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Fighting free with free: Freemium vs. Piracy

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  • Dubus, Antoine
  • Halmenschlager, Christine
  • Waelbroeck, Patrick

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.

Suggested Citation

  • Dubus, Antoine & Halmenschlager, Christine & Waelbroeck, Patrick, 2024. "Fighting free with free: Freemium vs. Piracy," International Review of Law and Economics, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:irlaec:v:80:y:2024:i:c:s0144818824000462
    DOI: 10.1016/j.irle.2024.106226
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    References listed on IDEAS

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    More about this item

    Keywords

    Online piracy; Versioning; Freemium; Streaming; Copyright; Music;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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