Search Results (26)

Digital platforms face a fundamental strategic decision between subscription-only, advertising-only, and freemium (hybrid) monetization models. We develop a game-theoretic framework that unifies these strategies, explicitly modeling consumer heterogeneity in both willingness-to-pay and advertising disutility, while incorporating network effects through the platform’s valuation of user-base size. Our analysis yields closed-form solutions identifying optimal strategy thresholds based on advertising market conditions. We show that subscription-only dominates when advertising prices are low, advertising-only prevails when prices are high, and freemium emerges as strictly optimal in the intermediate region. Under freemium, we demonstrate strategic complementarity: both subscription fees and advertising intensity exceed their levels in pure strategies because each instrument’s effectiveness is amplified by the other through user reallocation across tiers. Network effects universally reduce monetization intensity but alter instruments’ relative sensitivities differently across regimes—when advertising prices are moderate, freemium adjusts ad length more aggressively, while the opposite holds at high prices. Critically, freemium’s profitability requires sufficient consumer heterogeneity in ad tolerance. As consumer preferences converge, the screening mechanism fails and freemium collapses to the superior pure strategy. These results provide operational guidance for platform monetization decisions and clarify when hybrid models create value beyond traditional approaches. Full article

This paper considers the pricing of a subscription service in a heterogeneous market with consumers having different discount rates. We show that in the case of a non-zero enrollment/cancellation cost, solutions of the Hamilton–Jacobi–Bellman equation naturally contain an equivalent of the well-known Preisach operator, a fundamental model of hysteresis in engineering applications. Singular perturbation expansions are used to approximate the optimal solution, assuming that enrollment/cancellation costs are small, relative to the total subscription cost. As a case study, we consider and compare markets with one and two consumers. Full article

Usage-Based Insurance (UBI), also referred to as telematics-based insurance, has been experiencing a growing global diffusion. In addition to being well established in countries such as Italy, the United States, and the United Kingdom, UBI adoption is also accelerating in emerging markets such as Japan, South Africa, and Brazil. In Japan, telematics insurance has shown significant growth in recent years, with a steadily increasing subscription rate. In South Africa, UBI adoption ranks among the highest worldwide, with market penetration placing the country among the top three globally, just after the United States and Italy. In Brazil, UBI adoption is expanding, supported by government initiatives promoting road safety and innovation in the insurance sector. According to a MarketsandMarkets report of February 2025, the global UBI market is expected to grow from USD 43.38 billion in 2023 to USD 70.46 billion by 2030, with a compound annual growth rate (CAGR) of 7.2% over the forecast period. This growth is driven by the increasing adoption of both electric and internal combustion vehicles equipped with integrated telematics systems, which enable insurers to collect data on driving behavior and to tailor insurance premiums accordingly. In this paper, we analyze a large dataset consisting of trips recorded over five years from 100,000 policyholders across the Italian territory through the installation of black-box devices. Using univariate and multivariate statistical analyses, as well as Generalized Linear Models (GLMs) with Zero-Inflated Poisson distribution, we examine claims frequency and assess the relevance of various synthetic indicators of driving behavior, with the aim of identifying those that are most significant for insurance pricing. Full article

With the rapid growth of user demand for large language models (LLMs) in their work, the application market is driving intense competition among large language model providers (LLMPs). Users have different preferences and psychological perceptions towards the charging models of different LLMPs. LLMPs with different intelligence levels must design pricing strategies based on diverse user characteristics. To investigate the impact of user heterogeneity on the strategic pricing of competing LLMPs, this paper establishes a competitive model with two providers, comprising a highly intelligent initial LLM provider and a follower provider. Both providers can independently decide to adopt either a subscription model or a pay-per-use model, resulting in four pricing mode combinations (dual subscription SS, subscription-pay-per-use SD, pay-per-use-subscription DS, dual pay-per-use DD). The study shows that when the pay-per-use model is adopted, the user’s psychological perception of the “tick-tock effect” reduces the provider’s service price and profit, as the perceived psychological cost lowers the user’s valuation of the product, thereby decreasing demand. Furthermore, we analyze the equilibrium strategies for pricing mode selection by the two providers. The results indicate that the subscription model is not always advantageous for providers. Both providers will only choose to adopt the subscription model when both user usage frequency and perceived psychological cost are high. Conversely, when both user usage frequency and perceived psychological cost are low, the two providers will not simultaneously adopt the subscription model. Interestingly, as the product intelligence levels of the two providers converge, their choices of pricing modes are also more inclined to diverge. These insights guide LLMPs to strategically adjust their pricing models based on user behavioral patterns to maximize profitability in the competitive AI market. Full article

