What did you do this summer? Flat World Knowledge stayed busy on campus and now has 40 times as many students and more than 10 times the colleges using their freemium, open-source digital textbooks as they did spring semester. And they did it the old-fashioned way — one professor at a time.

After a sort of beta earlier this year, Flat World is set to announce Thursday that more than 40,000 college students at 400 colleges will use their digital, DRM-free textbooks fall semester, up from 1,000 in 30 colleges in the spring.

Digital textbooks remain a nascent business and a tough market to enter. At an average cost of $100, textbooks command the highest cover prices in publishing, outside of only some art and coffee-table books. Demand is artificially inelastic as students are indentured to cost servitude at the whim of college professors who blithely assign titles a student must own if she hopes to do well in a given course. Now, multiply that by four, five or even six courses a semester and you are talking big bucks.

By comparison, Flat World has a pricing scheme that starts at zero for online access using a browser, and $20 for a PDF, which they believe will be the most popular format. Printed versions of their textbooks cost up to $60.

Perhaps best of all: Textbooks are available a la carte, chapter by chapter.

But the key buy-in has been from teachers who make the assignments and who, in my college days, could not care less how much the textbooks cost. What's changed?

"There has been a mind shift," co-founder Eric Frank told Wired.com. A tipping point came a couple of years ago when faculty began to consider the financial burden on students because many of them (Frank estimates a third) didn't bother to get the texbook at all.

Perhaps more to the point, open-source textbooks — which are Creative Commons-licensed to allow unencumbered non-commercial use — make it possible to graft supporting material to the curriculum, rather than the other way around.

"Faculty are notorious for wanting to do things their way," said Frank. "But they always had to cut the foot to fit the shoe. Now, with open source, they can cut the shoe to fit the foot."

There is virtually no friction involved. A professor can register on Flat World's site and let students know that the book is available there. No cooperation from a school district or college administration is required.

"Every single class is a fiefdom, and they are kings and queens of their domain," Frank jokes.

Like any freemium retailer, Flat World depends on enough people buying something, because clearly the business cannot be sustained if everyone just opts for free web access. "What we're counting on is that people will be willing to pay for different packaging." (Frank proudly notes his company is on page 160 (.pdf) of Wired magazine editor in chief Chris Anderson's Free.)

And it will come down to the price points, Frank acknowledges, even when the company develops formats for the Sony e-book reader and Amazon Kindle, as they hope to this year. It makes as much sense to equip students with a device that makes all their reference materials available on demand as to offer a casual reader a complete portable library — perhaps more. This is a classic chicken-and-egg scenario in which a device-dependent culture needs to evolve alongside new content formats.

For this and a variety of other reasons, including the cost of e-readers and for the media they serve up, Frank thinks the PDF will remain the format of choice for students for some time to come (and the ubiquitous and DRM-free Portable Document Format is readable on the Sony and Amazon devices, anyway).

"They'll move forward," Frank says of device-specific e-reader formats. "But there is so much irrational pricing right now that they'll move forward much more slowly than they probably should."

For now, expect a PDF revolution. And what better back-to-school present can you think of for 40,000 hard-up college students in the midst of a recession?

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