System Design, User Cost and Electronic Usage of Journals

Dramatic increases in the capabilities and decreases in the costs of computers and communication networks have fomented revolutionary thoughts in the scholarly publishing community. In one dimension, traditional pricing schemes and product packages are being modified or replaced. We designed and undertook a large-scale field experiment in pricing and bundling for electronic access to scholarly journals: PEAK. We provided Internet-based delivery of content from 1200 Elsevier Science journals to users at multiple campuses and commercial facilities. Our primary research objective was to generate rich empirical evidence on user behavior when faced with various bundling schemes and price structures. In this article we explain the different types and levels of cost that users faced when accessing individual articles, and report on the effect of these costs on usage. We found that both monetary and non-monetary user costs have a significant impact on the demand for electronic access. We also estimate how taking user costs into account would change the “optimal” (least cost) bundle of access options that an institution should purchase. ∗Robert S. Gazzale is a Ph.D. student in the Department of Economics, University of Michigan. Mr. Gazzale is a research assistant on the PEAK project. †Jeffrey K. MacKie-Mason is a Professor of Economics, Information and Public Policy at the University of Michigan, Ann Arbor, Michigan, USA. Professor MacKie-Mason is the Research Director of the PEAK project.