Firm Strategies Against Piracy in Energy Information Goods: Value-Added Services Versus Free-Version Strategy

This paper studies how firms that provide energy information goods respond to piracy. We compare two business strategies: the free-version strategy (FVS) and the value-added service strategy (VAS). Energy information goods often rely on continuous data access, service support, and user participation. These features shape how firms create value and respond to piracy in digital energy-service markets. VAS can protect value through continuous services and professional support, whereas FVS can expand user participation and data coverage through legal free access. Therefore, the choice between FVS and VAS is especially important in this market. We develop a model to examine how the two strategies affect firm profit, pricing, and the piracy rate. When network externalities are not considered, VAS always brings higher profit, while FVS is better at reducing piracy. VAS usually has a higher price than FVS, but when piracy is only a threat and does not actually occur, the price ranking depends on piracy cost. We then study the case with network externalities. When network externalities are strong, FVS may bring higher profit. In this extended setting, profit, price, and piracy rate depend on piracy cost, network externalities, and the quality of the free version. These findings help energy information goods firms balance profit, legal user adoption, and piracy reduction, with implications for the viable legal provision of digital energy services.