In South Korea, Generation Z’s influence on the growth of sports over-the-top (OTT) services is significant. For sustainable growth, OTT service providers need to focus on converting existing users into loyal customers. In this context, understanding Generation Z’s subjective perceptions of the constraints on the continued use of sports OTT services would be meaningful. Therefore, this study aims to identify and categorize the factors constraining Generation’s Z’s continued use of sports OTT services using the Q methodology. A total of 25 Q samples and 18 P samples were selected. The QUANL program was used to calculate the correlation coefficients for each respondent, and Q factor analysis was performed through principal component analysis and varimax rotation. As a result, three types were identified: ‘Demand for improvements in pricing plans and system quality’, ‘Dissatisfaction with subscription fees and demand for diverse content’, and ‘Demand for differentiated services’. The findings of this study suggest that, for Generation Z’s continued use of OTT services, it is essential to provide personalized experiences and benefits or satisfaction relative to subscription fees. On top of that, offering various pricing plans can provide flexibility in service choices and encourage continued use among Generation Z. As such, this study can provide insights into appreciating the consumption trends and factors influencing the continued use of OTT services by Generation Z and interpreting related research results in the future. Full article

This study investigates the influence of consumers’ alignment with Sustainable Development Goals (SDGs) on their participation in agricultural product subscription services. A two-step cluster analysis was employed to classify consumer subscription behaviors into distinct groups, followed by discriminant analysis and one-way ANOVA to examine differences in consumer behavior and SDG alignment across these clusters. The findings identified three key subscriber categories: General, Price-Oriented, and Quality-Oriented Subscribers. A critical factor distinguishing these clusters was the reduction in product waste, which aligns with SDG 2, aimed at improving agricultural production efficiency to ensure food security. Overall, this study identified a significant relationship between agricultural product subscriptions and the SDGs, reflecting consumers’ attitudes toward sustainable development based on their varying degrees of recognition of the subscription model’s value. Full article

This research explores how the partitioned pricing strategy of premium subscriptions affects user willingness to purchase with two studies. Study 1 finds that all-inclusive pricing is more effective than traditional partitioned pricing (i.e., partitioned pricing in Single) and the two new formats of partitioned pricing (i.e., partitioned pricing in Combination and partitioned pricing in Blind Box) in terms of increasing user willingness to purchase due to the induced higher perceived value and perceived price fairness. Study 2 further finds that partitioned pricing in Combination or partitioned pricing in Blind Box (vs. partitioned pricing in Single) can affect perceived value positively via perceived playfulness and negatively via user-perceived price complexity simultaneously. These indirect effects hold across hedonic and utilitarian digital content products. These findings contribute to the literature on the pricing strategies of subscription-based digital content platforms. This research also provides suggestions for digital content platforms to adopt that will help them design their partitioned pricing strategies effectively. Full article

Digital products companies are increasingly adopting subscription pricing, but consumers who pay the subscription service may not be able to access all digital products sold on the sales platform. This paper explores the question of why some digital products are not in the subscription service of the sales platform. To address this problem, we develop an analytical model to examine two strategies of the firm. One is that the firm does not add the new product into the subscription service, the other is that the firm adds the new product into the subscription service. By comparing the profits under two sets, we find the condition under which the firm should add the new digital product into the subscription service. The results show that if the percentage of existing subscribers is below a certain threshold, and the subscription price is over a certain threshold, it is better for the firm to add the new product into the subscription service. We also analyze how the main variables affect the firm’s profit and the piracy rate. Our research provides useful insights for firms in choosing pricing schemes for the newly released product and offers advice for policymakers on controlling the piracy rate of digital products industry. Full article

