At one point, Howe asks Christensen to name some industries that are “either in a state of disruptive crisis or will be soon,” and the professor says:

“Journalism, certainly, and publishing broadly. Anything supported by advertising. That all of this is being disrupted is now beyond question. And then I think higher education is just on the edge of the crevasse. Generally, universities are doing very well financially, so they don’t feel from the data that their world is going to collapse. But I think even five years from now these enterprises are going to be in real trouble.”

Christensen recently co-wrote a study for Nieman Reports entitled “Breaking News,” which focused on the media industry and the disruption< that is going on there. He also described some of his thinking about what has happened to the newspaper and traditional media business in an interview with the Nieman Journalism Lab — in which he said that many newspapers were lulled into a false sense of security and then “very quickly, all of a sudden, you go off the cliff.”

When it comes to education, Christensen said that the availability of fairly high-quality online learning would be the disruptive force because “it will take root in its simplest applications, then just get better and better.”

“You know, Harvard Business School doesn’t teach accounting anymore, because there’s a guy out of BYU whose online accounting course is so good. He is extraordinary, and our accounting faculty, on average, is average. Some [universities] will survive. Most will evolve hybrid models, in which universities license some courses from an online provider like Coursera but then provide more-specialized courses in person.”

For more on the question of disruption in education, see the ongoing debate between media theorist and journalism professor Clay Shirky and Aaron Bady, a PhD student in African literature at the UC Berkeley. Shirky started it with a piece about the disruptive effect of “massively open online courses” from companies like Udacity, and Bady responded with a rebuttal, followed by a response from Shirky.

Image courtesy of Shutterstock / Don Skarpo

The Globe announced this week that is using $65,000 of reader vacation funds to buy 75 iPads for Boston Public Schools and Stoneham High School. The idea, according to Globe executive Saurer, is that “digital kids turn into digital adults” and that the iPad program will expose them to the paper’s content and knowledge from around the web.

“In the past, teachers would ask elementary school kids to cut out pictures from the paper — it was very tactile,” said Saurer by phone. He added that the advent of digital reading and the impractical economics of supplying paper and ink led the Globe to try the iPad program.

Saurer said the Globe will tweak the program going forward by, for instance, looking at whether the projectors are a good use of money or if more iPads are a better option.

Newspapers around the country run similar education programs funded by vacation subscriptions but Saurer believes the Globe and its sister paper, the Worcester Telegram & Gazette, are the first to provide school kids with devices. He said about a quarter of readers choose to donate their subscriptions.

Scardino will be replaced from January 1 by John Fallon, CEO of Pearson’s international education business, responsible for the company’s emerging-markets growth.

Liberum Capital analyst Ian Whittaker tells Bloomberg: “Marjorie Scardino was a big fan of the (FT) group, John Fallon has no emotional commitment.”

But that comment is a stretch to Bloomberg reporting the move “spurring speculation that the company may sell the Financial Times newspaper unit”.

It is Bloomberg which could be a bidder for any FT that might be for sale.

Genuinely sad to see our boss Marjorie Scardino go. I can honestly say she is the most inspiring person I’ve met in my business life.

— Steve Pinches (@sjpinches) October 3, 2012

@tartineaubeurre @tomjhall check your inbox- note from Marjorie is fabulously well written. bloomberg’s spin 100pc about chances of FT sale!

— Steve Pinches (@sjpinches) October 3, 2012

Michael Wolff in February reported pot-stirring dinner party chatter about a sale to Bloomberg or Thomson Reuters – then denied to paidContent by CEO John Ridding:

“My reaction was surprise. Pearson are very much committed to the FT. If you look back at the big moments in our history, that’s been clear.

“We’re plugged in to Pearson in an increasingly direct way. We see significant potential for the FT and Pearson through education.

“We are developing tools for professors and students to annotate FT articles. Case studies in business school books are pretty old but, every day, the FT front page is an interesting business case study.”

