In a widely-reported development (read: BBJ article, Boston Globe article, Xconomy article), three major textbook publishers Pearson, Cengage and Macmillan have sued the venture-funded textbook startup Boundless Learning for copyright infringement.

From the wording in the lawsuit, it’s pretty clear that Boundless struck a nerve. Maybe there really is more to their game plan than the new-industry hype and swagger (and deep-pocketed backers) they were pedaling to reporters a year ago (http://bostinno.com/2011/04/28/boundless-learning-raises-1-7m-taking-big-swing-in-big-space-in-boston/).

This development raises a number of interesting questions for those following the transition of publishing to an online milieu.

Did they copy? The lawsuit alleges that Boundless’ online textbooks use the same organization of material and presentation, while replacing the text itself with paraphrased, albeit original, material. That sounds like copying to me: compare with the publication of court proceedings, which is essentially public domain content, but when indexed by publishers using a proprietary numbering scheme, becomes copyrightable. Organization of content matters. However, I’m not in a position to judge the veracity of the charges: Boundless’ site is currently in lock-down mode (“invite-only beta until next semester”).

In either case, what’s the impact on Boundless? If their content is derivative, are they able to change it enough to step just back over the line? If not, this could be their death knell. Even if they eventually win the suit, there will be some distraction, and cost. On the other hand, the attention in itself is validation of a sort, and of course, free publicity. On the whole, I believe they’ll come out stronger if they’re in the right.

Is there any broader significance? In itself, the suit only affects the fortunes of one company, and it’s unclear at this point whether their magic sauce is the tastiest, but let’s take this as an opportunity to review briefly the current turmoil in the textbook world.

High textbook prices, attributed by publishers and their apologists to an increase in the used-textbook aftermarket, and by critics to inefficiencies perpetuated by the entrenched interests (universities, publishers) that control the market, have led to a variety of alternative textbook business models. (Read this fascinating 2010 online discussion)

There seems to be a lot of smart money trying every way it can to pry its way into the huge textbook business (see www.chegg.comwww.coursesmart.com, www.apple.com/education/ibooks-textbooks/). Savvy investors see the outsized profit margins in the traditional business and seek a way to undercut them. Trends indicate that textbook delivery will move online: Newer generations of students are more comfortable with screen delivery of reading material; the ubiquity of phones, tablets and ebook readers provides a better delivery platform than has been available in the past. Publishers are also trying to exploit these new markets. Who will win? Traditional businesses with deep connections to universities and their bookstores, or disruptive entrepreneurs with their venture capital backers?

One school of thought holds that the barriers to entry for the new guys can be overcome: that’s the “look what Amazon did to Borders” argument. But there is a fundamental difference between the textbook market and the market for potboilers: Textbook purchasers (students) do not choose what to buy: they have it dictated to them by professors who do not bear any costs (and in many cases in fact profit from the sales of their own textbooks). I predict that until the basic contract between student, professor and university is altered, we will continue to see a market in something like its current configuration, with the newcomers nibbling at the margins.

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