Pricing · Analytical/theoretical pricing model with numerical analysis
Whether to Add a Digital Product into Subscription Service?
Journal of Theoretical and Applied Electronic Commerce Research · 2024
Summary
Adding the new product is better when the existing-subscriber percentage is below a threshold and the subscription price is above a threshold. The paper also derives how key variables affect profit and piracy rate and gives pricing/piracy-control implications. For a founder, use this as a question to test in your own context, not a universal playbook.
For your marketing
Possible founder application
Treat this as evidence for the specific pricing and monetization question studied. Compare the setting and sample to your company before changing a growth decision; use a local experiment where the paper does not match your context.
Reported result
What the study found
Adding the new product is better when the existing-subscriber percentage is below a threshold and the subscription price is above a threshold. The paper also derives how key variables affect profit and piracy rate and gives pricing/piracy-control implications.
Research question
What the authors investigated
When should a digital-products platform add a newly released product to its subscription service rather than sell it only at retail, given piracy and existing subscribers?
Design
Monopoly firm model comparing two strategies (include vs exclude the new product from subscription), solved analytically and examined with comprehensive numerical analysis of profit, retail price, and piracy rate.
Sample and setting
No human sample; theoretical digital-products platform setting covering software, music, film, and e-books, with consumer valuation, piracy quality/cost, subscription fee, existing-subscriber share, and usage quantity as model variables.
Scope and transfer
Limitations to keep in view
The direct full text is a stylized model rather than observed-market evidence; results depend on its assumptions about a monopolist, consumer valuation, piracy, and subscription/retail choices. It does not provide an empirical sample or estimate real willingness-to-pay.
Research sources
Strong direct publisher full-text evidence from the MDPI article: publication date 20 April 2024, authors, pages 921–941, model setup, assumptions, numerical analysis, and conclusions are visible in the full open paper. No duplication check was possible. Correction notices were not separately verified in this collection; consult the current publisher record before applying the findings.