IDEAS home Printed from https://ideas.repec.org/p/tsa/wpaper/0192iscs.html
   My bibliography  Save this paper

Are Free Apps the New Solution to Software Piracy? The Impact of the Freemium Strategy on Mobile App Piracy in the Presence of Network Effects

Author

Listed:
  • Hoon Seok Choi
  • Yoris A. Au

    (UTSA)

  • Charles Z. Liu

Abstract

This research revisits the issue of software piracy in the emerging mobile apps market. The study seeks to empirically examine the controversial impact of piracy on the market performance of the legitimate apps. In particular, the study attempts to empirically examine how the presence (or absence) of free app affects the extent of piracy, and consequently, the adoption of the paid apps in the mobile app market, and whether such relationships are moderated by varying degrees of network effects in these mobile apps. A set of hypotheses will be empirically tested using a longitudinal dataset collected from both legitimate and pirated mobile app markets over a six-month period. Based on the findings, the study will attempt to offer insights to app developers and market designers on how to create mechanisms to curb piracy, stem the resulting losses, and foster a healthy growth of the mobile app market.Length: 12 pages

Suggested Citation

  • Hoon Seok Choi & Yoris A. Au & Charles Z. Liu, 2014. "Are Free Apps the New Solution to Software Piracy? The Impact of the Freemium Strategy on Mobile App Piracy in the Presence of Network Effects," Working Papers 0192iscs, College of Business, University of Texas at San Antonio.
    • Handle: RePEc:tsa:wpaper:0192iscs
    as

    Download full text from publisher

    File URL: http://interim.business.utsa.edu/wps/is/0011ISCS-673-2014.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
    2. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-166, June.
    3. Daniel Birke & G. M. Peter Swann, 2007. "Network effects and the choice of mobile phone operator," Springer Books, in: Uwe Cantner & Franco Malerba (ed.), Innovation, Industrial Dynamics and Structural Transformation, pages 109-128, Springer.
    4. Johnson, William R, 1985. "The Economics of Copying," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 158-174, February.
    5. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    6. Kathleen R. Conner, 1995. "Obtaining Strategic Advantage from Being Imitated: When Can Encouraging "Clones" Pay?," Management Science, INFORMS, vol. 41(2), pages 209-225, February.
    7. Hui Kai-Lung & Png Ivan, 2003. "Piracy and the Legitimate Demand for Recorded Music," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-24, September.
    8. Ramnath K. Chellappa & Shivendu Shivendu, 2005. "Managing Piracy: Pricing and Sampling Strategies for Digital Experience Goods in Vertically Segmented Markets," Information Systems Research, INFORMS, vol. 16(4), pages 400-417, December.
    9. Ram D. Gopal & G. Lawrence Sanders, 1998. "International Software Piracy: Analysis of Key Issues and Impacts," Information Systems Research, INFORMS, vol. 9(4), pages 380-397, December.
    10. Clements, Matthew T., 2004. "Direct and indirect network effects: are they equivalent?," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 633-645, May.
    11. John Kincaid, 0. "From the Editor," Publius: The Journal of Federalism, CSF Associates Inc., vol. 29(4), pages 1-4.
    12. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
    13. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bilal Bourkha & Adam Dewitte & Jeremy Tantely Ranjatoelina, 2015. "Organiser l'imitation d'un business model innovant : quatre propositions pour les entreprises," Working Papers hal-01202625, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tunay I. Tunca & Qiong Wu, 2013. "Fighting Fire with Fire: Commercial Piracy and the Role of File Sharing on Copyright Protection Policy for Digital Goods," Information Systems Research, INFORMS, vol. 24(2), pages 436-453, June.
    2. Sanjay Jain, 2008. "Digital Piracy: A Competitive Analysis," Marketing Science, INFORMS, vol. 27(4), pages 610-626, 07-08.
    3. Jean-Jacques Herings, P. & Peeters, Ronald & Yang, Michael S., 2010. "Competition against peer-to-peer networks," Information Economics and Policy, Elsevier, vol. 22(4), pages 315-331, December.
    4. Arun Sundararajan, 2004. "Managing Digital Piracy: Pricing and Protection," Information Systems Research, INFORMS, vol. 15(3), pages 287-308, September.
    5. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    6. Shin-yi Wu & Pei-yu Chen, 2008. "Versioning and Piracy Control for Digital Information Goods," Operations Research, INFORMS, vol. 56(1), pages 157-172, February.
    7. Brett Danaher & Michael D. Smith & Rahul Telang, 2014. "Piracy and Copyright Enforcement Mechanisms," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 25-61.
    8. Nie, Jiajia & Zhong, Ling & Li, Gendao & Cao, Kuo, 2022. "Piracy as an entry deterrence strategy in software market," European Journal of Operational Research, Elsevier, vol. 298(2), pages 560-572.
    9. Arun Sundararajan, 2003. "Managing Digital Piracy: Pricing, Protection and Welfare," Law and Economics 0307001, University Library of Munich, Germany.
    10. Herings, P. Jean-Jacques & Peeters, Ronald & Yang, Michael S., 2018. "Piracy on the Internet: Accommodate it or fight it? A dynamic approach," European Journal of Operational Research, Elsevier, vol. 266(1), pages 328-339.
    11. Cho, Won-Young & Ahn, Byong-Hun, 2010. "Versioning of information goods under the threat of piracy," Information Economics and Policy, Elsevier, vol. 22(4), pages 332-340, December.
    12. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    13. Yeh-ning Chen & Ivan Png, 2003. "Information Goods Pricing and Copyright Enforcement: Welfare Analysis," Information Systems Research, INFORMS, vol. 14(1), pages 107-123, March.
    14. Gürtler, Oliver, 2006. "Software Piracy in the Video Game Market," Bonn Econ Discussion Papers 20/2006, University of Bonn, Bonn Graduate School of Economics (BGSE).
    15. T. S. Raghu & Rajiv Sinha & Ajay Vinze & Orneita Burton, 2009. "Willingness to Pay in an Open Source Software Environment," Information Systems Research, INFORMS, vol. 20(2), pages 218-236, June.
    16. Stan J. Liebowitz & Richard Watt, 2006. "How To Best Ensure Remuneration For Creators In The Market For Music? Copyright And Its Alternatives," Journal of Economic Surveys, Wiley Blackwell, vol. 20(4), pages 513-545, September.
    17. Piolatto, Amedeo & Schuett, Florian, 2012. "Music piracy: A case of “The Rich Get Richer and the Poor Get Poorer”," Information Economics and Policy, Elsevier, vol. 24(1), pages 30-39.
    18. Gergely Csorba & Jong‐Hee Hahn, 2006. "Functional Degradation And Asymmetric Network Effects," Journal of Industrial Economics, Wiley Blackwell, vol. 54(2), pages 253-268, June.
    19. Carsten Fink & Keith E. Maskus & Yi Qian, 2016. "The Economic Effects of Counterfeiting and Piracy: A Review and Implications for Developing Countries," The World Bank Research Observer, World Bank, vol. 31(1), pages 1-28.
    20. Xinyu Hua & Kathryn E. Spier, 2021. "Settling Lawsuits with Pirates," HKUST CEP Working Papers Series 202104, HKUST Center for Economic Policy.

    More about this item

    Keywords

    software piracy; mobile apps; freemium strategy; network effects; panel data analysis;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    Statistics

    Access and download statistics

    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:tsa:wpaper:0192iscs. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Wendy Frost (email available below). General contact details of provider: https://edirc.repec.org/data/cbutsus.html .

    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.