January 15, 2020
Cengage, known as the ‘Netflix for Textbooks,’ is offering a cheaper digital subscription price to students. The flat $69.99 per semester rate gives college students unlimited access to more than 22,000 e-books.
Cengage CEO Michael Hansen told Cheddar on Tuesday that while his company has long offered an all-inclusive $120 subscription that included features like homework solutions, not every student needed those perks.
“We heard students tell us ‘We don’t need the digital platforms, the homework solutions, plus we might be in courses that don’t have homework,’” Hansen said. “We’re offering a cheaper option. All-you-can-eat for $70 a semester, which is really addressing the affordability issue.”
Affordability is the primary reason why Cengage has already signed up more than 2 million subscribers to its platform. According to The College Board, the average student spends more than $1,200 on books and materials over the course of a year.
“That’s a significant amount of money for a lot of students,” Hansen said.
Cengage says the textbook industry pushed prices for its materials so high, that students became desperate to find another solution. Hansen admitted that his company had played a role in perpetuating that broken marketplace.
“I think the industry brought it onto themselves and we were part of the problem. We decided we didn’t want to be part of the problem, but part of the solution,” Hansen said.
This new offer comes at a time when Cengage is attempting to complete its merger with textbook giant McGraw-Hill, a move that has prompted concern from students about further consolidation in the industry which could lead to higher prices. The Department of Justice is expected to approve the deal valued at $5 billion.
Should the merger go through, Cengage says it will not raise costs for students, but instead help expand affordability initiatives present at both companies.
“Textbook prices came to a level that a lot of students were basically so unhappy with,” Hansen said. “We are offering a very compelling way around that.”