Study: Online piracy has little effect on box office revenue

Those paying attention to the kerfuffle over illegal filesharing will have heard all about the various U.S. Government studies claiming to show how harmful “piracy” is to the entertainment industry – along with how they’re complete bullshit, according to the government’s own watchdog group. In fact, far from hammering a stake through Hollywood’s heart, a recent (independent) study makes the claim that filesharing actually doesn’t have much of an effect on box office receipts – and what’s more, that the levels to which movies are pirated online may be the industry’s own fault:

Hollywood films are generally released first in the United States and then later abroad, with some variation in lags across films and countries. With the growth in movie piracy since the appearance of BitTorrent in 2003, films have become available through illegal piracy immediately after release in the US, while they are not available for legal viewing abroad until their foreign premieres in each country. We make use of this variation in international release lags to ask whether longer lags – which facilitate more local pre-release piracy – depress theatrical box office receipts, particularly after the widespread adoption of BitTorrent. We find that longer release windows are associated with decreased box office returns, even after controlling for film and country fixed effects. This relationship is much stronger in contexts where piracy is more prevalent: after BitTorrent’s adoption and in heavily-pirated genres. Our findings indicate that, as a lower bound, international box office returns in our sample were at least 7% lower than they would have been in the absence of pre-release piracy. By contrast, we do not see evidence of elevated sales displacement in US box office revenue following the adoption of BitTorrent, and we suggest that delayed legal availability of the content abroad may drive the losses to piracy.

In other words, it’s just as critics of the modern anti-piracy fervor have been saying for years: that online filesharing is mostly about availability, not legality. Oddly enough, the better the product is and the easier it is to obtain, the more people will happily fork over the bucks to get it. It truly can’t possibly get any simpler than that.

Which makes one wonder why the industry still hasn’t picked up on it.

(via @ebertchicago)

Tags: SSRN • piracy • online piracy • filesharing • Hollywood • BitTorrent