THE EFFECT OF PIRACY WEBSITE BLOCKING ON CONSUMER BEHAVIOR Brett Danaher‡
[email protected] Michael D. Smith†
[email protected] Rahul Telang†
[email protected] This Version: November 2015 Acknowledgements: This research was conducted as part of Carnegie Mellon University’s Initiative for Digital Entertainment Analytics (IDEA), which receives unrestricted (gift) funding from the Motion Picture Association of America. Danaher acknowledges support from an NBER Economics of Digitization research grant. This research was conducted independently without any oversight or editorial control. The authors presented this paper at the December 2014 Workshop on Information Systems and Economics and to seminar participants at the University of Arizona’s Eller School of Management and thank participants for their helpful feedback. All findings and errors are entirely our own. ‡ Department of Economics, Wellesley College, Wellesley, MA, 02481 † School of Information Systems and Management, Heinz College, Carnegie Mellon University, Pitts- burgh, PA, 15213. THE EFFECT OF PIRACY WEBSITE BLOCKING ON CONSUMER BEHAVIOR ABSTRACT Understanding the relationship between copyright policy and consumer behavior is an in- creasingly 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 pira- cy — instead, consumers seemed to turn to other piracy sites or Virtual Private Networks that allowed them to circumvent the block.