The term serials crisis describes the problem of rising subscription costs of serial publications, especially scholarly journals, outpacing academic institutions' library budgets and limiting their ability to meet researchers' needs. The prices of these institutional or library subscriptions have been rising much faster than inflation for several decades, while the funds available to the libraries have remained static or have declined in real terms. As a result, academic and research libraries have regularly canceled serial subscriptions to accommodate price increases of the remaining subscriptions. The increased prices have also led to the increased popularity of shadow libraries.
Causes
Price inelasticity
Each journal article reports unique research findings, and as a result, each article is a unique commodity, that cannot be replaced in an academic library collection by another article. The same uniqueness applies to journals, which are collections of articles. In order to conduct a high quality research (and to receive high scores on a grant proposal), the researchers need to have access to every article related to the subject of their work. This situation is very different from the works of art, for which copyright was originally designed. For example, a consumer is not likely to suffer professionally, if he does not see the latest movie or hear a popular song. But missing a relevant research article may result in denial of grant application or expensive duplication of someone else's work.
This unique combination of non-replaceable demand and copyright monopoly leads to the type of price inelasticity not found in other fields, and allows each academic publisher to act as a monopolist, despite the presence of numerous other publishers on the market.
Publishers
Another possible set of factors in this situation includes the increasing domination of scholarly communication by a small number of commercial publishers, whose journals are far more costly than those of most non-profit academic societies. However, the institutional subscription prices for journals published by some academic society publishers (see below) have also exhibited inflationary patterns similar to those seen among commercial publishers.
The earnings of the American Chemical Society (ACS), for example, is based in large parts on publications. In 1999, the income of the ACS was $349 million, where $250 million came from information services. According to a 2004 House of Commons report (by the Science and Technology Committee), the ACS is one of the driving forces of the STM (science, technology, medicine) serials crisis. According to the same report the crisis started around 1990 when many universities and libraries complained about the dramatic inflation of STM subscription prices especially for the flagship Journal of the American Chemical Society, which is exclusively sold as a bundle with all other ACS journals. The report further states that:
Every year the Library Journal publishes a summary of periodical pricing and inflation. "The rate of price increase is analyzed for more than 18,000 e-journal packages handled by EBSCO Information Services...For 2019, the average rate of increase over two years was 5.5%, up slightly from 5% in 2018."
Profitability
A 2021 study found, that the cost of publishing a journal article to publishers varies from $200 (in a large scale platform with a post-publication review) to $1,000 (in a prestigious journal with acceptance rate under 10%), with $400 per article being the average cost. Also, when the number of published articles in a journal (such as a mega-journal) exceeds 1000, the fixed costs become less that 1% of the direct costs, and the marginal cost of publishing more articles is very small. At the same time, the revenue for most subscription journals is about 4,000 $ per article. That study estimated the average profit margin of academic journal publishers at ca. 55%.
In a free market, such high profit margin should have attracted numerous competing publishers. However, in a traditional publishing market is not free: each research article is unique, and the consumer (reader or subscriber) cannot substitute one article (or journal) for another. Instead, the competition occurs on the authors side: authors have a choice, where to publish. In an open access publishing model, the market forces are balanced properly.