Who exactly is the market leader in textbook rentals is no longer just an academic debate. Online textbook rental service Chegg recently sent its rival BookRenter.co a lawyer letter (embedded below) demanding that it stop using the phrase “#1 In Textbook Rentals” on its Website. That is Chegg’s marketing slogan, and it even registered the phrase as a trademark in 2008.
But how can a company trademark being No. 1, especially in a nascent market that is evolving rapidly? In addition to Chegg and BookRenter, bigger players such as Barnes & Noble are getting into the textbook rental game. Chegg’s trademark isn’t going to do it much good in fighting off such encroachments. And even if Chegg is the biggest online textbook renter, the offline book rental market is much bigger with companies like Follett dominating.
BookRenter.com CEO Mehdi Maghsoodnia stands his ground and says Chegg doesn’t have a case. To begin with, there are many ways to define “#1″: customers, revenue, selection, service. “We have the largest selection of textbooks in the U.S.,” claims Maghsoodnia, referring to the inventory of 3 million textbooks that BookRenter can rent out by tapping into partner inventory such as Amazon. Chegg operates its own warehouses, but it claims to offer “more than 4.2 million titles” and has rented out more than 2 million books to students so far. BookRenter.com says it serves 5,000 universities in the U.S.? Okay, Chegg claims 6,400. BookRenter says its revenues are growing 400% annually? Chegg tops it with a claim of 600% growth. Needless to say, none of these assertions are backed by any audited financial statements.
The point is that this market is growing fast and Chegg wants no one to question its undisputed number-oneness. Maghsoodnia concedes that in terms of customers and revenues, Chegg is probably five to seven times bigger than BookRenter, which recently passed 100,000 customers. And Chegg certainly has more capital. It has a massive war chest from raising $144 million over the past few years, whereas BookRenter.com only recently raised $6 million. But Maghsoodnia points out that estimates of the total online textbook rental market are $200 million, out of a $7 billion overall market. So for any online player to claim to be #1 in all textbook rentals is laughable. The fact that Chegg is trying to assert its trademark on such a dubious claim, he says, “tells me they are a lot more nervous than their advertising shows.”
Regardless, he doesn’t think Chegg can defend its trademark claim on such a common phrase, unless it could establish some sort of secondary meaning in the eyes of the public. At least that is what his lawyers tell him. In the meantime, he is thinking of changing the language on his Website just a little bit to, “We’re Numero Uno in Textbook Rentals!”