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Follow the money: Online piracy and self-regulation in the advertising industry

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  • Batikas, Michail
  • Claussen, Jörg
  • Peukert, Christian

Abstract

We study the effects of a self-regulation effort, orchestrated by the European Commission in 2016 and finalized in 2018, that aims to reduce advertising revenues for publishers of copyright infringing content. Data on the third-party HTTP requests made by a large number of piracy websites lets us observe the relations of the piracy and advertising industry over time. We compare these dynamics to a control group of non-advertising services which are not subject to the self-regulation. Our results suggest that the effort is limited in its effectiveness. On average, the number of piracy websites that make requests to EU-based advertising services does not change significantly. Only when we allow for heterogeneity in the popularity of third-party services, we find that the number of piracy websites that interact with the most popular EU-based advertising services decreases by 42%. We do not find evidence that non-EU-based advertising services react to the self-regulation. This implies that only a small share of the firms in the market comply with self-regulation in a way that is visible in our data. We also do not find evidence that the demand for piracy websites decreases due to this “follow the money” initiative.

Suggested Citation

  • Batikas, Michail & Claussen, Jörg & Peukert, Christian, 2019. "Follow the money: Online piracy and self-regulation in the advertising industry," International Journal of Industrial Organization, Elsevier, vol. 65(C), pages 121-151.
    • Handle: RePEc:eee:indorg:v:65:y:2019:i:c:p:121-151
    DOI: 10.1016/j.ijindorg.2019.02.001
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    3. Milan Miric & Lars Bo Jeppesen, 2020. "Does piracy lead to product abandonment or stimulate new product development?: Evidence from mobile platform‐based developer firms," Strategic Management Journal, Wiley Blackwell, vol. 41(12), pages 2155-2184, December.
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    5. Kretschmer, Tobias & Peukert, Christian & Bechtold, Stefan & Batikas, Michail, 2020. "European Privacy Law and Global Markets for Data," CEPR Discussion Papers 14475, C.E.P.R. Discussion Papers.
    6. Christian Peukert & Margaritha Windisch, 2023. "The Economics of Copyright in the Digital Age," CESifo Working Paper Series 10687, CESifo.

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    More about this item

    Keywords

    Piracy; Copyright enforcement; Online advertising; Natural experiment;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L8 - Industrial Organization - - Industry Studies: Services

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