To examine the effectiveness of the ‘Freemium’ business model.

Student Name | Kyle Brown | Student Number | N00128284 | Student email address | kyle.brown@student.iadt.ie | Date | 31/10/2014 | Submitted to | Eva Perez |

1 Introduction 3
1.1 Research Questions & Objectives 4
2 Literature Review 5
2.1 The 5% Rule 5
2.2 Music Streaming Services & Spotify 6
2.3 Freemium & Piracy 7
2.4 Consumer Perceptions 8
3 Research Methodology 9
3.1 Research Design 9
3.2 Data Collection 10
3.3 Sampling 11
4 Ethics 11
Harm to Participants 12
Invasion of Privacy 12
References 13

1. Introduction

The term Freemium was originated by Jarid Lukin of the Flatiron portfolio company Alacra. Moreover, based on this term, Wilson, a venture capitalist, built up a business model in 2006 (Wilson, 2006). ‘Freemium’ is a business model which has emerged in recent years and has become increasingly popular within the digital service industry, particularly for ever growing music streaming services such as Spotify, as this model has almost saved the music industry from being washed out through ever growing piracy issues. The company has posted growth at a staggering rate of nearly 8,000 subscriptions per day and is currently valued at $3 billion dollars (Hampp, 2013). This substantial growth provides an interesting platform for the researcher and to find out how effective the model is for businesses like Spotify, and on the consumers of such services. This type of business model is becoming the norm for web based start-ups worldwide as they look to gain instant consumers through testing of their services before charging them for what can be described as a better or more premium version of the service. Millers from the New York Times stated the Freemium model becoming the most popular model