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Fighting Free with Free: Freemium vs. Piracy

Author

Listed:
  • Antoine Dubus

    (D-MTEC - Department of Management, Technology, and Economics [ETH Zürich] - ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich])

  • Christine Halmenschlager
  • Patrick Waelbroeck

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

  • Antoine Dubus & Christine Halmenschlager & Patrick Waelbroeck, 2024. "Fighting Free with Free: Freemium vs. Piracy," Working Papers hal-03991858, HAL.
    • Handle: RePEc:hal:wpaper:hal-03991858
    Note: View the original document on HAL open archive server: https://hal.science/hal-03991858v2
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    References listed on IDEAS

    as
    1. Bae, Sang Hoo & Choi, Jay Pil, 2006. "A model of piracy," Information Economics and Policy, Elsevier, vol. 18(3), pages 303-320, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Online piracy; versioning; freemium; streaming; copyright; music;
    All these keywords.

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