Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/50536

Pay-per-download or Freemium: Revenue Models in a Competitive Mobile App Market

File Size Format  
paper0649.pdf 1.65 MB Adobe PDF View/Open

Item Summary

Title:Pay-per-download or Freemium: Revenue Models in a Competitive Mobile App Market
Authors:Luo, Xiaoxiao
Zhang, Jie
Keywords:Strategy, Information, Technology, Economics, and Society (SITES)
Mobile app, Pay-per-download, Freemium, Duopoly, Learning
Date Issued:03 Jan 2018
Abstract:This paper examines the revenue model selection of app developers in a duopoly setting. Two developers offering vertically-differentiated apps can adopt either a pay-per-download or a freemium strategy. Under the pay-per-download strategy, consumers pay a fee to acquire the app. Under the freemium strategy, consumers are offered with a free basic version and can choose to pay an additional fee for the full version. A game theoretical model is used to analyze the competition in the presence of network effect and learning effect. We find that when the quality difference is moderate, the pay-per-download strategy is optimal for the high-quality app if the quality of basic version is low, otherwise freemium strategy is optimal. Responding to the pay-per-download strategy of the high-quality app, adopting the pay-per-download strategy is optimal for the low-quality app if quality of basic version is high, otherwise freemium strategy is adopted.
Pages/Duration:10 pages
URI:http://hdl.handle.net/10125/50536
ISBN:978-0-9981331-1-9
DOI:10.24251/HICSS.2018.647
Rights:Attribution-NonCommercial-NoDerivatives 4.0 International
https://creativecommons.org/licenses/by-nc-nd/4.0/
Appears in Collections: Strategy, Information, Technology, Economics, and Society (SITES)


Please email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.

This item is licensed under a Creative Commons License Creative Commons