Nathan — I’m not at all worried that the creation of textbooks will lose its profitability. But I do agree that this could save students a decent amount of money.
College textbooks are a classic example of a third-party-payer problem: The professor decides what textbook students need, and students have to buy it, meaning that when a publisher jacks up the price, it doesn’t risk losing customers. (Personally, I would support folding textbook costs into tuition so that schools have a reason to pressure their staff to choose lower-priced books. Prices don’t serve their function in the marketplace if the person who pays them can’t jump to a competitor.)
The savings will come from the fact that bandwidth is cheaper than paper distribution. Look at this graphic: About half of new-textbook revenue goes to cover printing costs and college-bookstore expenses. Presumably, download services will take a smaller cut than that, and students will get at least some of the savings.
This does, however, open up the intriguing possibility of textbook piracy. I am a big fan of intellectual property — but it would be something of a comeuppance for textbook manufacturers to see their business implode after years of profiting from a market failure.