Digital and Mobile Commerce
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Paper Number
2119
Paper Type
short
Description
Digital entertainment products, such as e-books, movies, and video games, commonly leverage freemium pricing, i.e. offering early content to customers for free in hope to monetize later content. While offering scant free content risks customer churn, offering a lavish amount undermines profit. This research hence aims to identify a product-specific profit-maximizing “charging point” and how it is linked to content peaks/troughs experienced by consumers by leveraging a large-scale field experiment with 1.3 million consumers and content mining of 50 e-books. The optimal charging point identified by the field experiment escalates purchase up to 67% and typically occurs right after the second culmination based on sentiment analysis of book content. We further explore the underlying mechanism by analyzing the synchrony between the content and chapter-by-chapter customer comments. These findings will critically guide premium pricing strategy and automate the conventionally intuition-laden and labor-intensive pricing decisions by content creators.
Recommended Citation
Xue, Hanbing; li, yongjun; Foutz, Natasha Z.; and Ji, Yangfeng, "Charging at Second Culmination? Optimal Freemium Pricing for E-books via Field Experiment and Text Analysis" (2021). ICIS 2021 Proceedings. 10.
https://aisel.aisnet.org/icis2021/digital_commerce/digital_commerce/10
Charging at Second Culmination? Optimal Freemium Pricing for E-books via Field Experiment and Text Analysis
Digital entertainment products, such as e-books, movies, and video games, commonly leverage freemium pricing, i.e. offering early content to customers for free in hope to monetize later content. While offering scant free content risks customer churn, offering a lavish amount undermines profit. This research hence aims to identify a product-specific profit-maximizing “charging point” and how it is linked to content peaks/troughs experienced by consumers by leveraging a large-scale field experiment with 1.3 million consumers and content mining of 50 e-books. The optimal charging point identified by the field experiment escalates purchase up to 67% and typically occurs right after the second culmination based on sentiment analysis of book content. We further explore the underlying mechanism by analyzing the synchrony between the content and chapter-by-chapter customer comments. These findings will critically guide premium pricing strategy and automate the conventionally intuition-laden and labor-intensive pricing decisions by content creators.
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22-Digital