I can't figure out how it would be possible that shifting from physical paper to online hosting could be more expensive
Developing and hosting something like JSTOR in the early to mid 90's was no where near as cheap and easy as it might be today (and let's face it even today it isn't completely trivial). Doubly so if you had no staff with the relevant skills and had to do everything via consultants.
No, but it does explain why the traditional publishing societies didn't do it themselves back in the day and instead had to rely on for-profit entities.
Cost is half of it. The other half was very resistant. I am told that when my office started going digital in the late 80's there was a lot of turmoil and it split the organization. That attributed greatly to a period where we had 3 presidents for a year. Digitization won of course.
Developing and hosting something like JSTOR in the early to mid 90's was no where near as cheap and easy as it might be today (and let's face it even today it isn't completely trivial). Doubly so if you had no staff with the relevant skills and had to do everything via consultants.