Optimal Freemium Strategy for Information Goods in the Presence of Piracy

What drives subscribing to premium in freemium services? A consumer value‐based view of differences between upgrading to and staying with premium

“…Finally, contrary to our expectations, social connectivity had a negative effect on the intention to retain the premium subscription. By theorizing and empirically validating a consumer value-based perspective to the differences between upgrading and staying with premium, our study contributes to the literature on consumer decision making in the freemium context (Bapna & Umyarov, 2015;Hamari et al, 2017;Koch & Benlian, 2017;Nan et al, 2018;Oestreicher-Singer & Zalmanson, 2013;Vock et al, 2013;Wagner et al, 2014) and post-adoption user behavior in online services (egKim & Son, 2009, Li & Liu, 2014, Ma, Khansa, & Kim, 2018. The research findings are beneficial for freemium service providers and enable them to effectively encourage basic users to upgrade to premium subscriptions and premium users to retain their paid subscriptions with customized intervention plans for both groups of users.…”

“…Mathematical model (Nan et al, 2018) To examine how climbing the "ladder of participation" on a digital content website influences willingness to pay (WTP) Users who are more active in the community are more likely to pay for premium services, even after accounting for content consumption, demographics, and social influence. Community activity is more strongly associated with the likelihood of subscription…”

“…Despite the widespread and constantly increasing adoption of the freemium model as well as the emerging research on consumer behavior in the freemium context (Hamari, Hanner, & Koivisto, ; Koch & Benlian, ; Mäntymäki & Salo, ; Nan, Wu, Li, & Tan, ; Vock, van Dolen, & de Ruyter, ; Wagner, Benlian, & Hess, ), the differences between the factors driving basic users to upgrade from free to premium subscriptions and those that drive premium users to retain their paid subscriptions are not well understood. Indeed, prior freemium research suggests that there is no correlation between the attitudes toward the free and premium versions (Wagner et al, ); service quality perceptions explain the intention to play freemium games but not the intention to spend money in them (Hamari et al, ); and that premium users experience higher levels of gratifications such as enjoyment than basic ones (Mäntymäki & Islam, ).…”

Competing on freemium: Digital competition with network effects

“…Digital products are largely experience goods, where it can be difficult for the consumer to gauge the true value of the products before using them (Caves, 2003; Shapiro et al, 1998). One reason for offering a freemium strategy is that the free version can allow customers to try the product, while expecting that a considerable segment will purchase the premium version for a higher fee, once they truly understand the product's value (Chellappa & Shivendu, 2005; Datta, Foubert, & Van Heerde, 2015; Dey, Lahiri, & Liu, 2013; Greenstein & Markovich, 2012; Lee & Tan, 2013; Nan, Wu, Li, & Tan, 2018). This phenomenon is related to the literature on word‐of‐mouth diffusion (Dou, Niculescu, & Wu, 2013; Godes & Mayzlin, 2009; Kretschmer & Peukert, 2020; Niculescu & Wu, 2014).…”

“…An important issue that has been considered by a small number of existing studies is the impact of a competitor on a freemium paper. The few papers that have done so have used a symmetric modeling setup, where two identical firms choose whether to use freemium strategies (Etzion & Pang, 2014; Nan et al, 2018; Pang & Etzion, 2012; Zhang et al, 2016). 1 These studies illustrate how the seemingly straightforward decision to offer a freemium model can be complicated by the presence of a competitor and provide us with the foundation for our theoretical development.…”