Bernstein Research analyst Claudio Aspesi today writes:

“Some of the items that will be part of the agenda of the new CEO should include … what to do with the remaining assets which are not directly supporting the growth of education (such as the FT Group and Penguin). This may lead to unlocking value hidden in those assets.

“We believe that continued focus on digital products in Education could be the key to unlocking a step change in valuation, such as reaching a £30 (share price) target by 2020.

“While most of the revenues should be relatively stable irrespective of changes in economic activity, the FT Group (and the FT newspaper in particular) is more sensitive to the cycle, and none of the businesses is fully insulated from a deep and lasting slow down of economic activity.”

The Financial Times has shown how it can successfully charge for digital business news content, but Pearson mostly delivers education content and services.

Speaking with journalists on Wednesday (via Guardian), Fallon described the FT as “valuable” but did not rule out a sell-off:

“I think the FT is a highly valued and very valuable part of Pearson. I think the Pearson strategy is very much the FT strategy.

“If you look at digital transformation of the FT over the last few years, that is leading the transformation of the digital publishing industry. My attitude to the FT is that it is a valued and valuable part of the company.”

Playfish co-founders Shukri Shammas and Sami Lababidi founded London-based Mindshapes together with David Begg, Chrisian Dorffer and Tareq Naqib in 2010 to make interactive education games for kids on multiple platforms.

Now it is taking money led by Index Ventures together with Richmond Park Partners and previous backers.

The company last took a $5 million first investment round in November 2011. It did not say why it is taking the second investment, six months later.

So far, Mindshapes has developed Magic Town, a virtual world that launched on web on May 16 and includes 70 stories from 15 children’s book publishers including Hachette, Simon & Schuster and Penguin. The service plans to launch on iOS this summer and include 200 stories by year’s end.

The outfit also wants to target elder users, with an upcoming learning game, Language City London, aimed at the 16-to-30 market.

“Users will also be able to buy access to premium chapters based on licensed entertainment brands,” according to the company.

USAID funded the Worldreader Ghana study and independent firm ILC Africa did the research. iREAD “involved the wireless distribution of over 32,000 local and international digital books using Kindle e-readers to 350 students and teachers at six pilot schools in Ghana’s Eastern Region between November 2010 and September 2011.”

The full results are here (PDF). Some findings:

• Kids learned to use e-readers quickly even though 43 percent of them had never used a computer before. Also, not surprisingly, they were quick to discover “the multimedia aspects of the e-reader, such as music and Internet features.” (Kindle has an experimental web browser and can play MP3s.) Worldreader is “exploring ways to limit functions on the e-reader such as music” so that kids don’t get distracted during class, but points out that e-readers can also be a useful “bridge” device for students who’d never used a computer before.
• Near-zero theft. Only two e-readers (out of 600) were lost in the whole study, partly because “community involvement was encouraged through e-reader pledges, community outreach programs, and support from community leaders.”
• Kids got access to way more books. Before the study, primary-school students (whose average age was 11) had access to an average of 3.6 books at home. Junior-high students (average age 13.5 years) had access to an average of 8.6 books at home and high-school students (average age 16.6 years) access to an average of 11 books (mostly textbooks they had to buy for school.) With the e-reader program, kids had access to an average of 107 books, including books Worldreader “pushed” onto the Kindles as well as free e-books that kids downloaded themselves.
• Primary school students’ test scores improved, but effects on older kids were less clear. The reading scores of primary-school students who received e-readers increased from 12.9 percent to 15.7 percent, depending on whether they got additional reading support. That was an improvement of 4.8 percent to 7.6 percent above the scores of kids in control classrooms without e-readers. But results for older kids were mixed: “Student reading was affected almost exclusively at the primary level, and not at the junior and senior levels. This conclusion supports external data that students are most affected by reading interventions at the primary school stages between the ages of 4 and 10.”
• Students sought out access to international news. “Amazon data revealed that students were downloading The New York Times, USA Today, and El País etc., demonstrating that students want to access a wide range of reading materials that were previously inaccessible.”
• Some teachers worried kids became too dependent on the e-readers.  ”For example, one teacher stated that students thought that everything on the e-reader was the ‘absolute truth.’ He had to correct them by  explaining that the e-books may contain mistakes just as paper books do. Teachers also observed that some students have started to favor classes that use the e-reader and neglect classes that do not.”
• Kids shared their e-readers with their families and friends. Students, even primary schoolers, got to take their e-readers home at night and many reported sharing the devices. Kids in the study had an average of five siblings, so “the e-reader’s reach potentially extended to many people beyond the device’s owner.” Some kids whose parents were illiterate read to their parents from their e-readers.
• Kindles break too easily. Worldreader had not predicted how many Kindles would break: 243 out of 600, or 40.5 percent. Each time an e-reader broke, Worldreader sent it back to Amazon to conduct “a post-mortem analysis.” Turns out “fragile screens are the main weakness” and Amazon is working on Kindles with reinforced screens (at the same cost), which started shipping to Ghana in October 2011. Plus Worldreader is providing more rugged cases for the Kindles and providing more instruction on how to use them (don’t sit on it, for instance).
• The program appears cost-effective. Worldreader estimates that “for the years 2014-2018, using a calculation focused strictly on the provisioning of textbooks, the e-reader system would cost only $8.93-$11.40 more per student over a 4 year period [$0.19 to $0.24 per month] than the traditional paper book system.” That calculation is made with the assumptions that e-reader prices will fall and e-readers will become more rugged (so they break less). And of course, e-readers give students access to many books, not just textbooks.

