Is education the future of e-books? Rovia, a digital rights management and online distribution company, is betting on it. The company's cofounder and CEO, Andres Nannetti, pointed to Forrester Research's projection that e-books will account for one-quarter of all textbooks sold by 2005, producing sales revenue of more than $3 billion.
"There is a lot of noise about e-books and e-publishing, but the bottom line is there hasn't been a lot of results anyone can point to," said Nannetti. "It will happen first in textbooks." Nannetti and another MIT graduate, Pedro Zayas, founded Rovia in January 2000 to sell the proprietary software they created to secure copyrighted material online. Rovia Secure Protocol protects publishers' rights while allowing them to offer exact reproductions of their print books on the Web.
"Most companies tie downloaded copies to a single computer, but our technology allows access to information on any computer," said Nannetti. "When you're downloading an entire copy of a book onto a machine, then the student has all the time in the world to crack that security."
Rovia protects publishers from the "napsterization" of their content by disabling tools that allow for circumvention of copyright protections. By storing digital books on the Web, rather than on users' computers, students are prevented from accessing copies that are cached on their hard drive and from printing pages without publishers' permission.
The company has developed a business model that relies on e-book rental rather than purchase. "Think of it as buying a license to intellectual property," said Nannetti. "In the textbook market, most students are, in essence, renting," he added. "They buy a book and sell it back at the end of the semester."
By renting access to their materials, Nannetti said, publishers can prevent the losses they usually incur from recycled books as well as offer their content at lower prices. Publishers can rent entire books or individual chapters by the day, week or semester. A printed book that costs $100 can be rented online for as little as $50, while profit margins are maintained.
In January, the company announced contracts with Thomson and Houghton Mifflin and is pursuing deals with other major education publishers. Rovia has 20 titles available, and plans to have 150 by this fall, and more than 250 by the end of the year. The company offers introductory-level textbooks in such subjects as economics, political science, computers and business, and plans to branch out into other areas. Rovia negotiates the percentage of revenue shared with individual publishers. "They get the lion's share," said Nannetti.
Rovia turns PDF files into online textbooks in 10 to 15 business days. Publishers can sell access to their digital books from their own Web sites. Besides publishers, Rovia works with online booksellers ("the goal for Rovia is not to be a bookstore," said Nanetti) and course management systems to offer its versions of e-books. Rovia also provides publishers with figures on which sections of their textbooks are being accessed, helping them make decisions on updates. Rovia has developed its own e-book reader, called RovReader, which allows publishers to integrate print content with interactive features such as quizzes, flashcards, slides and CD-ROMs. Professors and students can also customize content by highlighting, bookmarking and annotating text. Currently only Microsoft operating systems support RovReader, but the company plans to integrate its software with Macintosh and Unix platforms by the year's end and to move into the handheld arena in the near future.
Rovia is a private company headquartered in Boston, with 30 employees. Rovia's first round of financing was led by the Cambridge, Mass.—based venture capital fund YankeeTek Ventures. Rovia is building its second round of financing, and looks to break even in fall 2002.
