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

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.