Articles & Notes — March 8, 2013 at 2:29 pm

Megaupload shutdown boosts digital movie revenues

megauploadA new paper suggests that revenues from digital movie sales and rentals were positively impacted after the shutdown of Megaupload.

Researchers from Wellesley College and Carnegie Mellon University compared the income from 12 countries with varying Megaupload usage.

They conclude that the shutdown caused a 6-10 percent increase in digital movie revenues for two major Hollywood studios, TorrentFreak reports.

It is no secret that the MPAA was one of the instigators of the Megaupload investigation, which ultimately led to the shutdown of the company January last year.

According to the Hollywood studios the file-hosting site kept people away from legal movie stores, and they now have some data to back this claim up.

This week researchers from Wellesley College and Carnegie Mellon University released a comprehensive study that evaluates the impact of Megaupload’s shutdown on digital movie revenues.

Titled “Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales,” the paper compared digital movie revenues across 12 countries.

These countries vary in the relative number of Megaupload users, allowing the researchers to estimate the effect of the cyberlocker’s demise on movie sales.

“We were interested in studying the effect of a major piracy site shutdown on demand for digital movie sales since we’ve seen the argument that such efforts could be like a game of whack-a-mole, with a new file-sharing site springing up as soon as one is closed,” assistant professor of Economics Brett Danaher tells TorrentFreak.

“We saw the logic of this argument, but could also imagine a world where shutting down such a large site could change the behavior of some types of consumers,” he adds.

After controlling for a wide range of country-specific trends and other variables the researchers conclude that the latter is the case, Megaupload’s shutdown had a significant effect on digital revenues.

The data suggest that the income of two major Hollywood studios was boosted by up to 10 percent.

“Our analysis across 12 countries suggests that, in the 18 weeks following the shutdown, digital revenues for these two studio’s movies were 6-10% higher than they would have been if not for the shutdown,” the researchers write in their paper.

“Thus our findings show that the closing of a major online piracy site can increase digital media sales, and by extension we provide evidence that Internet movie piracy displaces digital film sales,” they add.

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