Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales

29 Pages Posted: 7 Mar 2013 Last revised: 20 Nov 2013

Brett Danaher

Chapman University - The George L. Argyros School of Business & Economics

Michael D. Smith

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Date Written: September 14, 2013

Abstract

The growth of Internet-based piracy has led to a wide-ranging debate over how copyright policy should be enforced in the digital era. In this paper we analyze the impact of the US government’s shutdown of a major piracy site — Megaupload.com — on digital sales and rentals of movies.

Exploiting cross-country variation in pre-shutdown usage of Megaupload, we find that the shutdown of Megaupload and its associated sites caused digital revenues for three major motion picture studios to increase by 6.5-8.5%. Our results suggest that some consumers will turn to legal channels when a major filesharing site is shut down, and by extension that illegal filesharing displaces digital movie sales.

Keywords: Piracy, regulation, digitial distribution, copyright policy, motion picture industry, natural experiment

JEL Classification: K42, L82, O3, O34

Suggested Citation

Danaher, Brett and Smith, Michael D., Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales (September 14, 2013). Available at SSRN: https://ssrn.com/abstract=2229349 or http://dx.doi.org/10.2139/ssrn.2229349

Brett Danaher (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States

Michael D. Smith

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

HOME PAGE: http://www.heinz.cmu.edu/~mds

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