From 2012, different categories of free agency will apply to players who have served eight years or more at a single club.
Demetriou lauded the agreement as a historic day and said the balance achieved would benefit all parties.
"It does provide the opportunity for clubs to secure their players if they can and it gives the opportunity for players to get some more certainty with their length of contracts," he said from AFL House on Tuesday.
"It gives a bit more flexibility for players if they're delisted to be able to negotiate with whoever they want, instead of going into a draft and taking their chances.
Demetriou said he appreciated that the changes would attract criticism, but believed the model would ultimately serve the best interests of clubs, players and supporters alike.
"I know with any change, there will be people who may have different views and in football that is always the case and long may it be. But it's important to mention that historically players have always moved between clubs."
"We've been saying consistently for two years that we're not afraid of free agency," he said.
"We just want to get the model right and work with the AFL Players Association to get the model right, and it has taken the better part of two years to get to where we are today".
That point, said Demetriou, was largely due to the work of AFL football operations manager Adrian Anderson and AFL Players Association boss Matt Finnis, adding that it was important to maintain "industrial harmony" between the two parties.
Anderson said a visit with AFL colleague Andrew Dillon to the United States, where they met with top sporting leagues, helped formulate the AFL's form of free agency.
"It was extremely valuable background for us," he said.
"To talk to those competitions that have had free agency for 10 to 25 years and learn from their experiences [was important].
"The key thing is if you can sit down and negotiate a deal that you're both happy with, you'll be far better off than any disharmony that can be caused by disputing over free agency for many years."
Meanwhile, Anderson said the NAB AFL Pre-Season Draft could be scraped with the introduction of free agency. Just seven players were selected in last December's meeting and Anderson said the AFL and AFLPA would discuss its future in the coming months.
"That's something that's a possibility," he said.
"We've agreed for a few years now that one of the elements we would look at … is the Pre-Season Draft.
"We'll sit down with the [AFLPA to discuss] whether that still has a role to play in the future."
