Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales
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
September 14, 2013
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.
Number of Pages in PDF File: 29
Keywords: Piracy, regulation, digitial distribution, copyright policy, motion picture industry, natural experiment
JEL Classification: K42, L82, O3, O34
Date posted: March 7, 2013 ; Last revised: November 20, 2013