Would you like to be a premium customer a research on the factors related to the intention to pay for a premium music service

Abstract

Purpose- Freemium business model offers the customers a limited or unlimited product/service experience. Although the Freemium business model seems to be funded by the advertisement income, the main expectation from the model is to convert users to premium customers for increasing profit margin. In terms of this, the dynamics behind the conversion process of the user to premium customer have been researched in the study. Methodology- The data were collected from 240 people by online survey method. Hypotheses were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM). Findings- Results indicate that when perceived value of premium version is higher, attitude towards premium version becomes positive. Also, as the perceived value of premium version increases, attitude towards free version gets negative. Another result states that when the level of personal innovativeness increases, social influence related to premium version also increases. Conclusion- Attitude towards free version and attitude towards premium version are both related to intention to pay, however, attitude towards premium version has a stronger effect on intention to pay when compared to attitude towards free version. The key point is to balance the benefits package of free and premium versions.