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Are College Professor-Authors being cheated out of Royalties on their Textbooks?

The Brave New World of College Textbook Distribution

There is no doubt that the cost of traditional-form college textbooks has gotten out of hand. That is why secondary markets are flourishing. College textbook prices are 812 percent higher than they were a little more than three decades ago, the American Enterprise Institute, a think tank, reports. Textbook costs have well outpaced the 559 percent increase in tuition and fees over roughly the same period. The National Association of College Stores (NACS) says the average college student will spend $655 on textbooks each year.

As an author of a college textbook I am sensitive to the cost issue and believe these costs should be reduced significantly. That is one reason why publishers have gone to e-books as a cheaper alternative. College kids are used to reading materials on line so it seems like a good solution.

In this blog I address another aspect of the issue, which is whether authors such as I are receiving our fair share of royalties on the sale of our books. Having researched this issue, I think intellectual property rights are being abused.

My textbook, Ethical Obligations and Decision Making in Accounting, is used in about 40 colleges and universities. The third edition was just published by McGraw-Hill. I met my classes for the first time last week and discovered there was an ‘international version’ of the book. I looked at a copy one student had purchased and it had a different cover than the McGraw-Hill USA book; a different ISBN; and the paper was of a lower quality.

How could this happen, I thought. I contacted McGraw-Hill and was told there is no international version. I investigated further and not only found the site on which she bought the international version, but other sites selling it as well. In fact, a Google search identified sellers of the international version including eBay that included the statement under the true cover: “This image is for reference. We sell an international edition.”

Upon questioning, McGraw-Hill USA admitted it knew nothing about it. They would get back to me. I found out there is a Tata McGraw-Hill India and figure it is the source of the international sales because the book was composed in India.

How ironic it is that an ethics textbook is sold in ways that are ethically questionable especially since there is no reason to believe the authors get paid the correct amount of royalties. My royalty statement does not show specific vendors. What makes it worse is there are dozens of secondary vendors of both the domestic and international versions.

We all know Amazon and Barnes & Noble sell our textbooks on line. But, what I didn’t know is there are at least a dozen links through the Amazon website to secondary sellers. There are even links to secondary sellers on the websites of secondary sellers. A prime example is that not only sells the book but links to what it calls the “Uber Marketplace” and another dozen or so sellers come up including the Amazon Marketplace. Do I receive any royalties from these sources, I wondered?

For years I’ve known that study guides for my text are sold on line and they weren’t developed by me. Cram101 seems to be one of the big vendors in this area. Is it ethical for a secondary seller to develop its own, unauthorized, study guide for a text and sell it on line in a way that might mislead students into thinking it is somehow instructor-sanctioned? Of course not because information originally developed by the author is being used in a way that the author did not sanction. It’s not as if the author (and publisher) found an academic to do a study guide.

It gets worse. I found both the Instructor’s Manual and Test Bank being sold online through Google Groups. The problem here is, of course, any instructor who chooses to take exams from the author’s test bank that is available on the publisher’s website does so at his or her peril.

Writing a textbook, especially for a small market, offers limited royalties to authors like myself given the amount of time and effort we put into developing the book. We do so because of a desire to make a contribution to our field and enhance student learning. My accounting ethics text was motivated by the desire to encourage future CPAs and other accounting professionals to think and decide from an ethical point of view; to develop the courage to withstand employer and client pressures to act unethically; and for students to examine their own personal behavior and strive to be better human beings.

We live in a society where the pursuit of self-interest overrides any other motivation to act such as from the moral point of view. My own experience with the sale of my accounting textbook leads me to believe it is the publishers that are responsible for what is happening with secondary markets and international versions. They are not building in internal controls to prevent it from happening. Perhaps they even look the other way because they might sell a large quantity of these books to other sellers, like Amazon, and collect the sales price on the front end. Then, it doesn’t matter what Amazon does with the book including sales through secondary markets and sales directly to other sellers. The publisher has gotten its revenue but has the author received his or her fair share?

The moral of this story is college textbook authors should be aware of all the different vendors selling their text and carefully assess whether they are receiving their fair share of royalties.

Blog posted by Steven Mintz, aka Ethics Sage, on January 21, 2014

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