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DESCRIPTION:Completing the Virtuous Cycle between Payment and Social Engage
 ment in Freemium Social Communities\nDr. Ravi Bapna University of Minnesot
 a\nDate: November 8\, 2013Time: 1:30 pm - 3:00 pmLocation: Room 245\, Bron
 fman Building\nAbstract: \nThe Freemium business model\, where a software 
 product\, an app or a service is simultaneously provided free of charge as
  well as sold for a premium\, is a dominant business model in today’s soci
 al media landscape. From social communities such as LinkedIn to music list
 ening services such as Spotify\, Pandora and Last.fm\, to gaming apps such
  as Angry Birds\, to online dating sites such as Match.com\, Freemium mode
 ls owe their popularity to the fact that they combine elements of platform
  competition\, software versioning\, social communities and free sampling 
 under one umbrella. Yet\, making sustainable profits from a baseline zero 
 price and getting free consumers to convert to premium subscribers is a co
 ntinuing challenge for all Freemium communities. In this study\, we zoom i
 n on the question of monetizing Freemium social communities. Prior researc
 h has causally established that social engagement (Oestreicher-Singer and 
 Zalmanson 2013) and peer influence (Bapna and Umyarov 2013) are the two im
 portant drivers of getting users to convert to premium in such communities
 . We flip the perspective and ask whether paying premium causes users to b
 ecome more socially engaged. If this is the case\, then we can claim the p
 resence of a virtuous cycle between social engagement and premium subscrip
 tion\, which taken together with the presence of peer-effects\, can be a p
 owerful force for the monetization of Freemium social communities. We caus
 ally establish that payment for premium leads to more social engagement us
 ing a look-ahead propensity score matching (LA-PSM) procedure\, and that t
 his effect varies across users who have different lengths of experience wi
 th the site. We show how the LA-PSM technique is superior to both traditio
 nal propensity score matching and instrument variable regression in the co
 ntext of rare events involving economic decisions. In the context of the L
 ast.fm music listening Freemium social community\, we find that paying for
  premium leads to 47% more new friends as compared to free users. Likewise
 \, the premium adoption causes a 87% higher increase in loving songs\, 4.5
  times higher number of playlists created\, a 68% higher increase in recei
 ving wall posts (shouts) from other users\, and a 23% higher increase in l
 istening to songs.\nKeywords: Freemium\, social engagement\, monetization\
 , premium subscription(joint research with Jui Ramaprasad and Akhmed Umyar
 ov)
DTSTART:20131108T183000Z
DTEND:20131108T200000Z
LOCATION:Room 245\, CA\, Bronfman Building
SUMMARY:Seminar: Completing the Virtuous Cycle between Payment and Social E
 ngagement in Freemium Social Communities
URL:/desautels/channels/event/seminar-completing-virtu
 ous-cycle-between-payment-and-social-engagement-freemium-soci
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