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September 2000, Week 3

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From:
LLTI-Editor <[log in to unmask]>
Reply To:
Language Learning and Technology International Information Forum <[log in to unmask]>
Date:
Thu, 21 Sep 2000 08:36:20 EDT
Content-Type:
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--- Forwarded Message from "Jill Cheng" <[log in to unmask]> ---

>Reply-To: <[log in to unmask]>
>From: "Jill Cheng" <[log in to unmask]>
>To: <[log in to unmask]>
>Cc: <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]>,        <[log in to unmask]>
>Subject: Cheng & Tsui Pricing
>Date: Wed, 20 Sep 2000 14:36:37 -0400
>Importance: Normal


Dear Ms. Shoaf:

Professor Yao, one of the primary authors of the Integrated Chinese series,
was kind enough to forward your e mails regarding our audiotape pricing, as
he knows very well that we take customer feedback very seriously.

I appreciate the difficulty you have with our charging for audio-visual aids
for our language materials, as we know that many major publishers offer them
for free.  We have long struggled with this issue, speaking with many
language lab directors and attending the New England LLTI conference, trying
to come up with some equitable solutions to our dilemma.  The pricing we
have developed is based on such consultations and research, not based on
whim, although it continues to be a work in progress.

When we first started many years ago in dealing with audio-visual aids of
overseas products we distributed, all of the materials had to be purchased
at rather high prices--especially those coming from Japan.  We were told by
the mostly Asian publishers that they offer no duplication privileges or
discounts for volume purchases.  If a school wanted to put the tapes on ten
workstations, it needed to purchase ten units; if a school had 100 students
with no language lab, it had to buy the 100 sets to give away or have the
students pay for them, as no duplicating was allowed.  Again, no discount or
lab packs were offered.  Digitization or web server permissions were out of
the question.

Later, when we started publishing original audio-visual products, we wanted
to be more generous than our foreign counterparts, as we have always sought
to strike a balance between our customers' needs and our own requirements to
be a financially healthy company that can continue our mission of "bringing
Asia to the world."   So we looked into what other American publishers did
in this area.  First, we learned that major publishers of Spanish and French
language textbooks often gave these materials to language labs for free if
the books were adopted by the schools.  The sales volume of those languages
are huge and in a different league from ours.  Second, we learned that the
reason they could give them away without charge was that they charged much
higher prices for the textbooks to cover all the free giveaways.  Third, we
learned that no publisher in our specialized category of Asian or
less-commonly-taught language materials ever gave audiovisual products for
free.  Nearly all, in fact, followed exactly the same rules as our foreign
publisher counterparts--no discounts or site licenses even for large class
adoptions. Many charged higher unit prices than we do as well.

On the basis of all this research, we had two clear paths from which to
pick:  One, we could raise our textbook prices significantly higher to cover
all the free giveaways, and at the same time make a lot more money for us
and our authors since sales of audio-visual aids are usually so small that
they are money losers anyway.  Or, two, we could follow the majority of
small, specialized publishers and give no discounts, site licenses,
digitization or web server permissions at all and save us the heavy
adminstrative burden of issuing permissions and make more money from
full-price sales of all these auxiliary products.  Perhaps foolishly,
however, we chose a third and middle way:  We chose, first, to help the
students by keeping our textbooks reasonably priced relative to our costs;
it also meant that we had a much lower profit margin.  Second, we chose to
be more accomodating and supportive of the schools and developed a
sliding-scale model that offered significant savings to language labs rather
than to charge them full price for each unit purchased.  These formulas were
derived many years ago after consultation with labs of different sizes and
needs and have generally been accepted by them.  My staff is quite unhappy
about the extra work this entails but supported the rationale behind it
all--to be responsive to our customers' needs as best we can.

Exactly two years ago, I was invited by the New England Language Learning
and Technology International to represent the small publishers at a regional
conference on permissions for digitizing audio-video materials by
publishers.  (I was invited subsequently to speak at the international
conference but had to cancel at the last minute because of my mother's
illness.) Most publishers, large and small, were unwilling to allow
digitization at that time, as there were many concerns about copyright and
copying. The subject of lab directors' frustration with all the different
policies publishers had with tape duplication, site licensing, digitization,
etc. also came up.  This was in recognition of the fact that there is no
universal policy of free audio-visual materials from publishers or
permission to digitize. After I stood up to explain the small-market
publishers' predicament--that we simply do not have the sales volume to
allow such generous giveaways, nor do we wish to impose higher costs on
students if we were to institute such free giveaway programs by raising
textbook prices--many in the audience came up to me during our break to
express their new-found understanding and support of our situation and
philosophy.