Apple announced this week that it is partnering with the three largest K-12 educational publishers to sell iPad textbooks. It will be entering an $8 billion industry where most of the funds are controlled by state governments and school districts, which can mean long and politically charged funding discussions. Unlike in the college market, startups in the K-12 market have struggled to gain venture capital. One reason, on top of the bureaucracy that companies have to deal with: the digital infrastructure in many K-12 schools is weak, with an average of three students for every device as well as more mundane problems like too few electrical outlets.

That said, there’s clearly some real opportunity: While many assume the K-12 market is largely controlled by the three big companies that Apple is partnering with, in fact, more than half of that $8 billion market isn’t. Here’s a look at some of the challenges and opportunities awaiting Apple.

How big is the K-12 education market?

The market is estimated at $8 billion. There are 50 million K-12 students in public schools in the U.S.

K-12 school publishing — including elementary and high school textbooks and other teaching materials — is the second-largest publishing category in the U.S. after trade. Net sales revenue was $5.5 billion in 2010, according to the Association of American Publishers. (K-12 publishing net sales revenue fell 12.4 percent between 2008 and 2009, but increased by 7.1 percent between 2009 and 2010. Overall, net sales revenue between 2008 and 2010 declined by 6.2 percent.)

How is the K-12 publishing market different from trade and higher-ed publishing?

The main difference is that state governments and school districts procure about 90 percent of the books. “It’s very much unlike the consumer market where we decide to go into Barnes & Noble (NYSE: BKS) and buy a book,” says Jay Diskey, executive director of the AAP’s school division. “A school district will decide it needs a new reading program for its elementary school students and will request proposals from publishers. If the state likes the proposal, the contract is negotiated.”

Publishers don’t always sell the books individually; a parent may not be able to buy a single textbook, for instance. The AAP notes the average net unit price of a K-12 title was $65 in 2010, but extensive pricing data is difficult to obtain because so many books are bought in bulk by state governments and school districts.

Textbook rental doesn’t yet factor into K-12 education the way it does in higher ed, although some private and parochial schools are trying it.

Who are the main textbook publishers?

The K-12 textbook market is often seen as being dominated by just a few big companies, but that’s not entirely accurate, says Diskey. It’s true that three companies–McGraw-Hill (NYSE: MHP), Pearson (NYSE: PSO) and Houghton Mifflin Harcourt, the same three companies that are partnering with Apple in its new digital textbook store — capture about 85 percent of the K-12 core textbook market, which is worth roughly $3.2 billion. (The rest of that core market is made up of books from niche publishers on subjects like foreign languages, art and music, and books for technical and vocational schools.)

