Kno’s business model is making software and tools for students to buy and edit e-textbooks in an learning environment. The company is focused on shared technology that allows students to save on money and allow a tremendous amount of freedom in crafting their textbooks in the digital classroom. They also sell e-textbooks and publisher Cengage Learning accounts for over 25% of sales. Today Kno is suing the company for breach of contract because the publisher wants to pull out.
The reason why Cengage Learning is pulling out is because of new technology Kno has employed called “Journal,” that allows students to export text from textbooks with highlights and annotations. Cengage is claiming that the ability to augment the textbook and export text violates the initial agreement and has given Kno 30 days to rectify the matter. Kno in compliance was developing a solution to appease one of its largest partners with a Journal-free solution for its content, but Cengage terminated the license agreement after 30 days nonetheless. Now Kno is suing Cengage for doing so — while continuing to sell its books on the Kno platform.
According to the court filing attained by Mashable Kno said “Kno would not be able to replace Cengage’s unique textbook collection by contracting with another textbook provider. Student-users must buy the books assigned by their teachers or professors. To the extent those teachers and professors assign Cengage’s titles, there is no substitute for the student-user or Kno.”
This entire situation is indictive to the precarious circumstances facing start up companies trying to capitalize on the digital textbook market. Cengage currently has agreements with Coursesmart, Chegg and Cafescribe for similar ventures. If a publisher can breach a contract at anytime due to the enhancement and refining of current technology or meeting the needs of the majority of students it could signal game over for the company. These companies all rely on their major publishing partners for the actual textbook content while they spend millions of dollars on infrastructure and custom programming to sway students tot their platform. If companies can pull their wares at anytime it does not bode well for the fledgling industry.
We will be watching the court case with extreme vigor as this is fairly important.