More to your point, however, after receiving your e mail, I updated my
knowledge of the current status of pricing of audio-visual materials and
textbooks by other small commercial publishers and other larger
not-for-profit university presses in the U.S.  I thought it would interest
you to have a sampling of my survey, without my revealing the actual names
of the parties involved:

1)  A major university press publishes a series of beginning and
intermediate texts. In comparing an intermediate text with our Chinese
Breakthrough, a comparable-level book, we find:

University Press Title                                  Cheng & Tsui Title
Intermediate Chinese textbook                           Chinese Breakthrough
392 pages at $39.50                                     450 pages at $29.95
Macintosh CD-ROM at $42.50 (indiv)                      Macintosh CD-ROM at $49.95 (indiv)
30 users of CD-ROM at $1275.00 (no server)              Up to 30 users on server at
$174.83
90 users of CD-ROM at $3825.00 (no server)              Up to 90 users on server at
$274.73
Audio tapes not available, as not willing to do it              Audio tapes available
with privileges

Small Commercial Press Title                    Cheng & Tsui Title

Beginning Japanese textbook (top seller)                Integrated Chinese Level 1/1
Textbook
audiotapes (120 minutes) at $40.00              audiotapes ( 175  minutes) at $39.95
No digitizing/web allowed                       Digitizing/web permissions available
No discounts, no duplicating                    Heavily discounted license for duplication

These examples are typical of what I have learned.  In both cases, our
prices offer more value, and we offer greatly discounted pricing with
flexibility for duplication and digitizing in multi-user environments.
Educational publishers have known that audio-visual and multimedia materials
are money-losing products. In the case of the small commercial press above,
the publication of their entire series was funded by a major foundation; yet
their prices are higher than ours and policies inflexible.  As for the
not-for-profit university press above, they refused to publish and
distribute the audiotapes for all their Chinese language books because they
cannot make money from them.  When they published the CD-ROM, they had high
hopes for it.  In actuality, they found that multimedia products sell as
poorly as audiovisual aids and have just canceled plans that have been in
the works for quite a while to publish a CD-ROM for their successful
beginning Chinese textbooks.  Cheng & Tsui, on the other hand, is committed
to publishing accompanying multimedia products of quality that our authors
create, as we believe that these supplementary materials are essential tools
for effective language acquisition.  All this is to say that Cheng & Tsui is
not a typical bottom-line only publisher.  We believe in our mission; yet we
must have prudent policies to enable us to continue carrying out our
mission, especially since we have, to date, not had any foundation support
to help produce our publications.

In looking into the $1000 charge for digitizing to which you referred, I
learned that the total for $982.85 covered up to 90 users on the web for six
(6) books.  More clearly, my staff could have divided each book's tapes
charge separately as follows:
IC 1/1 Textbook tapes   (up to 90 users)        $219.73
IC 1/1 Workbook                  71.23
IC 1/2 Textbook                         164.73
IC 1/2 Workbook                   71.23
IC 2 Textbook                            384.73
IC 2 Workbook                            71.23

In comparison to the examples of other publishers' no duplicating and no
discount and no digitization rules, our prices are extremely cheap and
policies more accomodating. Separately, there are a few areas of
misunderstanding in your letter that are too specific to your case that I do
not wish to go into them here.  I would like to address them with you on the
phone after you have read this memo.

I hope that by putting all this into a context, you will appreciate why we
must charge for these materials, and that our fees are actually
significantly lower than what most other publishers in our specialized world
charge.

Recently, before your e mail reached us, however, we were already reviewing
our site license policies and wondering about the wisdom of our customized
"third way."  While we created it with the best of intentions, the "third
way" has led to misunderstanding and creates a heavy administrative load for
our staff.  Although nearly every one who learned more about the background
to our pricing rationale expressed support and understanding, we are now
seriously thinking of adopting the no duplicating, no discounts, no
digitization approach of our colleagues.

I look forward to hearing from you soon to discuss areas that I have not
covered in this letter.

With hope for your understanding,

Sincerely yours,

Jill Cheng
President
Cheng & Tsui Company
"Bringing Asia to the World"
25 West Street
Boston, MA 02111-1213 USA
Tel: 617-988-2401
Fax: 617-426-3669
www.cheng-tsui.com

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