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    8.6 Reasons Why Journal Subscription Prices Spiraled Upward

    There is overwhelming evidence that individual scholarly journal prices increased dramatically from 1960 to 1995. For example, we sampled 430 U.S. scientific scholarly journals and tracked them from 1960 to 1995.[10] In this sample, prices rose from an average of $8.51 per title in 1960 to $284 in 1995. One particular concern is that the rate of increase accelerated, even in constant dollars. There are many reasons that prices increased in this manner. Okerson (1989) provides an excellent discussion of some reasons for this phenomenon, and below we present some numeric examples as to why prices per title increased so much.

    Some of the high increases in price over these two decades can be explained by inflation and increase in the size of journals. Referring back to the publishing cost model above, one can establish an indication of how much increasing journal size has affected prices over time. As mentioned earlier, the average number of articles published in science journals has increased from 85 to 154 articles per title from 1975 to 2002. Other journal characteristics (e.g., number of issues, pages, special graphics) increased in size as well. By substituting 1975 and 2002 characteristics in the cost model and keeping number of subscriptions and cost parameters at 2002 levels we estimate that the cost per subscriptions for the 1975 size journal is about one-half that of the 2002 journal. Thus there is evidence that the increased size of journals has resulted in a substantial increase in journal publishing cost and, therefore, the necessity to increase prices accordingly.

    A more subtle factor is that the estimated number of scientific scholarly journals increased from 4,447 in 1975 to 6,772 in 1995. Most of the new journals had a small circulation and, therefore, must have a higher-than-average price per title. Consequently, the continued addition of new journals had the effect of increasing average price both per title and per subscription. In fact, journal prices increased at a rate greater than inflation since at least 1960, when there were only 2,815 scientific journals provided by U.S. publishers (Tenopir and King, 2000).

    This phenomenon can be documented by examining the 1975 number of journals in the quartile ranges shown for 1995 above and applying the same calculation of average price per journal title and per subscription as shown in Table 8.3. One can see that in 1995 there were more of the smaller-circulation journals and fewer larger ones.

    Table 8.3: 1995 Circulation Quartiles of U.S. Scholarly Journals and the Number and Proportion of Journals in the Ranges in 1975 and 1995
    No. of Journals Proportion of Journals (%)
    Circulation 1975 1995 1975 1995
    < 900 880 1,693 19.8 25
    901 - 1,900 805 1,693 18.1 25
    1,901 - 5,700 1,579 1,693 35.5 25
    >5,700 1,183 1,693 26.6 25
    ALL 4,447 6,772 100.0 100
    NOTE: Source: Tenopir and King 2000.

    In order to make unbiased comparisons, we again assume that all cost parameters remain the same and that average prices in the four ranges do as well. We find that the average price per journal title of 1975 journals with their circulation would be about $270 per title compared with $315 in 1995. Thus, this average price per journal would have increased about 17 percent due only to the change in distribution of circulation. A much smaller increase is observed in the average price per subscription, from $91 per subscription for 1975 circulation to $96 in 1995.[11] Note that the average circulation per title did not decrease much from 1975 to 1995, from 6,100 to 5,800 subscriptions, but the median dropped from about 2,900 to 1,900 subscriptions.

    The shifts in the distribution of circulation are attributable to more than the influx of new, small-circulation journals. Increased prices had a spiraling effect. As mentioned above, the average number of personal subscriptions per scientist dropped more than 50 percent over a twenty-year period. Had the average remained constant, there would be about 19 million more personal subscriptions than there actually were in 1995. Even at modest personal subscription prices, publishers undoubtedly lost billions in annual revenue from cancelled personal subscriptions, in which case they probably tried to recover the lost revenue through exceptionally high price increases to libraries. They would have been able to do this because library demand is much less sensitive to price changes than personal subscription demand.[12] Both personal and institution (library) prices jumped dramatically in the late 1970s due to high inflation, fluctuating international exchange rates, and other factors. When this happens, subscriptions can decrease even though the number of scientists interested in a discipline continues to increase. With small-circulation journals, decreases in circulation result in an accelerated increase in cost per subscription. For example, if circulation decreases by 100 subscribers from a 2,500 level, the cost to publishers at 2,400 subscribers would be $6 more per subscriber. However, a 100-subscriber decrease from 500 to 400 subscribers would require an increased cost of $186 per subscriber in order to recover costs. Examples of required cost increases are outlined in Table 8.4:

    Table 8.4: Required Publishing Cost Increases at Various Decreases in Circulation: 1995 Dollars
    Circulation Decrease Required Cost Increase
    2,500 to 2,400 $6
    2,000 to . 1,900 $8
    1,500 to . 1,400 $18
    1,000 to . 900 $41
    500 to . 400 $186

    Thus, the accelerated publishing cost increases can result in corresponding price increases and further decreases in circulation, leading to higher costs and in turn, by necessity, to spiraling prices. Since personal subscriptions are much more sensitive to price changes than library subscriptions, the spiraling effect was initially observed with personal subscriptions.

    Even with these reasons for the price increases of the past few decades, other factors must contribute as well. One explanation is that publishers have grown substantially in terms of the number of journals published. Some of this is due to publishers starting new journals and "splitting" journals into two or more when they increase in size, although the trend in recent decades has been to let them grow in size. Another factor has been growth through mergers. McCabe (this volume) provides evidence that such growth results in higher prices of journals due to market power. We believe that size of labor-intensive organizations such as publishers, tend to have relatively higher support costs as they grow in size. In our cost model for 2002, we estimated support costs to be about $198,000 or 29 percent of all costs. Others have speculated that commercial journal publishers are making an exorbitant profit by increasing prices, although this has yet to be proven for all commercial publishers. Furthermore, net revenue may also be positive for some society and other non-profit publishers. Case (this volume) emphasizes the importance of competition among publishers in order to minimize the potential for monopolization of the system.