School and university textbooks are to be turned into non-fungible tokens (NFTs) as part of education publisher FTSE 100 Pearson’s plans to secure a share of the lucrative second-hand book market.
Chief executive Andy Bird said blockchain technology would allow Pearson to place unique traceable codes in its digital books, allowing the company to take a cut of any resale by a student or college.
Mr Bird said: “In the analogue world, a Pearson textbook would be resold up to seven times. We were only involved in the first sale, and that created what is known as the secondary market.
“Going digital helps us reduce the secondary market, and technologies like blockchain and NFTs allow us to participate in every sale of that particular item throughout its life.”
NFTs are an offshoot of crypto-currencies that allow a unique code to be assigned to digital items. The idea is to prevent duplication and track ownership.
NFTs have primarily been applied in the art world and have exploded in popularity during the pandemic. However, NFT trading has fallen sharply in recent months. According to a report from Chainalysis, a crypto research firm, NFT sales totaled just over $1 billion in June, after peaking at $12.6 billion in January.
Pearson makes academic guides for secondary and university students in the UK and US, as well as textbooks for learning English. Using blockchain technology to track the resale and trade of its guides should allow it to demand payment every time it changes hands.
The plans for NFT books are Pearson’s latest attempt to reinvent itself as its traditional print business stutters. The escalating cost of college textbooks has forced Pearson to cede market share to the used book market, where students can purchase college titles more cheaply. Prior to Mr Bird’s arrival, Pearson had suffered six profit warnings in seven years.
Mr Bird is trying to transition Pearson to a digital publisher and last year launched the student subscription app, Pearson+. The app offers 1,500 titles for $14.99 per month with the goal of forging relationships directly with students rather than colleges and universities.
Shares of Pearson rose 12% to 845p on Monday after announcing that it expects to hit its margin target earlier than expected.
Half-year revenue rose 12% to £1.8bn and pre-tax profit climbed 14% to £179m, helped by cost cutting and growth at Pearson+.
Asked if the cost of living crisis will impact Pearson’s performance, chief financial officer Sally Johnson said: “We are a very diverse learning company, so there will be some give and take in the portfolio, I’m sure.
“We’re also seeing massive salary inflation and the employee package that people now expect is not just about the salary you get but the other things you get from your employer. One of those things is learning, which can make the difference between one company and another.”
Pearson rejected an offer of 870p per share from US buyout fund Apollo in March. The FTSE 100 group is valued at £6.1 billion.