Adopting subscription models has become a popular trend in e-commerce. Digital content platforms often use free trials to attract potential subscribers. However, rigorous research on platforms’ free trial strategies is lacking. Our paper aims to fill this gap using a horizontal duopoly framework. We investigate both the scenario of market symmetry and of market asymmetry. We study the benchmark case with no free trial for each scenario and derive equilibrium results with free trial promotion. We find that the platform will not benefit from free trials unless consumers’ learning rate exceeds a threshold. When a free trial is introduced in market symmetry, a higher rate of consumers’ learning leads to a higher price of subscription and a shorter free trial length. In addition, when the network effect is incorporated, the platform will introduce a lower subscription price and a shorter free trial length. Under market asymmetry, our results show that the platform faces a higher threshold of consumers’ learning rate. Additionally, it will offer a higher price and a longer period of free trial compared with those under the market symmetry scenario. Overall, our study provides useful managerial insights for online content platforms when considering their subscription strategies. Full article

In this paper, we look at two research questions. First, can lower ad-valorem taxes, on the selling of news and on the selling of advertising, conduce to lower prices in the media sector? Second, can lower ad-valorem taxes stimulate firms to increase the diversity of content that they offer? The purpose of this work is to give tax political guidelines to policy makers for the media sector. This is important for a sector that has seen the reduction in payment subscriptions by readers (due to competition from free news from the Internet), and reduction of advertisement revenues due to competition from media giants like Google and Facebook. With this purpose we build on the Hoteling product competition model, which is the workhorse model in media economics. We show that ad-valorem taxes on the selling of advertising are preferable to ad-valorem taxes on the selling of news because the former conduce to reduction in prices of newspaper. However, both ad-valorem taxes on the selling of news and on the selling of advertisement reduces media diversity, because they reduce revenues that media firms can use to invest in media content. Full article

Subscription-based news platforms (such as “Apple News+” or “Readly”) that bundle content from different publishers into one comprehensive package and offer it to media users at a fixed monthly rate are a new way of accessing and consuming digital journalism. These services have received little attention in journalism studies, although they differ greatly from traditional media products and distribution channels. This article empirically investigates the perception of journalism platforms based on eight qualitative focus group discussions with 55 German news consumers. Results show that the central characteristics these platforms should fulfill in order to attract users are strikingly similar to the characteristics of media platforms from the music and video industries, in particular regarding price points, contract features, and modes of usage. Against this background, the potential and perspectives of a subscription-based news platform for journalism’s societal role are discussed. Full article

Digitalisation provides access to an integrated network of information that can benefit society and businesses. However, the evidence of sustainability in business is less researched. In our paper, by building up the research approach, we address the relevant gap by investigating how sustainable development goals represent the interrelationship between digitalisation and sustainability. Such research is particularly important because understandings of digitalisation and sustainability determine how different actors, including business managers and policymakers, act in response to those imperatives to develop future employees skills starting from school age. Following a multi-method approach, we have combined our analysis into two steps examining the relationship between digitalisation and sustainability. Building digital networks, business managers and policy makers using digital means can create some unique opportunities to strategically address sustainable development challenges for the United Nations Targets (SDG) to ensure higher productivity, education, and an equality-oriented society. This point of view describes the potential of digitalisation for society and businesses of the future. The authors revise the links between digitalisation and sustainability in the European Union countries by using data available in Eurostat and UNECE public databases. The two-stage methodology for the identification of the relationship between ICT and sustainability is used in the paper and a linear regression model is applied. The results showed tiers with five SDGs, focusing on business, and all these tiers are fixed in the constructed equations for each SDG. The recommended solution is statistically valid and proves the novelty of this research. Among digitalisation indicators, only mobile-cellular subscriptions and fixed-broadband sub-basket prices in part do not affect researched sustainable development indicators. Full article

