EU Anti-Piracy Agreement Has Little Effect on Advertising, Research Finds

One of the best ways to beat piracy, according to many copyright industry groups, is to "follow the money." This is the reason why advertising agencies are encouraged to cut their deals with pirate sites. One such agreement was facilitated by the European Commission, but according to new research, its effects are minimal.

In recent years various copyright holder groups have adopted a “follow-the-money” approach in the hope of cutting off funding to so-called pirate sites.

Thus far this has resulted in some notable developments. In the UK, hundreds of advertising agencies began banning pirate sites in 2014 and similar initiatives have popped up elsewhere too.

One of the more prominent plans was orchestrated by the European Commission. In October 2016, this resulted in a voluntary self-regulation agreement signed by leading EU advertising organizations, which promised to reduce ad placement on pirate sites. The question is, how effective is this agreement?

To find out, researchers from European universities in Munich, Copenhagen, and Lisbon, conducted an extensive study. They collected data on the prevalence of ads from various advertisers on hundreds of pirate sites. The data were collected on several occasions, both before and after the agreement.

The findings are published in the article “Follow The Money: Online Piracy and Self-Regulation in the Advertising Industry.” Christian Peukert, one of the authors, informs TF that the latest version of the working paper was published last month and is currently under review at an academic journal.

The results show that the effects of the anti-piracy agreement are fairly minimal. On a whole, there is no significant change in the volume of piracy sites that ad agencies serve. Only when looking at the larger ad-networks in isolation, a downward trend is visible.

“Our results suggests that the presence of advertising services on piracy websites does not change significantly, at least not on average,” the researchers write in their paper.

“Once we allow for heterogeneity in terms of size, we show that more popular advertising services, i.e. those that are overall more diffused on the Internet, reduce their presence on piracy websites significantly more.”

When larger advertising companies are given more weight in the analysis, the average effect equates to a 17% drop in pirate site connections.

That larger companies are more likely to comply with the agreement can be explained by a variety of reasons. They could simply be more aware of the agreement, or they feel more pressure to take appropriate steps in response.

Interestingly, there are also advertising companies that began advertising on pirate sites after the agreement was signed.

“We further provide some evidence that ad services that were not active in the piracy market before the self-regulation agreement increase their presence on piracy websites afterwards,” the researchers write.

This may have been partly triggered by site owners looking for alternatives, or advertising companies looking for new opportunities. However, the effect is not statistically significant, which means that people shouldn’t read into it too much.

Overall, however, the researchers conclude that the voluntary agreement only had a relatively small impact on the EU advertising as a whole, and that there’s room for improvement.

“These results raise concerns about the overall effectiveness of the self-regulation effort with respect to reducing incentives for publishers to supply unlicensed content,” they write.

The EU agreement coincided with a series of similar agreements which, according to this data, had little effect on EU advertisers either over the researched timespan. And by looking at the average pirate site today, it becomes instantly clear that there are still plenty advertisers who are willing to work with these sites.

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