The Effect of Piracy Website Blocking on Consumer Behavior

37 Pages Posted: 2 Jun 2015 Last revised: 6 Aug 2018

See all articles by Brett Danaher

Brett Danaher

Chapman University - The George L. Argyros School of Business & Economics

Michael D. Smith

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Rahul Telang

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Date Written: March 2018

Abstract

Understanding the relationship between copyright policy and consumer behavior is an increasingly important topic for both rights holders and policymakers. In this paper we study how consumer behavior changes when Internet Service Providers are required to block access to major piracy websites. We do this in the context of three court-ordered events affecting consumers in the UK: A blocking order directed at The Pirate Bay in May 2012, a blocking order directed at 19 major piracy sites in November 2013, and a blocking order aimed at 52 different piracy sites in 2014. Our results show that blocking a single site—The Pirate Bay—only caused a small reduction in total piracy and no increase in usage of legal sites. Instead, consumers seemed to turn to other piracy sites or Virtual Private Networks that allowed them to circumvent the block. In contrast, blocking 19 different major piracy sites caused a meaningful reduction in total piracy and subsequently led former users of the blocked sites to increase their usage of paid legal streaming sites such as Netflix by 11% on average. Similarly, blocking 52 sites in 2014 caused treated users to increase their usage of legal subscription sites by 10% and legal ad-supported streaming sites by 11.5%. These results are heterogeneous across groups such that users who have not yet formed a strong tie to either legal or piracy channels are the most likely to be impacted by the blocks.

Keywords: Piracy, regulation, digital distribution, motion picture industry, natural experiment

Suggested Citation

Danaher, Brett and Smith, Michael D. and Telang, Rahul, The Effect of Piracy Website Blocking on Consumer Behavior (March 2018). Available at SSRN: https://ssrn.com/abstract=2612063 or http://dx.doi.org/10.2139/ssrn.2612063

Brett Danaher (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States

Michael D. Smith

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

HOME PAGE: http://www.heinz.cmu.edu/~mds

Rahul Telang

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

4800 Forbes Ave
Pittsburgh, PA 15213-3890
United States
412-268-1155 (Phone)

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