Ethical Dimensions of Freemium Models: Consumer Perceptions and Behavioural Implications

Abstract

The study investigates the ethical aspects of freemium models in digital multinational enterprises by analyzing consumer perceptions and behaviors. It quantitatively assesses the impact of ad-supported and feature-limited freemium designs on Consumer Perceived Ethicality (CPE) and related behaviors. Data from 220 respondents in China and the Netherlands indicate that feature-limited models are perceived more favorably than ad-supported ones. Additionally, a "free mentality"—the belief that digital content should be free—negatively affects CPE, making freemium models seem less ethical. Compared to premium models, this mentality moderates the impact on CPE, leading to higher perceived ethicality for feature-limited models. Higher CPE is associated with more word-of-mouth promotion and greater intentions to upgrade to premium versions. The study provides guidelines for ethical business strategy design and recommends future research on various freemium strategies and consumer attitudes.