Do Free Users Make Seller Pay? The Asymmetry Network Effect of Free Users on Fee Sellers in Business-to-Business Electronic Platform

With the prosperity of worldwide e-commerce, platforms generally conduct premium model to convert customer assets. Extant research has investigated the network effect at e-commerce platform, but no study to date has analyzed whether the influx of free users can stimulate sellers to pay for the membership or backfire. In the context of B2B electronic market, we examine the dynamic network effect of free users in different participation quality on fee sellers with a VAR model. The results show that (1) the rise of registered regular sellers can incite more fee sellers to pay for the membership than that of regular buyers; (2) external users attracted by advertising (search advertising and social media advertising in this paper) can impact targeted internal user base. These findings emphasize more exploration should be pay attention to the engagement quality of user base in two-sided markets, and provide guidance related to advertising strategy.