K-12 Publishing, Ed-Tech Markets Seeing Sales Increases

Sales increases highlighted in two recent reports

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The K-12 publishing and ed-tech industries are experiencing a jump in sales as an improving economy, schools' greater reliance on digital resources, and new materials for the Common Core State Standards translate into revenue boosts for many K-12 businesses, according to a pair of recent industry reports.

One indicator of robust sales comes from an Association of American Publishers' analysis, which found that actual, not estimated, sales of print and digital instructional materials in schools grew 7 percent from January through October 2013, compared with the same period in the previous year.

Overall, the market for K-12 instructional resources is $9 billion, according to Jay Diskey, the executive director of the pre-K-12 learning group for the association. His organization tracks monthly sales of K-12 educational publishers. It recorded a 25 percent spike in sales in September, followed by a 9 percent increase in October, over the previous year for the same months, Mr. Diskey said. The organization has been collecting the information since the 1970s.

"We haven't been in the 7 percent [growth] territory since 2005," Mr. Diskey said during a webinar arranged by the Copyright Clearance Center, a Danvers, Mass.-based organization which describes itself as a global-rights broker for the licensing of content. "It's been eight years of pretty much a drought."

Indeed, recent years have seen hardly a droplet of sales advancement. In 2010, shortly after the official end of the nation's recession, sales of instructional materials crept up about 1 percent. But they plunged 12 percent in 2011, and fell 15 percent in 2012, according to the association.

'The Bigger Story'

In the meantime, educational software and digital content sold into the pre-K-12 market accounted for $7.97 billion in company revenues in 2011-12, a 2.7 percent increase from the year before, according to results of a survey released in January by the education division of the Washington-based Software & Information Industry Association, or SIIA.

Where Is the Money Going?

A recent report by the Software & Information Industry Association shows significant increases in school purchases of digital content and technology-based instructional support, but a decrease in the platform and administration category.

Even with statistics based on district spending from two years ago, when school budgets were still reflecting the challenges wrought by the recession as property taxes had yet to rebound, growth was recorded by the SIIA report.

"The bigger story is that the economy has turned around. There will be more money available. In some states, it will be the second year in a row that funding will be available," said Michael P. Griffith, a school finance analyst for the Education Commission of the States, a Denver-based organization that advises state policymakers.

Instructional Support Boom

The SIIA study found that the highest ed-tech growth area was instructional support, recording a 30 percent increase generated mostly by the revenues reported in the testing and assessment category. This area is likely to be a driver of growth for the foreseeable future, experts said.

"We could see another boom in tech spending, as schools are moving tests to electronic [test administration] and away from paper exams," said Mr. Griffith. Two types of testing are fueling this shift: the move to assessments based on the common-core standards, and the introduction of new assessments in the classroom to give teachers real-time feedback about their students' progress.

On a recent visit to Illinois, for instance, Mr. Griffith heard concerns about where the funding would come from to keep up with demand for computer-based testing, particularly in poor districts. Illinois is one of the states that has chosen to be part of the Partnership for Assessment of Readiness for College and Careers, one of two consortia developing common-core tests. Field tests will be administered online in spring 2014; operational tests will be conducted in spring 2015.

"We might see states decide to make line items in their upcoming budgets to cover the [technology] costs for local districts," said Mr. Griffith, noting that it's difficult to keep tabs on states' technology spending because states usually don't receive detailed reports about how districts invest in that area.

Even in the state of Virginia, which did not adopt the common core and has been conducting online testing since 2000, there's been a flood of interest from the ed-tech industry. The catalyst is the Virginia e-Learning Backpack Initiative, launched in 2013, in which every 9th grade student attending a public school that is not fully accredited in fiscal year 2014 will receive a tablet computer, digital content, and computer applications. Eligible schools receive $400 per 9th grade student to purchase a tablet computer, with additional funding for content creation tools for teachers, according to Tammy M. McGraw, the director of digital innovations and outreach for the state department of education.

When the initiative was announced, Ms. McGraw was inundated with requests from companies asking to present at the event in Virginia last summer, where school leaders could learn about the technology and software available to them. Ultimately, her department decided to offer information from manufacturers of the three operating systems, then directed digital content providers to contact Apple, Google, or Microsoft if they wanted to be part of the program.

"It was the only fair way we could figure out to do this," she said.

Gaining Traction

While digital content providers are scrambling to serve students in Virginia and elsewhere, they are gaining traction, with nearly a 20 percent increase in content revenue, according to the SIIA's "2013 U.S. Education Technology Market: PreK-12" report.

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"Those curriculum materials are the focus of a lot of the evolution in schools," explained Karen Billings, the vice president of the association's education division. Providing materials aligned with the common core provides a significant amount of the momentum in producing digital content, as well as moving instructional materials from print to digital delivery.

In the subject area breakdown of content, revenue increases registered in every area except reading/English language arts, which did not grow—but remained at the highest level of revenues among all subject areas. Science and social studies grew more, year over year, than math. A category called "other" increased primarily from revenues in digital resources for special education, which grew almost 80 percent, and online courses, which increased 200 percent.

Brian Lewis, the CEO of the International Society for Technology in Education, a Washington-based association for educators and education leaders dedicated to innovative and effective uses of technology in pre-K-12 and teacher education, said that the fast evolution of technology and its adoption in the K-12 marketplace is "both the blessing and the curse of what everyone's trying to accomplish for their kids."

He offered a cautionary note to schools investing in such change: "Make sure the timeline and funding provide for the planning and professional development that will increase the odds of successful implementation."

Vol. 33, Issue 18, Page 9

Published in Print: January 22, 2014, as K-12 Publishing, Ed-Tech Markets Experiencing Rising Revenues
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