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Auditor Genji Fujimori-Smith asked:

Why has Peason, a London-based company, dominated the US higher education market for textbooks and course materials?

If you’ve ever set foot in an American classroom, there’s a good chance you’ve used a Pearson product.

Maybe it was a textbook you sifted through for your math class. Or maybe you passed one of its standardized tests.

The London-based conglomerate, which started out as a construction company, has grown into an educational powerhouse in the nearly 180 years since its inception, creating a range of products used from kindergarten through college.

Its success is the culmination of a series of acquisitions, timely timing, transactions and investments in education technology.

“The best way to think of Pearson is as a buyout company operating in the public market,” said Joe Esposito, senior partner at Clarke & Esposito, a management consulting firm.

Two key agreements helped establish the company’s place in higher education: First, the 1988 acquisition of US textbook publisher Addison-Wesley, “America’s sixth-largest publisher of academic textbooks. At the time, according to the Los Angeles Times.

Then, in 1998, it acquired Prentice Hall, the educational publishing arm of Simon & Schuster and the world’s largest publisher of higher education.

Pearson Education was officially launched that year.

Pearson’s Rise

Pearson’s “first-mover advantage” in learning applications has helped increase the company’s market share in the industry, said Tim Bozik, president of higher education for the company.

Bozik explained that in the 2000s, first-generation learning software emerged. Then, in 2008, during the Great Recession, Bozik said college enrollment started to increase, especially at community colleges, and online learning in the for-profit sector gained popularity.

“You have more students for whom the software aspects become more valuable to educators and institutions. So you have a real acceleration in demand, ”said Bozik.

Some of Pearson Education’s earlier products included MyLab Math, which launched in 2001 and provided online homework and testing, and gave students the ability to individualize their study plans.

America is moving away from educational publishing

Esposito said Pearson’s importance is not unusual because many, if not most, US publishers are owned by foreign entities.

He said that in college publishing, for example, you have Elsevier, a company based in the Netherlands, as well as the German company Macmillan and the UK company Taylor & Francis.

“Most of the US capital has moved from publishing to larger growth industries (eg Silicon Valley, medical technology, commercialized space travel),” Esposito said. “To put it bluntly, the US market has outsourced academic publishing and other categories of publishing to low cost economies, just as it has outsourced manufacturing to Asia.”

In contrast, he said, Europe welcomes “the modest returns from publishing in part because they have failed in the higher growth categories.”

Expand reach and criticism

In the mid-2010s, five textbook companies controlled 80% of the U.S. textbook market, said Cailyn Nagle, head of open educational resources at the Michelson 20MM Foundation, a nonprofit that aims to make education more accessible. and affordable. Pearson, Cengage and McGraw Hill, with Pearson controlling the largest share of the market.

Michael Field, senior equity analyst at Morningstar, said Pearson has a few competitive advantages: its intangibles – the ability to generate content for its learning materials and standardized tests – and the fact that it would be expensive for them. schools to switch to programs other than Pearson.

For example, he said, Pearson advises universities and helps them create their online degree programs. Some of these institutions include schools such as George Washington University and the State of Arizona.

Field said this highlights “the integrated nature of Pearson in these education systems.”

And this disproportionate influence drew criticism. In a 2015 investigative article for Politico, journalist Stephanie Simon wrote that a review of Pearson’s “government contracts and government grants, including at least $ 98.5 million in tax credits from six states , has been paid to Pearson even when the company cannot show its products and services producing academic gains.

“We’ve been through a whole lot of stuff – online education, core curriculum. And every step of the way, big companies like Pearson have been there and have been able to create products and services that meet those needs and sell them very effectively, ”Simon told Marketplace host Kai Ryssdal, in an interview.

Pearson executives said “they are still working on deals that benefit not only the company but its public sector partners – and most importantly, the millions of students who use Pearson products on a daily basis,” Simon wrote. .

As we moved into the digital age, businesses have also come under fire for the data they’ve accumulated on their users, including Pearson.

“Students should be able to know how their information is being used, what it is for, and I think they should be able to opt out,” said Nagle of Michelson 20MM.

Responding to concerns about data privacy, Bozik said, “Pearson holds both high regard and high standards when it comes to data privacy. Applying the data we take is part of learning. Data can help us shape products that benefit more people, but with full respect for PII [personal identifiable information] along the way.”

Student affordability

Alan Spearot, director of the economics department at the University of California at Santa Cruz, conducted an informal survey of other professors about the materials they used, and found that about half of those surveyed used materials. Pearson products.

“Pearson has a very good relationship with economists who write attractive textbooks for our instructors,” said Spearot. He added that the company also provides pre-prepared lesson slides, which professors in the department say are useful for planning their own lesson slides.

However, Spearot said some don’t even use textbooks for a variety of reasons, including helping students save money. Spearot said he used a mix of research articles and published case studies instead.

Another criticism that textbook companies have received is the cost of these materials. Textbook costs increased 88% between 2006 and 2016, according to a report from the Bureau of Labor Statistics.

To tackle the issue of accessibility and affordability, Nagle said she hopes open educational resources will expand.

“There is a growing movement of educators, institutions and authors who, since the early 2000s, began to write and publish their educational materials under an open copyright license,” he said. she said, adding that faculty members can adapt them to their classrooms.

Pearson’s Bozik said the company is tackling the high cost of books with “an affordable access model,” its recently launched subscription service called Pearson +, with monthly options of $ 9.99 and 14.99. $. (There is also a minimum four-month commitment.)

The average price for a new textbook was $ 84 in 2020, according to EducationData.org.