Fighting free with free: Freemium vs. Piracy

Antoine Dubus, Christine Halmenschlager and Patrick Waelbroeck

International Review of Law and Economics, 2024, vol. 80, issue C

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)
JEL-codes: L12 L82 L86 O34 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:80:y:2024:i:c:s0144818824000462

DOI: 10.1016/j.irle.2024.106226

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