Enhancing revenue from information goods through the free-to-play business model using price discrimination

Abstract

The free-to-play business model for information goods is a price discrimination application in economics, but with the unique characteristics of the virtual world, scholars find it hard to understand from a price discrimination perspective. This study introduces the model and describes its development. Key to its cash generation logic are its monopolistic status based on free usage, the easiness of trial and error due to low marginal cost, and control of transfers among customers in the virtual world. A case study shows that the information business enhances revenue by changing the price logics of the model based on price discrimination. © 2013 International Information Institute.