117,015 research outputs found
Pricing and Bundling Electronic Information Goods: Field Evidence
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 report initial results. We found that although there is a steep initial learning curve, decision-makers rapidly comprehended our innovative pricing schemes. We also found that our novel and flexible "generalized subscription" was successful at balancing paid usage with easy access to a larger body of content than was previously available to participating institutions. Finally, we found that both monetary and non-monetary user costs have a significant impact on the demand for electronic access.
Modeling Tiered Pricing in the Internet Transit Market
ISPs are increasingly selling "tiered" contracts, which offer Internet
connectivity to wholesale customers in bundles, at rates based on the cost of
the links that the traffic in the bundle is traversing. Although providers have
already begun to implement and deploy tiered pricing contracts, little is known
about how such pricing affects ISPs and their customers. While contracts that
sell connectivity on finer granularities improve market efficiency, they are
also more costly for ISPs to implement and more difficult for customers to
understand. In this work we present two contributions: (1) we develop a novel
way of mapping traffic and topology data to a demand and cost model; and (2) we
fit this model on three large real-world networks: an European transit ISP, a
content distribution network, and an academic research network, and run
counterfactuals to evaluate the effects of different pricing strategies on both
the ISP profit and the consumer surplus. We highlight three core findings.
First, ISPs gain most of the profits with only three or four pricing tiers and
likely have little incentive to increase granularity of pricing even further.
Second, we show that consumer surplus follows closely, if not precisely, the
increases in ISP profit with more pricing tiers. Finally, the common ISP
practice of structuring tiered contracts according to the cost of carrying the
traffic flows (e.g., offering a discount for traffic that is local) can be
suboptimal and that dividing contracts based on both traffic demand and the
cost of carrying it into only three or four tiers yields near-optimal profit
for the ISP
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