With the whole market estimated at $8 billion, though, there is still about $5 billion up for grabs outside of core textbooks. That portion includes many players, publishers and technology companies. They publish supplemental materials like workbooks, encyclopedias, books for teachers and reference works, all in print and digital formats. “There is far more diversity in the market than I think a lot of people understand,” Diskey says.

What is the role of digital?

Digital products are becoming a more important part of the K-12 school publishing market. Revenues from digital products increased by 45.6 percent between 2008 and 2010, to $638.7 million, according to the AAP. (The market for print books is still much larger but revenues from print products declined 13.7 percent between 2008 and 2010, to $2.6 billion.)

Spending on e-learning as a percentage of overall K-12 education expenditure is small, according to the September 2011 White House report “Unleashing the Potential of Educational Technology” — it makes up just $0.46 of every $100 spent, for a total of $2.9 billion. (Expenditure on e-learning in higher education is over ten times greater: $5.60 per $100 spent, a total of $24.4 billion.)

K-12 publishers all offer digital products now, but school districts have to decide how to buy them. The digital products are often bundled with print, but “a lot depends on the digital infrastructure in the school district and whether it can support digital learning,” says Diskey. “Not too many states have one-to-one student-to-hardware ratios. In order to have full-blown digital learning, students should have access to their own devices in the same way you had access to your own textbooks when you were in school.”

In fact, the national average ratio of students to hardware devices is three-to-one (three students for every computer, tablet, etc.) “That makes learning very difficult,” Diskey says — and is another way K-12 is different from higher ed. About 90 percent of students arrive at college with at least one electronic device like a laptop. netbook or tablet. “By and large, K-12 students do not arrive with these devices,” Diskey says. This raises questions about who will pay for the devices — family or school districts.

School districts must deal with more mundane issues as well, such as whether there are enough electrical outlets to charge devices. “Behind all this, there’s the backdrop of schools providing textbooks,” Diskey says. In many states, schools are required to fund textbooks, but those mandates don’t always extend to digital materials. It will take “massive funding” to provide the 50 million K-12 public school students with hardware.

How will digital adoption change in the next year or so?

“I think you’ll see more partnerships between publishers and hardware producers such as Apple and others,” says Diskey. “For a long time at the K-12 level, content providers and hardware developers have operated in different silos, but they need to be partnered. (The announcement by Apple) is very good for publishers — new softwtare tools and applications being developed means that more publishers, particularly smaller ones, can get into the digital market at the K-12 level. But there’s still a hangup at the school level with funding and availability of devices.”

What will encourage more entrepreneurship in the area? The White House report reiterates the challenges of selling new products into the market:

An important feature of the market for K-12 educational technology products is the large number of institutional purchasers, each with its own distinct curriculum and procurement process. The school district is the relevant decision unit for most institutional purchases. Selling an educational product to a school district may require substantial contact with a diverse set of actors, including state and local procurement officers who oversee funding streams, academic consultants who advise districts, key school board members, and principals and teachers in individual schools. Moreover, decisions about purchases often involve an extended timeline.

Those barriers help explain why very little venture capital is spent on K-12 education: “In the last five years, estimates suggest that venture capital has totaled perhaps $200 million annually for education companies, backing an average of 25 new businesses per year. This venture capital investment compares to $4.4 billion for biotechnology, $3.0 billion for medical devices, and $4.8 billion for software.”

In a paper on K-12 entrepreneurship, Larry Berger and David Stevenson, the founders of K-12 tech product company Wireless Generation, describe some of the “relatively simple steps that districts, policymakers, foundations and entrepreneurs themselves could take to work around the barriers or dismantle them entirely.” They suggest that school districts and states could form consortia “in which they pool their resources and their expertise to help bring a new product or service to market.”

