New research shows that tackling large scale file sharing websites is a failure

Ray Walsh

Ray Walsh

May 15, 2015

The entertainment industry spends a huge amount of time worrying about how to close down file sharing websites such as The Pirate Bay (TPB) – without whose existence it feels life would suddenly become all roses and Carebears. The truth, however, would appear to be quite different. A new inquiry published by the European Commission’s Joint Research Center shows that the kind of raids which temporarily shut down TPB are a waste of resources, and are largely ineffective.

The new research is the result of an in depth study into what happened following the 2011 raid of popular movie streaming portal, in what was one of the largest piracy related busts Europe has ever witnessed.   The raid itself was the result of a coordinated effort by German, Spanish, French and Dutch police departments, who arrested about a dozen people connected to the site – all in residential addresses that had been exposed to be data centers for

The coordinated effort successfully put an end to the operations of the largest illegal streaming portal in Europe, and was considered a massive success by law enforcement and the entertainment industry alike. However, new revelations from the European Commission show that despite the size of the raid, and the importance and size of the illegal operation that was shut down, the end effect on user piracy was extremely limited.

The paper itself is titled ‘Online Copyright Enforcement, Consumer Behavior, and Market Structure’, and examines a click stream data-set of 5000 German internet users. Its aim was to analyze their behavior – both legal and illegal – in order to reach conclusions about the efficacy of taking down copyright-infringing websites as a way to reduce the consumption of pirated media, and to increase licensed consumption.

The unsurprising results show that while the raid on did have a short term effect on the amount of piracy that took place  (no doubt due to those people having to find new web sites from which to get their pirated material), the overall trend did not show an upsurge in the legal consumption of media of any relative kind,

“While users of decreased their levels of piracy consumption by 30% during the four weeks following the intervention, their consumption through licensed movie platforms increased by only 2.5%.”

In fact, the study shows that if you factor into the equation the costs of performing the raids across Europe, and of prosecuting those individuals involved, the effects of closing down likely had no positive outcome whatsoever,

‘Taken at face value, these results indicate that the intervention mainly converted consumer surplus into deadweight loss. If we were to take the costs of the intervention into account, our results would suggest that the shutdown of has not had a positive effect on overall welfare’

Also unsurprisingly, the research shows that the closure of was soon replaced by new streaming services that sought to fill the gap in the market that it had left behind, demonstrating that the will and ability to continue providing content for people that demand it works very much in the opposite way to the ‘top-down’ manner in which the entertainment industry believes (and hopes) it does.  In other words, while there is a demand for pirated material, someone will quickly fill the gap in the market and provide that material.

The paper also found that this so called ‘Hydra effect’ actually fragmented a piracy landscape that was previously dominated by one web site (in this case into a number of disparate websites that overall had roughly the same amount of visitors. Due to their unconnected nature, it would be much harder to tackle these in future,

‘Our analysis shows that the shutdown of resulted in a much more fragmented structure of the market for unlicensed movie streaming.  This potentially makes future law enforcement interventions either more costly – as there would not be a single dominant platform to shutdown anymore – or less effective if only a single website is targeted by the intervention’

Although the conclusion of the research could be to advise governments against such large scale raids in future, it is actually hard to understand how authorities and the entertainment industry could ever simply stand back and allow an extremely prolific file sharing website to continue unhindered.  For that reason alone, this research is a fantastic demonstration of just how difficult the problem of piracy is, and just how differently the entertainment industry ought to be trying to curb it if it wants to succeed.

Finally, it is worth noting that the paper also advises that it was not able to figure into its conclusions any rise in the purchase of legal media in hard copy format, and points out that in 2011 there were much fewer ways of legally accessing media online – a market which is now flourishing.

After all, services such as Netflix do demonstrate, at least in part, some sort of movement in the right direction from the entertainment industry who must work hard to give people viable options, at the right price,  if they want to draw the public away from piracy indefinitely.

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