Digital Textbook Startup Kno Was Sold For $15 Million

Nate the greatest writes "Intel didn't mention how much they paid for digital textbook startup Kno when they announced the acquisition last week but inside sources are now saying that the digital textbook startup was picked up for a song. GigaOm reported earlier today that their sources told them that Kno sold effectively for pennies on the dollar: 'Well placed sources who were in the know told us that the company sold for $15 million with some retention bonuses for the employees. Intel bought the company mostly for its hardware-related intellectual property and the employees. Intel also was one of the largest investors in the company — having pumped in $20 million via its Intel Capital arm.' Kno had raised $73 million in venture capital since it was founded 4 years ago, and it picked up another $20 million in debt. This deal was nothing less than a fire sale, and that does not bode well for the digital textbook market or other startups in this niche. Inkling, for example, just raised $20 million dollars this summer in order to compete in a market that where one of their competitors failed."

Once bitten, twice shy

[water-and-sewer]

This doesn't bode well for the electronic textbook industry, and it's their own damned fault.

In theory, I'd personally love digital textbooks. Searchable, I could carry them all with my on an appropriate gadget or gadgets the way I can access my Barnes&Noble books either on my Nook or my Nexus 7 on a Nook app, etc. I didn't think I'd like ebooks since I like the paper versions so much, but over the past two years I've actually come around to the idea and now like it very much.

But look at the history of textbook selling. Over the past twenty years they've gone to desperate measures to destroy the resale value of books that are otherwise perfectly resellable, via once-only mandatory digital downloads, problem sets that are only on line and that expire, and tricks like that. That is an unholy annoyance to any person with a sense of dignity, and it's all to inflate profits for publishers that want to sell a physics 101 textbook for $100, and then sell it again a year later regardless of how little the content has changed.

So if this is the "company" you're doing business with, why would any rational consumer be stupid enough to accept going to a digital format? If that's the way you do business you can guarantee it will be DRMed out the whazoo, be untransferrable to other devices, expire/disappear if they can make it happen, and all that other funny business. And that industry would LOVE to sell you the digital version for the same $100 they sold the paper version.

I'm glad to see the digital textbook business die at the moment, but every failed attempt is another nail in the coffin for these rapacious publishers intent on surviving by screwing over the consumer. Once they've crashed and burned, the market will be ripe for a more honest textbook seller interested in a different business model. The sharks on the market now? They can all go piss off.

Never under estimate the power of "a free an unfettered marketplace" to encourage rapacious companies to live well by screwing the consumer.