An Economic Analysis of Subscription Sharing of Digital Services

Subscription sharing, where users share premium family plans with non-family members via platforms like Together Price and Sharesub, has become increasingly common. This raises a key question: should providers still offer discounted family plans alongside individual ones? Our research explores this issue for a monopolistic provider facing this sharing threat. We analyze the optimal pricing strategy and the effects of subscription sharing on profits, plan offerings, consumer surplus, and social welfare. We find that offering both plans is at least as profitable as offering individual plans only, and sharing can sometimes supercharge profits. However, platform fees reduce these benefits by narrowing the price gap between plans, weakening the market expansion effect. Our numerical results show that sharing often improves social welfare. Overall, these insights suggest that subscription sharing is not always as harmful to providers, and the platform service fees play a key role in pricing strategies.