IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v194y2025ics0148296325001778.html
   My bibliography  Save this article

Freemium vs. Deterrence: Optimizing revenue in the face of piracy competition

Author

Listed:
  • Wu, Cheng-Han
  • Chamnisampan, Netnapha
  • Sin, Liou

Abstract

The freemium pricing strategy is widely adopted by digital firms, despite the challenges posed by piracy. This study assesses whether digital firms should use freemium strategies to capitalize on piracy or combat it. Analyzing a digital firm’s strategic options against piracy for both its base and add-on products, the study examines three strategies: no action, deterrence, and freemium. The findings reveal that deterring piracy may backfire, as it can push consumers toward pirated alternatives, particularly when penalties for using pirated products are low. The freemium strategy, which involves offering a free base product, is more profitable under such conditions. Furthermore, a no-action strategy may lead to greater adoption of legitimate products. The study also considers network effects, revealing that strong cross-version and cross-product effects favor a no-action strategy. In contrast, cross-version and cross-product/same-version network effects support the freemium strategy. These insights help digital firms develop effective strategies against piracy.

Suggested Citation

  • Wu, Cheng-Han & Chamnisampan, Netnapha & Sin, Liou, 2025. "Freemium vs. Deterrence: Optimizing revenue in the face of piracy competition," Journal of Business Research, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:jbrese:v:194:y:2025:i:c:s0148296325001778
    DOI: 10.1016/j.jbusres.2025.115354
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296325001778
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2025.115354?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:194:y:2025:i:c:s0148296325001778. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.