• October 30, 2014

Rise of Online Booksellers Brings Complaints From Campus Bookstores

Arrival of an Online Bookseller Often Brings Complaints From Campus Bookstores 1

The Chegg bus arrives with energy drinks and T-shirts for students but headaches for college-bookstore managers.

When the orange Chegg bus rolls onto a campus, one person is unlikely to be excited about its free swag and energy drinks: the college-bookstore manager.

The rise of online textbook retailers such as Chegg, Amazon, and Half.com, has put official college and university bookstores on the defensive. Once the default source of course materials, campus bookstores run by Barnes & Noble and Follett are responding to the pressure by cracking down on competitors’ on-campus advertising, which bookstores contend violates their exclusivity contracts with colleges.

Chegg is a nine-year-old company that offers textbook rentals and sales, along with tutoring and career services. It has irked campus officials and bookstore managers with its marketing techniques, which include recruiting students as brand ambassadors, slipping free Red Bull and Starbucks products into book-delivery packages, and buying back books on the campus, often for more money than the bookstore offers.

The company has received dozens of cease-and-desist letters, according to its president, Dan Rosensweig, but it has no plans to scale back its efforts.

"There’s no legal basis for it, and we’ve never been sued," Mr. Rosensweig said. The aggressive tactics have helped bring rapid growth to the company, which couches its arguments in populist terms. "Everything we can be doing to help kids save money and time, we should," Chegg’s chief executive argued. "The school should not be working against the interest of the student financially."

Southern Connecticut State University is the latest battleground in the textbook turf war. The university has an exclusive contract with Barnes & Noble College Booksellers that gives the campus bookstore sole rights to buy and sell course materials on the campus and in the surrounding 10 blocks. On August 29 a university official sent a cease-and-desist letter ordering Chegg to stop soliciting on the campus. The request came in response to a report by the bookstore manager that individuals, possibly students hired by Chegg, were violating the contract by distributing fliers advertising the company in academic buildings.

Chegg’s general counsel, Robert Chesnut, contended that those students were not marketing Chegg’s textbook services but were most likely promoting Chegg Deals, a coupon book that offers student discounts at local restaurants and shops.

"If there were 100 coupons in the book, at most one would be a textbook coupon," Mr. Chesnut said. "There’s no one on that campus working for Chegg who’s out trying to promote Chegg textbooks."

Regardless of what they were distributing, said James E. Blake, executive vice president at Southern Connecticut State, academic buildings are not appropriate places for solicitation.

"The university has a policy against this type of activity in our buildings because it can be disruptive," he said, noting that any individual or business is welcome to advertise on public bulletin boards in other locations.

Covering Logos With Masking Tape

Cease-and-desist letters are not the only form of pushback against Chegg.

On some campuses, college officials have asked Chegg to cover over the logo on its bus while it is parked nearby, said Mr. Chesnut. "Chegg may send reps out on or near campuses with cash to buy books … and we had to take masking tape and cover Chegg’s logo on the table."

Mr. Rosensweig said he had heard from students whose universities actively discourage them from renting books from Chegg. The company took to social media to highlight one recent example: On July 17, George Washington University faculty members received an email from the university instructing them not to endorse online textbook retailers, citing the institution’s exclusive contract with its Follett campus bookstore. When professors objected, the university backpedaled. A new email, sent on August 11, expressed support for helping students explore cost-cutting options.

Mr. Blake said Southern Connecticut State does not have a policy discouraging faculty members from sharing information about textbook options, and he noted he had overheard campus tour guides tell prospective students about online textbook companies. Sara Johnson, an assistant professor of nursing who served on the university’s bookstore-vendor selection committee, said she also had not felt pressure to steer students to the campus bookstore.

"No one has come to me and said, You have to tell the students they have to buy the books at Barnes & Noble," Ms. Johnson said. "If they have the book, we have no vested interest in where they buy them from."

Mr. Rosensweig and Mr. Chesnut asserted that exclusive bookstore contracts don’t serve students’ interests but benefit colleges and universities by generating revenue. The commission Barnes & Noble pays Southern Connecticut State each year varies depending on sales, but the university is guaranteed at least $600,000. On top of that, the company provides $26,000 each year to support textbook scholarships, a lecture series, and a golf classic.

But when considering a contract bid, Mr. Blake said, the university gives priority to the needs of the store’s potential customers: professors and students. "At the end of the day, that’s the most important part of the proposal," he said. "There are assurances that the books faculty require are available, and a book-buyback policy that’s fair to the students."

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