Follow The Money: Online Piracy and Self-Regulation in the Advertising Industry

Abstract

In this paper, we study the effects of a self-regulatory effort, orchestrated by the Euro- pean Commission, that aims to reduce advertising revenues for publishers of copyright infringing content. Historical data lets us follow how the third-party advertising and tracking services associated with a large number of piracy websites and a correspond- ing set of legitimate “placebo” websites change after the agreement to self-regulate went in place. We find that larger EU-based advertisers comply with the initiative and reduce their connections with piracy websites. We do not find reductions for other non-advertising services that track consumers, which has potentially important implications for the efficiency of targeted advertising.

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