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The Effect of Piracy Website Blocking on Consumer Behavior

36 Pages Posted: 2 Jun 2015 Last revised: 9 Dec 2015

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: November 2015

Abstract

Understanding the relationship between copyright policy and consumer behavior is an increasingly important topic for participants in digital media markets. In this paper we seek to 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 two court-ordered events affecting consumers in the UK: The blocking order directed at The Pirate Bay in May 2012, and blocking orders directed at 19 major piracy sites in October and November 2013.

Our results show that blocking The Pirate Bay only caused a small reduction in total piracy — instead, consumers seemed to turn to other piracy sites or Virtual Private Networks that allowed them to circumvent the block. We thus observed no increase in usage of legal sites. 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 12% on average. The lightest users of the blocked sites (and thus the users least affected by the blocks, other than the control group) increased their clicks on paid streaming sites by 3.5% while the heaviest users of the blocked sites increased their paid streaming clicks by 23.6%, strengthening the causal interpretation of the results. Our results suggest that website blocking requires persistent blocking of a number of piracy sites in order to effectively migrate pirates to legal channels, but also that the increased availability of legal digital services can make antipiracy efforts more effective.

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 (November 2015). 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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