.g. mathematics and physics is for decades, as the fundamentals of the subjects don't change) and everyone scrawled lightly in them, meaning you had previous students' thoughts to guide you (it's way easier to annotate real paper than an e-book). It was rather a good lesson in the value of tried-and-tested over fashion, but then you can't really get more conservative than an English public school.
Who would buy textbooks from a company, which makes it painfully obvious, that they themselves never bothered to open an English textbook or to find some other means of learning to spell.
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