Pirating levels worse than 'in our worst dreams', says Hansen

Cengage hopes to reap the benefit of its anti-counterfeiting work this autumn, its chief executive Michael Hansen has revealed.

The Higher Education company reported a 10% drop in annual revenue earlier this year (to $1.5bn) and a 20% drop in EBITDA (to £353m). It recently signed up Barnes & Noble and Ingram, among others, to its Anti-Counterfeit Best Practices (ACBP), an industry standard to combat counterfeit textbooks. It was developed by the Educational Publishers Enforcement Group (EPEG), comprising Cengage, McGraw-Hill Education, Elsevier and Pearson.

Hansen said piracy costs Cengage $70m–$100m a year, with the problem worsening after a 2013 US court ruled in favour of student Supap Kirtsaeng (against publisher Wiley), decreeing that cheaper international versions of textbooks could be imported into the US. Hansen said: “We formed EPEG to figure out how big the problem was... [and it] is a much bigger level of counterfeiting than we had imagined in our worst dreams - much higher. For Cengage it was a $70m–$100m impact on an annual basis. Given the size of our business, that is a significant impact.”

He believes ACBP will “have a significant impact... I hope we will start to see the results soon - as early as this fall.”

Speaking about the impact of the current political climate on trade, Hansen said he hadn’t noticed a negative effect, but instead sensed an opportunity for Higher Education publishers to help “close the gap between the rich and the poor, which drives so much of this volatility right now. Without upskilling, that gap is going to become a bigger problem every year. We can significantly contribute to the closing of that gap. Many people understand that investment in education, whether by individuals or the government, is a massive investment in the future. As a business we are well- positioned [to invest] and we feel passionate about doing this. For that reason, it is an opportunity.”