Megaupload close-down harmed the film industry

When Big Content leaned on its police sockpuppets to shut down Megaupload it apparently did itself some harm.

According to a paper with the catchy title “Piracy and Movie Revenues: Evidence from Megaupload”, conducted by the Munich School of Management (LMU) and the Copenhagen Business School, the movie studios lost money on the whole fiasco.

The paper used what it called exogenous variation from the unexpected shutdown of the popular file hosting platform on 19 January, 2012.

Looking at box office revenues before and after the shutdown, the researchers looked at weekly data from 1,344 movies in 49 countries over a five-year period.

They found that the shutdown had a small negative effect on box office revenues.

Not all films were harmed. Blockbusters did better out of the shut down. The researchers suggested that file-sharing acts as a mechanism to spread information about a film from consumers with zero or low willingness to pay to users with high willingness to pay.

But this information-spreading effect only works if the film is less well known. The big blockbusters do not need file sharing to help them out.

People are most likely to see big blockbusters with their friends regardless of what happens on the internet. Those flicks are less likely to require word-of-mouth promotion by people who used Megaupload to share movies.