Fighting Free with Free: Freemium vs. Piracy

Antoine Dubus, Christine Halmenschlager () and Patrick Waelbroeck
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Antoine Dubus: D-MTEC - Department of Management, Technology, and Economics [ETH Zürich] - ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]

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Abstract: We analyze the optimal business model of a firm facing piracy. The firm either sells a premium version of its product, or also offers a free version along with the premium version. The firm can in turn impose restrictions on the use of the free version. Consumers can choose between the free and the premium version, but can also get an illegal digital copy. We show that freemium offers can reduce digital piracy by fighting free with free and that firms choose their optimal business model depending on the strength of copyright protection. Therefore, the strength of copyright protection can lead firms to choose a traditional business model rather than the new freemium model, impacting significantly the legal usage of the good.

Keywords: Online piracy; versioning; freemium; streaming; copyright; music (search for similar items in EconPapers)
Date: 2024-08-15
New Economics Papers: this item is included in nep-com, nep-cul, nep-dcm, nep-law, nep-mic and nep-pay
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