Free or Free and Fee: Pricing Strategy of Information Goods on Mobile Internet

For Mobile Internet content providers, a common business strategy to promote information goods is to provide free products to increase the user base. The increase of user base will lead to higher value of the content providers on account of positive Internet advertising effect. However, offering a free product may cannibalize some demand of the fee information goods. This study will examines the tradeoff between the free products´ Internet advertising effect and the cannibalization effect, and aims to reveal the conditions under which the Mobile Internet content providers should use free pricing strategy, and when to use the “free and fee” pricing strategy. The expected results will supply several managerial implications for Mobile Internet content providers, namely, content providers should supply more free products for non-monthly subscription users, and more exquisite and “free and fee” products for monthly subscription users. For different market segments, use the free and “free and fee” pricing strategies respectively, the content providers can not only increase the advertising revenue, but also increase the subscription revenue.