STRATEGIC MONETIZATION AND UPGRADING DECISIONS FOR MOBILE APPLICATIONS

Abstract

The mobile applications (apps) market has been growing steadily, propelled by rapid technological developments and consumer adoption of smartphones and tablet personal computers. In this dissertation research, I study app publishers’ strategic monetization and upgrading decisions. The first essay studies app publishers’ dynamic forward-looking decisions on offering different versions of an app: free, paid, or both (i.e., freemium), and investigates alternative commission schemes which could benefit both app publishers and an app platform. My findings lead to recommendations on how one may improve the current commission structure to achieve mutual benefits for both the platform and app publishers. The second essay examines strategic upgrading decisions of mobile apps by taking into consideration of their interconnections with versioning decisions and between the free and paid versions of an app. Our joint model of versioning and upgrading decisions provides estimates of various revenues and costs associated with the two decisions, and our policy simulations based on the model estimates examine the soundness of certain current practices and identifies opportunities to improve app publishers’ profits, the app distribution platform’ revenue, and the eco-system payoff. This dissertation research provides a range of policy recommendations to key players in the mobile app industry.