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Piracy and Box Office Movie Revenues: Evidence from Megaupload

International Journal of Industrial Organization, 52, 2017, 188-215

34 Pages Posted: 17 Nov 2012 Last revised: 11 May 2017

Christian Peukert

University of Zurich - Faculty of Economics, Business Administration and Information Technology

Jörg Claussen

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Copenhagen Business School - Department of Innovation and Organizational Economics

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Date Written: January 17, 2017

Abstract

In this paper we evaluate the heterogeneous effects of online copyright enforcement. We ask whether the unexpected shutdown of the popular file hosting platform Megaupload had a differential effect on box office revenues of wide-release vs. niche movies. Identification comes from a comparison of movies that were available on Megaupload to those that were not. We show that only movies that premiere in a relatively large number of theaters benefitted from the shutdown of Megaupload. The average effect, however, is negative. We provide suggestive evidence that this result is driven by information externalities. The idea is that online piracy acts as a mechanism to spread information about product characteristics across consumers with different valuations for the product.Our results question the effectiveness of blanket public anti-piracy policy, not only from a consumer perspective, but also from a producer perspective.

Keywords: Piracy, Movie Revenues, Megaupload, Natural Experiment

Suggested Citation

Peukert, Christian and Claussen, Jörg and Kretschmer, Tobias, Piracy and Box Office Movie Revenues: Evidence from Megaupload (January 17, 2017). International Journal of Industrial Organization, 52, 2017, 188-215. Available at SSRN: https://ssrn.com/abstract=2176246 or http://dx.doi.org/10.2139/ssrn.2176246

Christian Peukert (Contact Author)

University of Zurich - Faculty of Economics, Business Administration and Information Technology ( email )

Affolternstrasse 56
Zürich, 8050
Switzerland

Jörg Claussen

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, 80539
Germany

Copenhagen Business School - Department of Innovation and Organizational Economics ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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