Abstract: The impact of freemium version products launched by suppliers on pricing and quality decisions of information goods in the presence of piracy goods is studied. Conditions for the formation of three market models when the freemium version products are released and the freemium version products are not released are given. Then a comparison among the pricing of information products, the piracy rate, the change of supplier's profit, the piracy quality cost ratio and the influence of network externality on the changes is made before and after the implementation of the freemium version products, and the infuence of the freemium version products and network externality on the quality of information products and consumer surplus is further explored. The result shows that:when the network externality is low, the freemium strategy can improve the quality and cost conditions for piracy products to enter the market; in the piracy competition model, the release of the freemium version products will help to increase product pricing, increase supplier's profit, and reduce market piracy rate when piracy products' quality costs are high; as the cost of piracy increases, the "moral" consumer surplus and social welfare will rise first and then fall, and finally the trend will be stable, however, it is only when the network externality is large that the freemium version products will be introduced to improve the total consumer surplus; when there is piracy product in the market, the launched freemium version products will reduce the quality of information good, network externality will be helpful to increase product's quality; whether the conclusion is established when there is no piracy googs depends on the size of the network externality.

Key words: piracy, freemium strategy, network externality, information goods pricing