Artificial intelligence (AI) has gained significant prominence in technological development, resulting in an increasing prevalence of AI-based platforms. These platforms typically employ either an advertising-based revenue model offering basic services, versus a freemium model providing free basic services alongside premium paid features. We develop a game-theoretic framework to analyze strategic revenue model selection in duopoly AI platform competition. The analysis demonstrates that when premium service quality is sufficiently low (high), competing platforms are compelled to adopt homogeneous advertising-based (freemium) models. At intermediate quality levels, platforms achieve equilibrium through differentiated revenue model adoption.

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Advertising or Freemium: The Revenue Model Decisions for Competing Artificial Intelligence-Based Platforms

  • Siyuan Wang,
  • Lin Wang,
  • Zhiyong Li,
  • Donghan Wang

摘要

Artificial intelligence (AI) has gained significant prominence in technological development, resulting in an increasing prevalence of AI-based platforms. These platforms typically employ either an advertising-based revenue model offering basic services, versus a freemium model providing free basic services alongside premium paid features. We develop a game-theoretic framework to analyze strategic revenue model selection in duopoly AI platform competition. The analysis demonstrates that when premium service quality is sufficiently low (high), competing platforms are compelled to adopt homogeneous advertising-based (freemium) models. At intermediate quality levels, platforms achieve equilibrium through differentiated revenue model adoption.