In this study, Call Detail Records (CDRs) covering Budapest for the month of June in 2016 were analyzed. During this observation period, the 2016 UEFA European Football Championship took place, which significantly affected the habit of the residents despite the fact that not a single match was played in the city. We evaluated the fans’ behavior in Budapest during and after the Hungarian matches and found that the mobile phone network activity reflected the football fans’ behavior, demonstrating the potential of the use of mobile phone network data in a social sensing system. The Call Detail Records were enriched with mobile phone properties and used to analyze the subscribers’ devices. Applying the device information (Type Allocation Code) obtained from the activity records, the Subscriber Identity Modules (SIM), which do not operate in cell phones, were omitted from mobility analyses, allowing us to focus on the behavior of people. Mobile phone price was proposed and evaluated as a socioeconomic indicator and the correlation between the phone price and the mobility customs was found. We also found that, besides the cell phone price, the subscriber age and subscription type also had effects on users’ mobility. On the other hand, these factors did not seem to affect their interest in football. Full article

Cyber security has made an impact and has challenged Small and Medium Enterprises (SMEs) in their approaches towards how they protect and secure data. With an increase in more wired and wireless connections and devices on SME networks, unpredictable malicious activities and interruptions have risen. Finding the harmony between the advancement of technology and costs has always been a balancing act particularly in convincing the finance directors of these SMEs to invest in capital towards their IT infrastructure. This paper looks at various devices that currently are in the market to detect intrusions and look at how these devices handle prevention strategies for SMEs in their working environment both at home and in the office, in terms of their credibility in handling zero-day attacks against the costs of achieving so. The experiment was set up during the 2020 pandemic referred to as COVID-19 when the world experienced an unprecedented event of large scale. The operational working environment of SMEs reflected the context when the UK went into lockdown. Pre-pandemic would have seen this experiment take full control within an operational office environment; however, COVID-19 times has pushed us into a corner to evaluate every aspect of cybersecurity from the office and keeping the data safe within the home environment. The devices chosen for this experiment were OpenSource such as SNORT and pfSense to detect activities within the home environment, and Cisco, a commercial device, set up within an SME network. All three devices operated in a live environment within the SME network structure with employees being both at home and in the office. All three devices were observed from the rules they displayed, their costs and machine learning techniques integrated within them. The results revealed these aspects to be important in how they identified zero-day attacks. The findings showed that OpenSource devices whilst free to download, required a high level of expertise in personnel to implement and embed machine learning rules into the business solution even for staff working from home. However, when using Cisco, the price reflected the buy-in into this expertise and Cisco’s mainframe network, to give up-to-date information on cyber-attacks. The requirements of the UK General Data Protection Regulations Act (GDPR) were also acknowledged as part of the broader framework of the study. Machine learning techniques such as anomaly-based intrusions did show better detection through a commercially subscription-based model for support from Cisco compared to that of the OpenSource model which required internal expertise in machine learning. A cost model was used to compare the outcome of SMEs’ decision making, in getting the right framework in place in securing their data. In conclusion, finding a balance between IT expertise and costs of products that are able to help SMEs protect and secure their data will benefit the SMEs from using a more intelligent controlled environment with applied machine learning techniques, and not compromising on costs. Full article

Rapidly increasing mobile data traffic have placed a significant burden on mobile Internet networks. Due to limited network capacity, a mobile network is congested when it handles too much data traffic simultaneously. In turn, some customers leave the network, which induces a revenue loss for the mobile service provider. To manage demand and maximize revenue, we propose a dynamic plan control method for the mobile service providers under connection-speed-restriction pricing. This method allows the mobile service provider to dynamically set the data plans’ availability for potential customers’ new subscriptions. With dynamic plan control, the service provider can adjust data network utilization and achieve high customer satisfaction and a low churn rate, which reflect high service supply chain performance. To find the optimal control policy, we transform the high-dimensional dynamic programming problem into an equivalent mixed integer linear programming problem. We find that dynamic plan control is an effective tool for managing demand and increasing revenue in the long term. Numerical evaluation with a large European mobile service provider further supports our conclusion. Furthermore, when network capacity or potential customers’ willingness to join the network changes, the dynamic plan control method generates robust revenue for the service provider. Full article