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Raleigh, N.C.-Based Company Sells Digital Educational Content to Students

Posted on: Wednesday, 17 August 2005, 18:00 CDT

Aug. 17--A Raleigh company that provides digital educational content has begun selling directly to students by creating a Web-based bookstore.

VitalSource Technologies on Tuesday announced the launch of the VitalSource Store, which enables students to buy and download more than 1,000 titles -- textbooks, reference books and classic works such as Shakespeare's plays -- over the Web. More titles will be added as the company forges partnerships with publishers.

Sales are made similar to buying songs through the iTunes music store, said Frank Daniels III, VitalSource's chief executive.

Prices for classics such as "The Adventures of Huckleberry Finn" start at 99 cents on the company's Web site (www.vitalsource.com/betterbooks). Prices for other titles can be as low as 60 percent off the printed version. But prices are set by the publishers and in some cases are no cheaper than regular books, Daniels said.

Besides offering the ability to take notes in the margins and highlight passages just like on paper, the e-books allow students to search for key phrases in the books and their notes, Daniels said. Students also can cut and paste highlighted passages to create a study guide.

The rising cost of textbooks has been pushing publishers toward creating online versions. Last year, three major textbook publishers -- McGraw-Hill, Pearson and Thomson -- released online textbook programs.

"It's a small percentage of the market, but it's growing fast," said Daniels, a former executive editor of The News & Observer.

But there are challenges. Some students aren't interested in dispensing of books to spend more time in front of a computer screen, and online versions of many classics are available free.

Daniels concedes that the company's lineup of textbook titles is somewhat light, but said he expects to remedy that with new deals with publishers.

Up to now, VitalSource, a privately held company with 32 employees, has been one step removed from customers. It has sold through pacts with computer makers Apple and Lenovo.

VitalSource also has deals to provide e-textbooks to schools. The company's e-textbooks are being used by 15 dental schools that account for about 30 percent of the dental students in North America.

Selling to students creates a new revenue source for VitalSource, but Daniels also sees it as a way of showcasing the company's e-book technology. That's important because he expects the company's top source of revenue to come from licensing that technology to publishers.

VitalSource already has signed, or is about to sign, deals with four top publishers, Daniels said, but he can't yet say who they are, at the publishers' insistence.

Daniels wouldn't disclose the company's financial results but said revenue for the fiscal year that ended June 30 was double that of a year ago. The company lost money last year but is expected to turn a profit this year, he said.

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Source: The News & Observer

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