Why Is Access to the Scholarly Journal Literature So Expensive?

For more than 30 years the spiraling costs of scholarly journal subscriptions, often called the "serials crisis," have been a hotly debated topic. Academics and librarians have pointed out the high profit levels of the major commercial publishers, despite that the content they sell is provided by unpaid authors and reviewers. The publishers then resell it to the universities of these same authors and reviewers. Publishers have attempted to justify their prices by cost increases, their investments in information technology, and the value they add.

A useful framework for understanding the situation is Michael Porter's five forces model for explaining the competitive conditions in an industry. Despite claims to the contrary, the degree of market concentration in scholarly publishing is not higher than that in many other industries, and it is not the main cause of the problem. But because the big deals of different publishers are complements rather than substitutes, the leading companies essentially do not compete for customers, in contrast to other industries, such as mobile phones or automobiles. The high barriers to new entrants, partly due to journal ranking lists and impact factors, as well as the low bargaining power of suppliers and customers, explain why this industry has been so well shielded from the disruptive forces of the Internet. The protected competitive position and high profitability are also major reasons why the big subscription publishers have been slow to adopt the open access business model.

Background

During the past three decades, there has been a continuing discussion about the subscription prices of peer-reviewed journals, which have risen faster than inflation. This phenomenon has been named the "serials crisis."¹ Although publisher-wide electronic licenses such as ScienceDirect or Springer Link have largely replaced subscriptions to individual titles, the same price spiral seems to be continuing.²

A related issue is the slower than expected transition to open access (OA) journals. Contrary to the early optimistic predictions 15 to 20 years ago, the growth has been linear, with a rate of only around 1 percentage point of the market share per annum.³ The major commercial publishers and learned societies have been reluctant to flip existing titles or start new OA ones. Instead, they have opted for the risk-free alternative of subscription journals offering paid OA for individual articles, a model called hybrid OA.

University librarians and OA activists have spent much time trying to calculate "reasonable" journal costs and criticizing publishers for pricing leading to excessive profits.⁴ On the other side of the fence, publishers have tried to justify their prices by their high costs.⁵ The discussion has lately also concerned the pricing of articles in OA journals, so-called article processing charges (APCs).⁶

What many information science specialists and OA activists seem to ignore is that peer-reviewed journal publishing is a market like the trade in any other commodity or service. Despite that a large part of the raw material is provided pro bono by the academic community, scholarly publishing follows the same basic microeconomic rules of prices, set in an interplay between supply and demand, as well as the peculiarities of non-perfect markets characterized by oligopolies (a few big companies controlling the market).

The so-called five forces model by the economist Michael Porter has for four decades been part of the standard curriculum at business schools for analyzing the competitive situation in different industries.⁷ The model is well suited also as a framework for a discussion of scholarly journal publishing. It offers plausible explanations both for the high pricing and for the slow transition to OA.

The purpose of Porter's five forces framework is to analyze the key factors that together determine the competitive situation of an industry. The five forces that Porter claims define the overall level of competition are (1) industry rivalry, (2) the bargaining power of suppliers, (3) the bargaining power of buyers, (4) the threat of new entrants, and (5) the threat of substitutes. The model is usually visually represented in a figure where industry rivalry stands in the center and...