Berger and Stevenson also say states should comission more research and development instead of requiring a finished product. “When NASA wants a new spacecraft, it does not expect Boeing and Lockheed to build it on their own dimes in the hope of getting the contract,” they note. “It invites the industry to submit proposals and sometimes even funds the early development of competing designs — and then it picks a team with which it will work closely to bring a new product into existence.”

Finally, Berger and Stevenson note, “Entrepreneurship is often driven by the search for, and discovery of, ‘disruptive’ technologies and business models that transform a sector. It is not easy to figure out how the education sector should welcome disruptions and innovations that do not exist yet, but a simple first step would be to ask for them — to articulate the demands that would inspire entrepreneurs to try to create a supply.”

Sources:
– The Association of American Publishers, interviews and statistics
– National Center for Education Statistics
– “K-12 Entrepreneurship: Slow Entry, Distant Exit” by Larry Berger and David Stevenson. PDF here.
– “Unleashing the Potential of Educational Technology,” Executive Office of the President Council of Economic Advisers, September 2011. PDF here.

In addition, Apple is releasing free software, iBooks Author, which allows users to create any type of interactive e-books — not just textbooks.

Apple’s event today is the first since the death of Steve Jobs in October. According to Walter Isaacson’s biography of Jobs, the former Apple CEO “had his sights set on textbooks as the next business he wanted to transform.” Apple relied on the education market to sustain its Mac business in the 1990s and into the early 2000s, and the company has longtime relationships with buyers in school districts and state education departments, many of whom have switched their focus to iPads. In Q2 2011, Apple sold more iPads than Macs to K-12 education departments.

The iBookstore gets a new textbook category; to start, it includes high-school textbooks from publishers Pearson, McGraw-Hill (NYSE: MHP) and Houghton Mifflin Harcourt as well as some titles from children’s publisher DK and the E.O. Wilson Foundation. The textbooks are all priced at $14.99 or less.

To help publishers further populate the iBookstore with content, Apple is releasing free iBooks Author software, which allows users to create interactive e-books of all types. Users can drag Word files, images, video and widgets — including custom widgets — directly into the program. The books can then be previewed on the iPad and published straight to the iBookstore. “If you’ve ever been involved in any kind of e-book creation project before, you know this is a total miracle in terms of time savings,” said Roger Rosner, VP development, iWork.

Apple’s education announcements today are not limited to K-12 students. The company is also overhauling iTunes U, which it says is used by 1,000 colleges and universities that primarily post lectures. Those lectures have been downloaded over 700 million times since iTunes U’s launch four years ago. The new iTunes U app allows teachers and professors to create complete online courses — with notes, videos, to-do lists, course signups and ratings, etc. The new features seem primarily intended for use within universities, but the iTunes U app will be available to K-12 teachers and schools too.

Numerous startups have focused on digital textbooks, but they are aimed at college students, not elementary- and high-schoolers. In the days leading up to the Apple event, those companies ramped up their own stream of announcements. Textbook rental site Chegg released an e-textbook reading app yesterday, and digital textbook software company Kno said this week that it will add new flashcard and dashboard features to its platform. Meanwhile, iPad textbook publisher Inkling raised $17 million in its most recent funding round and is backed by McGraw-Hill and Pearson (NYSE: PSO). However, none of these companies have emerged as a clear winner in the digital textbook space.

Amazon (NSDQ: AMZN) added Kindle textbook rental in July 2011. Barnes & Noble (NYSE: BKS) sells digital textbooks and offers a little-known e-textbook reading app, Nook Study, for PC and Mac. That app has been available since 2010, and the company has not updated it or paid any attention to it with the subsequent launches of Nook Color and Nook Tablet. (Barnes & Noble’s bricks-and-mortar college bookstores bring the chain substantial revenues — $768 million in Q2 2012, down from $797 million in Q2 2011, “due to a shift from selling new and used textbooks to lower priced, higher margin textbook rentals.”)

The event, on January 19, will be held at the Guggenheim Museum, and the invite, designed to look like a chalkboard with a drawing of the New York skyline, reads, “Join us for an education announcement in the Big Apple.”

