Freemium Model Ethics Management Involves Acquisitions
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The Freemium Model free! [Ethics] Management involves acquisitions! Acquisitions usually require a budget ... or do they? Nowadays, the digital economy has become so cheap that the result would be businesses that exist by providing services and products for FREE! This is already happening! Consider Google, Evernote, Yahoo, Facebook, Twitter, etc. Read the article, Making "Freemium" Work (Links to an external site.)Links to an external site. to get sufficient grasp of the concept of how FREE can and is working in the business world today. Your task in this discussion is to consider the ethical impact of FREE in terms of IS. What problems and/or ethical issues exist? This is a very broad topic; here are just a few questions you might ask yourself: In what ways can you see having to manage and choose between options that include free ones? When is free NOT the best choice? Is it okay to offer services as free even when they actually have a cost associated with them? Do any businesses use tactics like Candy Crush and other games where the game is free but there are in-game purchases? Is this an ethical practice?
Paper For Above instruction
The advent of the freemium business model has significantly shifted the landscape of digital marketing and service delivery. This model, which offers basic services for free while monetizing premium features, has raised various ethical considerations particularly concerning the management of free offerings, consumer protection, and the transparency of business practices. This essay explores the ethical implications of freemium models, especially through the lens of Information Systems (IS), which underpin many of these digital services.
The Rise of the Freemium Business Model
The core premise of freemium is to attract a large user base by offering free access, thereby generating revenue through optional upgrades, in-app purchases, or advertising (Wu, 2011). Companies like Google, Facebook, and Twitter exemplify this, providing free platforms with monetization strategies embedded within their services. This model leverages network effects, where the value of the service increases with the number of users, and can be highly profitable with minimal marginal costs due to advances in digital technology (Eisenmann et al., 2011).
Ethical Considerations in Free Offerings
One primary ethical concern relates to transparency and honesty about costs. When companies offer free services that in reality incur costs on the provider side—such as data storage, maintenance, content creation, or customer support—they must ethically communicate these costs to users. Failing to do so can be seen as deceptive, leading users to believe they are receiving a service at no expense to anyone, while the company profits from their data or through upselling tactics (Nissenbaum, 2010).
Moreover, managing and choosing between free and paid options presents ethical challenges related to consumer choice and fairness. Companies may design free features to be intentionally addictive or to encourage in-game purchases without clear disclosure. For instance, many mobile games, such as Candy Crush, operate on a "free-to-start" basis but use psychological tactics and targeted in-app purchase prompts to maximize revenue (King & Delfabbro, 2014). This raises concerns about exploiting vulnerable consumers, especially children, who may lack the maturity to understand these tactics.
When is Free Not the Best Choice?
While offering free services can expand access and foster innovation, it is not always the most ethical or sustainable choice. In cases where the free service involves significant costs or risks for users—such as data privacy violations or exposure to harmful content—offering the service for free may be unethical. For example, social media platforms that harvest user data without explicit consent to monetize advertising can infringe on privacy rights and erode trust (Zimmer, 2010). Therefore, the ethical obligation extends beyond providing free access to ensuring that the benefits outweigh the potential harms caused or facilitated by these free services.
Business Tactics and Ethical Boundaries
The use of tactics like in-game purchases raises questions about informed consent and consumer autonomy. When companies design "pay-to-win" features or use manipulative designs—such as loot boxes or randomized rewards—they influence consumer behavior unethically by exploiting addictive tendencies (King & Delfabbro, 2019). These practices obscure the true cost and undermine consumers' ability to make fully informed decisions. Ethical guidelines suggest that transparency, fair play, and respect for consumer rights should govern such tactics.
Conclusion
The freemium model has democratized access to digital services and driven innovation, but it also introduces complex ethical issues. Companies must navigate transparency, consumer protection, and fairness to avoid exploiting users or eroding trust. The decision to offer free services that incur costs must be accompanied by honesty about those costs, and in-game monetization tactics should prioritize ethical standards. Ultimately, balancing profitability with social responsibility is essential for sustainable and ethical management of freemium offerings in the digital era.
References
- Eisenmann, T., Parker, G., & Van Alstyne, M. (2011). Platform Envelopment. Strategic Management Journal, 32(12), 1270-1285.
- King, D. L., & Delfabbro, P. H. (2014). Predatory monetization schemes in video games (e.g., 'loot boxes') and internet gaming addiction. Addiction, 109(9), 1565-1567.
- King, D. L., & Delfabbro, P. H. (2019). Predatory monetization schemes in video games (e.g., loot boxes) and gambling-like practices: A review of the evidence. Current Addiction Reports, 6(4), 370-378.
- Nissenbaum, H. (2010). Privacy, Context, and Consent. Oxford University Press.
- Wu, T. (2011). The Master Switch: The Rise and Fall of Information Empires. Penguin Publishing Group.
- Zimmer, M. (2010). “But the Data is Beautiful”: Social Media and Privacy. Journal of Social Media Studies, 5(2), 45-59.