Early conjectures about what Apple would reveal were around advertising and/or publishing, as well as various…um…educated guesses about an education-related announcement, possibly around iTextbooks.

Apple has made significant inroads into the education market already in terms of its device strategy. That has included discounts for students and teachers on its computers, and it has even donated 9,000 refurbished iPads to the Teach for America program covering impoverished communities. In other cases, such as in France, the operator France Telecom (NYSE: FTE) teamed up with the government for a subsidized tablet program for students in the country: that gave students a choice of either an iPad or a Samsung Galaxy Tab.

There are a number of other tablet players that are looking at the educational and childrens’ markets, acknowledging how resonant the devices have been with kids so far, and what kind of potential that can hold. Among them, the One Laptop Per Child group is aiming for a $100 Android tablet; and Amazon (NSDQ: AMZN) is now publishing children’s books.

While there are thousands of educational apps in the App Store and its devices are used extensively in schools, Apple has yet to launch any educational content of its own — or formal facilities to enable others, such as publishers, to deliver educational content. Some have guessed that January 19 could bring news of its first moves here. But it could be something else altogether — we’ll find out more concretely on the 19th.

Almost lost in the intense coverage of Hurricane Irene and its aftermath, the New York Daily News reported over the weekend that New York State Comptroller Thomas DiNapoli rejected a contract that would have paid Wireless Generation $27 million to help develop software to track test scores. News Corp. paid $360 million for 90 percent of the Brooklyn-based education tech company last November.

According to the Daily News, DiNapoli told the state education department:

“In light of the significant ongoing investigations and continuing revelations with respect to News Corp., we are returning the contract with Wireless Generation unapproved.”

In addition to the UK efforts that have resulted in numerous arrests of News International and NOTW execs, those “ongoing investigations” include the FBI’s ongoing look at allegations that the now-defunct tabloid tried to hack the voice mail of 9/11 victims and their families. DiNapoli also cited an “incomplete record” of News Corp.’s education qualifications, which seems murky given that the company was qualified for education contracts across the U.S., including the New York city schools, before it was acquired by News Corp. as a cornerstone for its education initiatives.

Critics say DiNapoli is using hacking as an excuse to avoid signing a contract for tracking software that the powerful teachers unions oppose. If he is, News Corp. has handed him the excuse on a silver platter. The potential test of Rupert Murdoch and News Corp. He won’t be the last to use it. Watchdog groups are clamoring to make hacking part of any license renewals and approvals in the U.S. and others may well see an opportunity to use the scandal and the uncertainty over U.S. investigations as a way of blocking other News Corp. moves.

Murdoch’s education plans already have taken a hit from the hacking scandal in a different way. Joel Klein, the former New York City Schools chancellor, joined News Corp. and its board last fall to head up the education business. As a former deputy U.S. attorney general, he was quickly pressed into duty as a Murdoch advisor when reports that the tabloid had hacked the phone of a yourg murder victim cascaded into a crisis for the company. His appointment to head the internal investigation into what happened at News Intl. and NOTW has drawn harsh criticism and may make it difficult for him to lead education efforts effectively.

The four-year compensation package described in the SEC filing is substantial: a $1 million signing bonus, a base salary of $2 million a year, an annual bonus with a target of not less than $1.5 million. Perqs include the same stock options and an incentives as other senior execs, the usual benefits, and a car allowance of $1,200 a month. (Unlike Roger Ailes, no security allowance.) The total if he gets only the minimum bonus every year could break $15 million.

That’s a hefty increase over the $250,000 a year Klein was making as a public school chancellor when he had a $22 billion operating budget and responsibility for more than one million students. Now his mission is to make money out of education for News Corp. and it’s Cathie Black’s turn to educate.

Soon after Klein’s move to News Corp. was announced, the media company spent $360 million for NYC edtech company Wireless Generation. Murdoch’s track record when it comes to building new areas of the company suggests more investment is on the way.